The plutocrat’s nightmare may be about to come true: A Democratic president and a Democratic Congress could raise taxes on the wealthy, the most horrifying injustice imaginable. Will no one spare a thought for the beleaguered hedge fund managers, pacing through their Hamptons beach houses with anxiety about the future of their marginal tax rates?

Of course, someone will: the entire Republican Party, for whom there is nothing more important than easing the burden of taxation under which the wealthy suffer so greatly.

But President Biden’s latest plan does something important, putting what ought to be a foundational principle of taxation into practice for the first time. Unfortunately, it gets right up to a full realization of that principle, then stops short.

As Bloomberg News first reported, the Biden administration is formulating a plan to pay for their ambitious domestic policy agenda with various tax increases for the wealthy, including raising the top marginal income tax rate back to 39.6 percent (where it was before the 2017 GOP tax cut, which lowered it to 37 percent) and increasing taxes on capital gains.

Let’s focus on the capital gains part, because it gets right to the heart of what’s wrong with our tax system.

Right now, the system treats capital gains — for instance, money you make when you sell a stock — better than money you make from working. The top rate on capital gains is only 20 percent (plus a 3.8 percent Obamacare surcharge for high earners). It’s one of the clearest ways that our tax code has been built by and for the wealthy, who pay the overwhelming majority of capital gains taxes.

Biden’s proposal would treat capital gains just like regular income. If because you’re wealthy you’re being taxed at the 37 percent marginal rate on your income, that would apply to your stock sales too.

So where does this fall short? In two ways. First, it applies only to those with incomes over $1 million a year.

In other words, the principle Biden is working off is that the money you make when your money makes you more money shouldn’t get better treatment than the money you make from working. Which is great! But there’s no reason that shouldn’t apply to everyone. Otherwise, it’s not really a principle; it’s conditional.

What’s stopping him from applying that principle to everyone? The administration hasn’t said so specifically, but it’s pretty clear that it’s running up against his repeated promise not to raise taxes on anyone making less than $400,000 a year.

From a political standpoint, I get it. Republicans are always going to say “Those dastardly Dems want to raise your taxes!” and the administration’s answer is always to repeat their promise not to raise taxes on anyone but the wealthy.

But that means that when Biden decides to make a change like the one he’s proposing to capital gains, it can’t honestly be presented as a fundamental change that puts core ideas of fairness into practice across the board. It’s a tweak, an adjustment, just one of a grab bag of changes that might all be focused on the wealthy, but don’t embody the kind of simple, principle-driven reform we ought to be making to the tax code, especially at a time when we’re rethinking so much about what government does.

I’m not saying implementing Biden’s idea wouldn’t be a big deal; it would be. You can have a big tweak. But it’s still a tweak.

We should also note that this proposal is exactly what Biden proposed when he was running for president, though at the time it was characterized as a modest increase on the wealthy’s taxes compared to proposals from his progressive primary rivals. So he gets points for following through on a campaign promise, even if it was an imperfect one.

The second and related way this idea falls short is that it doesn’t apply to other kinds of income. If you wanted to apply the principle that the kinds of income regular people earn and the kinds of income rich people get should be treated the same, you wouldn’t stop with capital gains. You’d apply it, for instance, to inheritances too.

The estate tax is paid only by a tiny sliver of the super-rich (the first $11.7 million is exempt from a penny of taxes). Biden and other Democrats are considering raising it too, with some proposing a change to the “step-up in basis” rule that would allow less inherited wealth to escape taxation (here’s an explanation). But that too would only apply to inheritances of over $1 million. In other words, another tweak, even if a meaningful one, but not a fundamental change.

Again, I’m not naive about the politics: The administration clearly wants to raise taxes on the wealthy while holding everyone below $400,000 harmless. It’s probably the politically safest route.

But in my fantasy, Biden would say “Starting now, there will be no more tax favors for the rich.” Then he’d put that principle into action — even if it meant a few semi-rich people paid a little more too.

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