President Donald Trump made several remarks about linking capital gain taxes to inflation in an interview with Bloomberg News. Though the idea was previously floated by his administration and was criticized as a tax cut for the rich, Trump says, “I’m thinking about it.”
Treasury Secretary Steven Mnuchin raised the idea earlier this summer while Larry Kudlow, the White House’s top economic advisor, continues to push the idea forward. President George H.W. Bush considered the idea while in office, but ultimately dropped it altogether.
Those who own assets, including stocks and real estate, would benefit largely from an estimated $100 billion tax cut while others would not be so lucky. Mnuchin told The New York Times back in July that the Treasury was looking at whether it was possible to use regulatory powers to enable the change. However, critics argue Congress would definitely need to approve it.
Indexing to inflation could potentially save money for individuals with multiple assets. Taxpayers could adjust the initial value of an asset for inflation when selling it and by doing so, save money on long-attained assets by reducing the amount of capital gains tax they would normally have to pay.
“There are a lot of people that love it and some people that don’t,” said Trump during his Oval Office interview with Bloomberg News. “But I’m thinking about it very strongly.”
The House is preparing to roll out a new tax bill as well which will outline more tax cuts for next month. Bloomberg reports that Kudlow pushed for capital gains indexing to be included in that legislation according to CNBC.