President Trump is reportedly weighing whether or not to take executive action to reduce capital gains taxes.
While the president has not nailed down his position on possibly acting to index capital gains to inflation, economic advisers are expected to meet with him on Wednesday to discuss the possibility, according to a report in The Wall Street Journal citing people familiar with the subject.
Trump’s aides will reportedly be advising the president on legal ramifications and any regulations affected by actions that could reduce the amount of investment gains subject to taxes.
“We’ve been talking about indexing for a long time,” the president said last month. “And many people like indexing and it could be done very simply.”
However, he soon appeared to change his mind.
“I’m not looking at doing indexing. And I haven’t been seriously looking at it,” he said. “It’s not something I love.”
Trump worried that cutting capital gains taxes would be seen as “somewhat elitist” as it would benefit the wealthy.
“I’ve studied indexing for a long time. I think it will be perceived, if I do it, as somewhat elitist,” he told reporters. “I want taxes for the — the middle class, the workers, the people that work so hard … I think indexing is really, probably better for the upper-income groups.”
“I believe I could [do it]. But I’d need a letter from the attorney general,” he added.
Days later, the president retweeted posts that linked to an op-ed from Americans for Tax Reform President Grover Norquist and to Texas Sen. Ted Cruz’ support of indexing capital gains.
An idea liked by many? https://t.co/Ev9uqa1hoj
— Donald J. Trump (@realDonaldTrump) August 30, 2019
Advocates of the move include top White House economist Larry Kudlow, Vice President Mike Pence, and Office of Management and Budget Acting Director Russ Vought. Supporters believe it could help to boost the economy and have been pressing the president to move ahead with the plan.
“This is an issue for 2020 because voters want to see strong economic growth and more money in their pockets,” Club for Growth President David McIntosh wrote in a memo sent to allies of the conservative group this week. “If President Trump takes executive action to make the change in the near-term, the benefits to U.S. economy will be evident and he will receive the credit.”
Democrats, on the other hand, have been opposed to the idea, arguing that Trump does not have the executive action authority and that the move will ultimately only benefit the very wealthy.
According to The Wall Street Journal:
To make the change unilaterally, the administration would likely need to reverse a 1992 opinion by the Justice Department’s Office of Legal Counsel that concluded that Treasury lacked the authority to define the word “cost” to include inflationary gains. The attorney general at the time, William Barr, is again the attorney general.
Two administration officials said it is unclear whether the Justice Department will alter the opinion, but the department has been involved in the discussions about the proposal. A Justice Department spokeswoman declined to comment.
But with the U.S. locked in a trade war with China, and the president pointing a finger at the Federal Reserve for suppressing the U.S. economy, supporters of the idea see it as a winning strategy for Americans.
“The benefit of this policy change will extend to most Americans, not just millionaires and billionaires as the Socialist Left would lead you to believe,” McIntosh wrote, noting a resulting “robust benefit to millions of Americans that own land, a home, a 401(k), stocks, bonds, and those enrolled in the Federal Employees Retirement System (FERS).”
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