The Trump tax reform plan calls for eliminating the estate tax. That’s a gift to the wealthiest Americans, who are virtually the only ones who pay it. But what makes this worse is something the plan doesn’t mention: President Trump and Congressional Republicans have also proposed eliminating the "stepped-up basis" on capital gains, which could amount to a new death tax on the middle class.

Strangely, the repeal of the estate tax is being sold as a populist agenda. “A lot of families go through hell because of the death tax,” Trump said on the campaign trail. In fact, only 0.2 percent of Americans pay estate tax according to Congress's Joint Committee on Taxation. Nearly all those who do are among the wealthiest 5 percent of Americans, and the richest 0.1 percent of income earners pay 27 percent of the total tax.

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To drum up support, Trump and Congressional Republicans promote the myth that the estate tax drives small firms and family farms “out of business.” House Ways & Means Chairman Kevin Brady Kevin Patrick BradyTrump order on drug prices faces long road to finish line On The Money: US deficit hits trillion amid pandemic | McConnell: Chance for relief deal 'doesn't look that good' | House employees won't have payroll taxes deferred Top Republican offers bill to create payroll tax holiday MORE and Senate Finance Chairman Orrin Hatch Orrin Grant HatchBottom line Bottom line Senate GOP divided over whether they'd fill Supreme Court vacancy MORE have perpetuated this fiction.

The facts belie their claim. The Tax Policy Center found that in 2013, only 20 small businesses and farms paid any estate tax. It estimates in 2017, maybe 50 small farms and closely held businesses will pay any such tax. They represent only 1 percent of all taxable estate tax returns.

Kasich: Trump's tax plan shows "how pathetic things get in this town" https://t.co/2boLfTQ6Wa pic.twitter.com/9LBFBlfEaI — The Hill (@thehill) April 28, 2017

If it weren’t repealed, the other 99 percent of estate tax returns would generate about $275 billion over the next decade, according to CBO estimates — more than the combined cost of funding the Food and Drug Administration, the Centers for Disease Control, and the Environmental Protection Agency.

It gets worse: Trump has suggested raising revenue by by taxing unrealized capital gains upon death, which would potentially shift a significant portion of the "death tax" burden to the middle class.

Under current tax law, unrealized capital gains are not taxed, because assets in an estate are valued at their market value at the date of death (or optionally one year after). In other words, the estate and the heirs receive a “stepped up basis” upon the death of their parents.

But Trump has proposed taxing unrealized capital gains upon death, whether or not the assets are sold, which could hit many of millions of middle class households.

To be fair, Trump has suggested the possibility of not taxing the first $10 million in capital gains. Such an exemption would substantially eliminate the burden on the middle class. But it is far from a sure thing.

Trump Treasury secretary can't guarantee middle class won't pay more under tax reform https://t.co/HxrlxC6gyg pic.twitter.com/kR0aTGWxN0 — The Hill (@thehill) April 27, 2017

According to InvestmentNews, given all the uncertainty, estate planners don't know what to tell their clients. AccountingWEB recently noted that, “Trump has previously proposed a $10 million exemption from the step up in basis rule for farms and small businesses. Other exceptions (e.g., a $1 million exemption) could be included in any final legislation that Congress passes.”

Would assets other than farms and small businesses get the exemption? That's an unknown. But nearly all the rhetoric about the unfair death tax has been about burdening farms and small business.

Trump also said he might not tax capital gains until the assets are sold and the gains are realized by the estate or the heirs. Would any exemption be available then? We just don’t know, and the new White House tax plan doesn’t offer clarification. Not taxing gains until they’re realized would only postpone the hit to the middle class, not eliminate it.

Suppose parents have been frugal, saved $100,000 over their lives and invested it in stocks worth $500,000 when they die. Under current law, the stocks will be valued at $500,000 upon death, so the estate or the children can sell them for $500,000 without paying a tax.

But if there’s no applicable exemption, the estate and the children would pay a tax on the difference between $100,000 (the original cost) and $500,000 (the value at death). The estate of anyone who owns property that has increased in value would be subject to such a tax.

That would suck up vast amounts of wealth from the middle class. The very wealthy would also be subject to the same tax on unrealized gains, but for them that loss would be outweighed by what they gained from repealing the estate tax.

If Trump and Congress decide to eliminate the stepped up basis, they must exempt the first $10 million of capital gains. That would effectively avoid imposing a new death tax on the middle class, and retain part of the estate tax on the wealthiest Americans. After all, having run on a platform to cut middle class taxes, how could the president and Republicans in Congress champion policies that widen the immoral wealth inequality in our country?

These are the types of substantive issues Democrats should focus on. They must better explain how proposed tax cuts and fiscal policies would hurt the middle class and threaten the safety net including Social Security, Medicare, Medicaid, unemployment insurance, education subsidies and food stamps. Then, if they want their message to resonate, they need to come up with more constructive proposals of their own.

Neil Baron advised the SEC and Congressional staff on rating agency reform. He represented Standard & Poor’s from 1968 to 1989, was Vice Chairman and General Counsel of Fitch Ratings from 1989 to 1998, and was on the board of Assured Guaranty for a decade.

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