An article from The New York Times has reported that Trump’s administration is thinking about acting unilaterally to implement a 100 billion dollar tax break that will hugely benefit those who are wealthy.
Recently, during a meeting with the G-20 in Argentina, Steven Mnuchin, Treasury Secretary, said that if the administration can’t accomplish the tax cut in Congress, then it will “look at what tools” they need to make the move on its own.
“If it can’t get done through a legislation process, we will look at what tools at Treasury we have to do it on our own and we’ll consider that,” Mnuchin declared. “We are studying that internally, and we are also studying the economic costs and the impact on growth.”
Conservatives want to decrease people’s capital gains taxes through indexing capital gains to inflation. They think this could build off the tax-break law Trump approved last year, and they claim that it would help the economy because it increases incentives for taxpayers to invest in new things.
Under current legislation, capital gains taxes are paid on the difference between how much an investment was bought for and how much it sold was sold for. Instead, Republicans want capital gains taxes to be paid just on the difference between how much the investment was purchased for, adding inflation and how much the investment was sold for.
Devin Nunes, Representative of California, and Ted Cruz, Senator of Texas, introduced a bill that would index capital gains to inflation. There’s been interest in the tax break being including in a second tax cut package that the House will vote on in the fall. However, it wasn’t mentioned in the “Tax Cuts 2.0” outline that Kevin Brady, Chairman of the House Ways and Means Committee, published this past week.
Democrats are against indexing capital gains due to the fact that it would increase the deficit and benefit the wealthy hugely. A Penn-Wharton Budget Model analysis reveals that, over ten years, it would cost around 100 billion dollars to index capital gains, and individuals with the highest 1 percent of income would receive 86 percent of the benefit.