After the Trump administration floated a proposal to index capital gains taxes for inflation, it was hard to spin it as anything less than a gift to the super rich. Little wonder:
Two-thirds of the savings from such a move would go to the top one-tenth of 1 percent of U.S. taxpayers. The public reaction was overwhelmingly negative.
Former Trump economic adviser Gary Cohn declared the idea dead on arrival, and the administration has given little real indication it’s pursuing the idea further. That’s likely for the best, but we perhaps shouldn’t let it go so quickly. Trump’s proposal highlights one of the deeper problems in the tax code. Congress should fix it.
Rallying around to stir more hyperbole, in a letter sent to Steve “Foreclosure King” Mnuchin on Monday, the Lyin’ Senator from Texas urged the Treasury Secretary to use his “authority” to index capital gains to inflation, a move that would almost exclusively benefit the mega-rich.
Claiming, falsely, that the United States economy “has experienced historic levels of growth as a result of Congress and the current administration’s policies such as the Tax Cuts and Jobs Act,” Cruz insists that it is now crucial for the Treasury Department to adjust capital gains for inflation “so that everyday Americans can continue to enjoy better lives and livelihoods.” And by “everyday Americans,” he of course means (but doesn’t say) the spectacularly wealthy.
Missing from Cruz’s call for Mnuchin to use “executive authority” to end this “unfair” treatment of taxpayers, which was signed by 20 of his Republican colleagues, is the fact that, according to the Penn Wharton Budget model, a whopping 86% of the benefit of indexing capital gains to inflation would go to the 1 percent (and reduce annual tax revenue by an estimated $102 billion over a decade).
