President Biden needs tax revenue to pay for his Build Back Better plan, and he wants to raise most of it by raising taxes on corporations and the rich—both of which got large tax cuts under President Trump. But congressional Democrats are already balking at the White House’s tax-hike proposals. The House Ways and Means draft bill falls short of the Biden tax proposals in several ways, but thankfully not all.

The draft accepts the global minimum corporate tax rate that Treasury Secretary Janet Yellen painfully and successfully...

President Biden speaks on his spending package in Crystal Lake, Ill., July 7.

Photo: saul loeb/Agence France-Presse/Getty Images

President Biden needs tax revenue to pay for his Build Back Better plan, and he wants to raise most of it by raising taxes on corporations and the rich—both of which got large tax cuts under President Trump. But congressional Democrats are already balking at the White House’s tax-hike proposals. The House Ways and Means draft bill falls short of the Biden tax proposals in several ways, but thankfully not all.

The draft accepts the global minimum corporate tax rate that Treasury Secretary Janet Yellen painfully and successfully negotiated with 130 countries—yes, 130. It would be a shame to see Congress pull the rug out from under Ms. Yellen’s achievement and at least so far, it hasn’t.

Now the bad news. I want to spotlight a seemingly wonky tax provision that is fundamental to alleviating inequality in the U.S. and that the committee didn’t change in its draft bill: the treatment of accrued capital gains at death.

In June, ProPublica published leaked tax records of rich Americans that showed many of them paid little or nothing in tax. In some years, Jeff Bezos, Elon Musk, Michael Bloomberg and others paid no federal income tax at all. How is that possible?

One primary reason: The U.S. doesn’t tax capital gains until the gains are realized. Mr. Bezos’ huge holdings of Amazon stock rose from being worth close to zero in 1994 to about $200 billion today, and if he hadn’t sold any, he wouldn’t owe any tax on that gain. (He has sold some puny—for him—amounts.)

If Mr. Bezos continues to hold his stock until he dies—when it will probably be worth far more than $200 billion—the entire tax liability on the enormous capital gain will disappear. If he never sells, most of Mr. Bezos’ huge lifetime income will never be taxed.

To be sure, billionaires aren’t acting nefariously by using tax laws Congress has made. Nor should we condemn them for accumulating vast fortunes. After all, they did it by creating innovative products and services that people want. They deserve applause. But must we also exempt them from taxation?

There is a simple, if partial, solution, proposed by Mr. Biden. Among economists, it goes by the wonky name “constructive realization of capital gains at death.” Under this policy, taxes on accrued capital gains are deferred until death, just as they are now. But the long-delayed, and therefore greatly reduced, tax bill would be due at death—before heirs inherit the assets.

This policy wouldn’t place a heavy burden on accumulation of wealth. I find it difficult to understand how anyone can oppose it. Yet Ways and Means apparently does.

One objection is that taxing gains at death could force heirs to sell the family farm to pay the tax bill. That is as red a herring as you will ever see. The first roughly $11.7 million of an estate can be passed on to heirs tax-free. If an estate is first passed to a surviving spouse, and then to other heirs upon that spouse’s death, the exemption effectively doubles. That certainly covers most family farms. Further, if heirs are land-rich but cash-poor, the proposal offers a 15-year fixed-rate payment plan. Are we really supposed to believe that someone who inherits a large fortune can’t scrape together 1/15th of the tax bill each year?

There is another egregious and unjustifiable tax policy that favors the rich: the so-called carried interest provision. Mr. Biden wants to end it, but the Ways and Means Committee wants only to trim by requiring a longer holding period.

General partners of private-equity funds are paid handsomely for their work. One common payment formula is called “2 and 20,” meaning that fund managers receive 2% of the invested capital as a management fee plus a 20% share in the fund’s gains in excess of some benchmark. Forget the 20%; that is capitalism. The 2%, called carried interest, is a management fee, analogous to a very high salary earned by the fund’s managers. Yet the tax code treats it as a long-term capital gain.

Why, you might ask, do we single out private-equity managers for favorable tax treatment instead of, say, nurses or teachers? It is a good question without a good answer. Mr. Biden thinks it is wrong. Don’t you?

Mr. Blinder, a professor of economics and public affairs at Princeton, served as vice chairman of the Federal Reserve, 1994-96.

Journal Editorial Report: Paul Gigot interviews Rep. Kevin Brady of the Ways and Means Committee. Image: Chip Somodevilla/Getty Images The Wall Street Journal Interactive Edition