Connect with us

Politics

Trump $100 billion tax cut through capital gains inflation index plan

Published

on



paul ryan donad trump kevin brady
From
left, Speaker of the House Paul Ryan, President Donald Trump, and
Rep. Kevin Brady

Evan Vucci/AP
Images



  • President Donald Trump is considering a plan to allow
    investors to index capital gains taxes to inflation, according
    to a new report.
  • This would result in a roughly $100 billion tax cut
    over the next 10 years, with much of the benefit going to
    wealthier Americans..
  • The Trump administration is considering circumventing
    Congress to implement the plan, which would be legally
    dubious.

President Donald Trump is mulling a plan to go around Congress
and implement a technical tweak to the tax code that would result
in a nearly $100 billion tax cut, according to a new report.

The
New York Times reported Monday
that the Trump administration
could adjust rules around capital gains taxes, allowing investors
to adjust the value of their investments for inflation. Such a
move would result in a tax cut of roughly $100 billion over the
next 10 years:

  • Under current rules, an asset was bought in 2000 for $1
    million and sold for $5 million today, the investor would be
    taxed on the $4 million difference.
  • But under Trump’s plan, the original value of the asset would
    be adjusted for inflation.
  • For tax purposes, the value of the purchase in 2000 would be
    adjusted to just over $1.4 million, meaning the taxable amount
    would be $400,000 less than under current rules.

The plan would overwhelmingly benefit wealthier Americans.
According to
the Penn-Wharton Budget Model
, 97.5% of the $102 billion tax
decrease over the next 10 years would go to the top 10% of income
earners in the US, 86% of the total would go to the top 1%, and
63% of the total benefit would go to just the top 0.1% of income
earners.

Pegging capital gains to inflation has been a long-term goal for
Republicans but was not a component of their massive tax bill
that was passed last December. GOP lawmakers and tax-reduction
advocates have argued that the cut would incentivize increased
investment and result in an economic boost.

Given the difficulty facing any legislative change to the rule,
Trump’s plan would instead facilitate the change through an
adjustment of Treasury Department rules.

Such a move would likely draw a legal challenge, as it would
reinterpreting the idea of “cost” under the Revenue Act of 1918.
According to the Times, President George HW Bush’s administration
considered a similar plan in 1992 but decided there were no legal grounds to
support the shift
without new legislation.

Continue Reading
Advertisement Find your dream job

Trending