At some time in the past year, you surely heard, saw, ignored or rolled your eyes at the chant “Tax the Rich!” I find “Tax the Rich,” like almost all political slogans, not particularly helpful. (Who’s rich? What kind of taxes?) I prefer unified, cogent policy platforms over slogans, but I acknowledge slogans help start conversations, which is why “Tax the Untaxed Wealth” seems a better starting place. 

The Second Estate

by Ray D. Madoff

University of Chicago Press
92p, $19

Wage-earning millionaires are paying a good deal in taxes. I am not so sure the same is true about the ultra-wealthy (jet owners as opposed to first-class fliers, island owners as opposed to two-house owners), whose avoidance of income has birthed an American “second estate.” 

In her new book The Second Estate, Ray D. Madoff, a law professor at Boston College, connects the pre-Revolutionary French Second Estate to the new class of ultra-wealthy Americans who avoid income taxes almost entirely, amplifying their influence and power. The idea of an emergent American aristocracy, antithetical to both the Catholic faith and American democracy, propels the book’s necessary arguments about inequality and prompts the question: How do taxation and democracy rely on and mutually support each other?   

Income and payroll taxes, and the avoidance of them, take center stage in this book along with the weakened estate tax system and the potential abuse of charitable tax deductions, particularly through donor-advised funds. Madoff balances her opinions of the tax system with a commitment to ensuring that facts, not just public relations successes or failures, guide her book. The Second Estate is more a primer for understanding the federal revenue system than a rigorous analysis of all tax questions, and at that it achieves its goal.

Madoff notes three ways that members of the second estate avoid income and payroll taxes. First, they tend to avoid wage income, earning profits through sales of capital assets, which serves as a helpful reminder that raising income tax rates will not necessarily recoup income from everyone equally.

Second, they use the “buy, borrow, die” strategy, in which a person receives a loan (which does not count as income) and offers stock or another investment property as collateral. This system relies on the “stepped up basis” tax provision at death, a uniquely generous and American tax treatment. As a simple illustrative example: If I buy stock for $1 and sell the stock two years later for $1,000,000, I would pay taxes on the gain of $999,999. However, if I die at the two-year mark and pass the stock on to anyone, I will not have paid any taxes on the increase in value—and neither will they. Goodbye, taxes.

Third, they may inherit wealth, which often counts as untaxed federal income for the recipient. 

This naturally leads into a discussion about what is called the estate, inheritance or death tax, depending on who you ask. Madoff briefly explores the history of this levy from the founding of our country to the present day. Skepticism toward wealth and power being a family birthright served as a motivating principle in the founding of the United States, and this skepticism turned into tax action in the late 1800s and early 1900s, as the Gilded Age minted social, economic and political power not because of merit but because of birth. The industrialist-turned-philanthropist Andrew Carnegie boosted the idea of charitable giving by individuals and heavy estate taxes imposed by the state. 

While the estate tax was modified throughout the 1900s, its end began with President Bill Clinton (underscoring that inefficient tax policy is bipartisan) and accelerated in the 2000s because of changes to the tax code that exempted many estates. In 2000, there were 121,171 estate tax returns filed. In 2021, that number was 6,158.  

At its core, The Second Estate uses precise yet comprehensible prose to express tax issues as both technical and moral in nature. The gift of this book is its embrace of tax questions as not exclusively economic. While written by a law professor, the book is valuable for everyone, whatever one’s familiarity with the tax code.

Addressing every aspect of the broad tax code in one book would be impossible, but a brief exploration of taxes beyond federal income taxes would have helped round out the book. The book too briefly explores the history of the 16th Amendment, which gives Congress the authority to impose a federal income tax and could offer insight into contemporary discussions about the constitutionality of a wealth tax. There is more to say about the exempt organization sector that would have fit nicely into this book. For example, donations that grease the wheels of admission to higher education are still tax-deductible. At the same time, the way some philanthropists, such as Craig Newmark or MacKenzie Scott (who donated $7 billion in 2025 alone), operate deserves more recognition. 

Madoff does not mention artificial intelligence, or the mention is so brief that I missed it. Yet society must address the question of the taxation of artificial intelligence, considering the massive, and mostly untaxed, wealth A.I. has generated for entrepreneurs and shareholders. 

Finally, The Second Estate does not explore the issues that affected tax administration last year, but readers in 2026 will find themselves questioning how the Trump administration’s policies have and will further undermine the tax system—and who exactly benefits from this.  

The Second Estate, like any book, can also be read through the lenses of the Gospel and of Catholic social teaching. Just as in the times of the Gospel, people discuss wealth inequality because it is an issue, and not the other way around. Jesus challenged these structures of inequality and unethical behavior, inviting tax collectors to be part of the kingdom he preached, and Catholic social teaching can lead us to imagine a just tax system. 

Tax policy shows both the virtues and the vanities of the human experience, equal opportunities for grace and sin. The Second Estate forces us to grapple with legality and morality and how tax evasion, even if completely legal, is, like all sin, a separation from God, others and self. 

Government functions because of rights and responsibilities. Yes, we have a right to minimize our taxes, but we also have a responsibility to be honest about income. Yes, we have a right to criticize taxes, but we have a responsibility to pay them. Yes, there is a right to prosecute tax evasion, but there is a responsibility for justice to be impartial and rehabilitative. 

Taxes build democracy and underscore the idea that universal contribution shows collective values. Paying a tax that supports something I hold as immoral, like the death penalty or certain immigration enforcement actions, inspires my engagement in the democratic process. A system that allows certain people to opt out of paying taxes is not a system that shows a universal call to participation and is less like a democracy and more like a collection of fiefdoms.

Finally, the preferential option for the poor and vulnerable certainly calls us to focus on how much revenue is being raised and what is ultimately done with this revenue. Charitable donations are great, and should be widely embraced, whether in the form of money, goods or time. At the same time, charitable donations are not the same thing as taxes. Care for the poor is both an individual and a societal moral responsibility, one to which we must all contribute. 

Crafting a tax code involves balancing tradeoffs: spending versus saving, individual risk versus society-wide stability, equality versus inequality. Everyone should have opinions on tax, guided by data, both quantitative and qualitative. 

As new facts are presented, as economic conditions shift, as nations develop, as certain industries grow and certain industries die, the best tax policy will shift. However, certain bedrock principles, such as taxation being a responsibility of everyone, including the ultra-wealthy, always undergird effective tax systems. The most disturbing question provoked by The Second Estate is how much further America may be from this tax system than we thought. The most hopeful answer is that policy can address, and has addressed, questions of inequality and taxation. 

Don’t think of the current state of taxes as only a technocratic problem. It’s also a moral one. 

This article appears in October 2026.

Robert McCarthy is a graduate of New York University Law School and a former third-grade teacher at Cathedral School of the Annunciation in Stockton, Calif. He also served as an intern at America.