specsaregood
08-30-2018, 06:37 PM
Trump Says He’s Thinking About Indexing Capital Gains to Inflation
(Bloomberg) -- President Donald Trump said he’s considering a capital gains tax break by issuing a regulation that would index gains to inflation.
“There are a lot of people that love it and some people that don’t,” Trump said Thursday in an Oval Office interview with Bloomberg News. “But I’m thinking about it very strongly.”
The capital gains change would slash tax bills for investors when selling assets such as stock or real estate by adjusting the original purchase price for inflation. The change has been a longtime goal of Trump’s top economic adviser, Larry Kudlow, who says the policy would spur job creation and economic growth because people wouldn’t be taxed on what he’s called “phantom income.”
The issue has gained attention since Treasury Secretary Steven Mnuchin said in July that his department was looking at whether it could sidestep Congress and issue a rule to allow capital gains to be indexed to inflation.
Still, the move is likely to face legal challenges from critics who say it gives an unfair advantage to investment income and from those who say it needs congressional approval. It could also alienate some segments of Trump’s base, as it would mostly benefit top earners who have investment income. More than 63 percent of the benefit would go to the top 0.1 percent of taxpayers -- and the tab would be $102 billion over the next decade, according to estimates by the Penn Wharton Budget Model.
The inflation adjustment would amount to a several percentage point tax cut for investors, depending on the type of asset and how long it’s held, according to estimates from the non-partisan Congressional Research Service. Corporate stock with dividends held for 10 years would be subject to an effective tax rate of 24.3 percent under current law. That same holding indexed to inflation would be subject to a 21.4 percent tax rate, the group said.
https://www.sfgate.com/business/article/Trump-Says-Thinking-About-Indexing-Capital-Gains-13194688.php
(Bloomberg) -- President Donald Trump said he’s considering a capital gains tax break by issuing a regulation that would index gains to inflation.
“There are a lot of people that love it and some people that don’t,” Trump said Thursday in an Oval Office interview with Bloomberg News. “But I’m thinking about it very strongly.”
The capital gains change would slash tax bills for investors when selling assets such as stock or real estate by adjusting the original purchase price for inflation. The change has been a longtime goal of Trump’s top economic adviser, Larry Kudlow, who says the policy would spur job creation and economic growth because people wouldn’t be taxed on what he’s called “phantom income.”
The issue has gained attention since Treasury Secretary Steven Mnuchin said in July that his department was looking at whether it could sidestep Congress and issue a rule to allow capital gains to be indexed to inflation.
Still, the move is likely to face legal challenges from critics who say it gives an unfair advantage to investment income and from those who say it needs congressional approval. It could also alienate some segments of Trump’s base, as it would mostly benefit top earners who have investment income. More than 63 percent of the benefit would go to the top 0.1 percent of taxpayers -- and the tab would be $102 billion over the next decade, according to estimates by the Penn Wharton Budget Model.
The inflation adjustment would amount to a several percentage point tax cut for investors, depending on the type of asset and how long it’s held, according to estimates from the non-partisan Congressional Research Service. Corporate stock with dividends held for 10 years would be subject to an effective tax rate of 24.3 percent under current law. That same holding indexed to inflation would be subject to a 21.4 percent tax rate, the group said.
https://www.sfgate.com/business/article/Trump-Says-Thinking-About-Indexing-Capital-Gains-13194688.php