The Register Citizen (Torrington, CT)
Capital gains tax break being considered by Trump officials
The Trump administration is studying the idea of implementing a big tax break for wealthy Americans by reducing the taxes levied on capital gains, but no decision has been made yet on whether to proceed.
Administration officials said Tuesday that Treasury Secretary Steven Mnuchin prefers deferring to Congress. But he does have his department studying the economic impact of such a change and the legality of proceeding without congressional approval.
The change would involve taxing capital gains — profits on investments such as stocks or real estate — after taking into account inflation, which would lower the tax bite. Capital gains taxes are currently determined by subtracting the original price of an asset from the price at which it was sold and taxing the difference without adjusting for inflation.
Indexing capital gains for inflation would reduce federal revenue by about $102 billion over a decade, according to the Penn-Wharton Budget Model. The Congressional Research Service has estimated that about 90 percent of the benefits would go to the top 1 percent of households.
The New York Times and the Washington Post reported Tuesday that the proposal was under active consideration by the administration. It has long been supported by Larry Kudlow, head of the president's National Economic Council. Mnuchin, however, has signaled caution in approaching the idea.
Republicans, led by House Ways and Means Committee Chairman Kevin Brady is leading an effort to extend and expand the $1.5 trillion tax cut President Donald Trump pushed through Congress last December.
“If it can't get done through a legislative process, we will look at what tools at Treasury we have to do it on our own and we'll consider that,” Mnuchin said in an interview with the Times in which he emphasized that he has not yet concluded that Treasury has the authority to act alone.
“We are studying that internally, and we are also studying the economic costs and the impact on growth,” Mnuchin told the Times.
Democrats, however, vowed to oppose the change to how capital gains are taxed.
“Once again, Republicans have exposed the true priorities of their tax scam: billions in tax breaks for the wealthiest at the expense of everyone else,” House Democratic Leader Nancy Pelosi said in a statement. “American families are drowning under the weight of stagnant wages, higher health costs and soaring prescription drug costs, but the GOP continues to pick their pockets to give more handouts to the wealthiest 1 percent.”