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Trump Wants To Index Capital Gains Taxes For Inflation, Which Will Boost The Economy

Trump Wants To Index Capital Gains Taxes For Inflation, Which Will Boost The Economy
Photo Credit: spac0548 by NOAA Photo Library is licensed under Flickr CC BY 2.0
It’s official. President Trump wants to index capital gains taxes for inflation.  This would be a big stimulus boost for the U.S. economy immediately and over time and could get us back to 3% to 4% growth by liberating potentially hundreds of billions of dollars for new capital investment.  My sources tell me that the president has told his White House team that if he can get his legal counsel to give him a ruling that he has the right to make this change administratively, he will do exactly that.

Traditionally, a gain has been defined as the difference between the price that an asset has been bought at and the price it is sold at.  The issue is whether these gains should be adjusted for the inflation rate over the time period the asset was owned.  In other words, should the gain be defined as the change in the cost of living over the period.

If you bought a stock 10 years ago for $1,000 and over that time the inflation rate was, say 20 percent, if you sold it for $1,200 is that $200 a genuine gain to the shareholder?

In an ideal world, Congress would define a gain over for an asset held over a long period of time as taking into account inflation.  This would reward risk taking and capital investment by reducing the “real” capital gains tax.

By the way, Congress wants to give itself a cost-of-living raise each year, a measure supported by such leading liberals as Alexandria Ocasio-Cortez. Why not a similar deal for those 100 million Americans or so who own stocks?

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Americans for Fair Taxation® is a 501(c)(4) non-profit, non-partisan grassroots organization solely dedicated to replacing the current income tax system with a fair, simple and transparent national consumption tax – the FAIRtax® Plan. We rely entirely on contributions from concerned citizens like you who want a tax system that will generate jobs and stimulate the economy. Welcome to the FAIRtax team!

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