President Trump is apparently still considering a plan to cut capital-gains taxes. The Wall Street Journal’s Andrew Restuccia and Kate Davidson report that Trump was set to discuss with his economic advisers on Wednesday the idea of bypassing Congress to allow gains to be indexed to inflation.
“The president’s advisers will discuss the legal and regulatory issues associated with the move, and present the president with a range of broader options about cutting taxes,” Restuccia and Davidson write.
Indexing capital gains to inflation would reduce federal revenues by about $100 billion over 10 years, according to estimates from the Penn-Wharton Budget Model. The vast majority of the benefits would flow to the top 1% of income earners, according to that analysis, which also found that the tax cut would generate “roughly zero net additional economic growth during the 10-year budget window.”
Trump had seemingly dismissed the capital-gains tax cut a few weeks ago, telling reporters that he wasn’t looking to do it. “I think it will be perceived, if I do it, as somewhat elitist,” he said. “I want tax cuts for the middle class, the workers.” But he raised the issue again a week later on Twitter.
The National Economic Council, the Council of Economic Advisers, the Office of Management and Budget and the Treasury Department are reportedly all still looking at the tax cut.
The president’s Wednesday meeting was also expected to cover a broader “Tax Cuts 2.0” package that the administration hopes to eventually pass through Congress. “Exactly what would be included in such a package couldn’t be determined, though Republicans have at varying times said it would extend pieces of the 2017 tax law that are scheduled to expire, and hinted at a vague new middle-class tax cut that the administration hasn’t yet detailed,” the Journal reported.
The bottom line: With the House under Democratic control, another round of tax cuts is highly unlikely, barring a full-blown economic meltdown. And if Trump decides to push the envelope on capital-gains indexing, he’s sure to face intense political and legal blowback. Trump has made clear he’s aware of those challenges … so maybe it says something that, despite all that, the idea isn’t dead.