August 2, 2018
As if the Tax Cuts and Jobs Act did not provide enough payback to President Donald Trump and his elite donors in 2018; the POTUS now is contemplating a unilateral move that would cut taxes, mainly for rich people, by $100 billion.
Specifically, the administration is considering bypassing Congress in an effort to cut capital gains taxes—a gambit that many say would not be lawful; but, like the earlier act, would overwhelmingly benefit the wealthy.
Indeed, The New York Times reported on July 30, that Treasury Secretary Steven Mnuchin had said last week at the Group of 20 (G20) summit in Argentina that his department was “studying whether it could use its regulatory powers to allow Americans to account for inflation in determining capital gains tax liabilities.”
Mnuchin noted that the Treasury Department could change the definition of “cost” for calculating capital gains, the Times said—thereby, enabling taxpayers to adjust the initial value of an asset, such as a home or a share of stock, for inflation when it sells.
As an example, the Times said, if a high earner spent $100,000 on stock in 1980 , and sold it for $1 million today, he or she would owe taxes on $900,000. But if the original purchase price was adjusted for inflation—as Mnuchin and Trump are considering— it would be about $300,000, reducing his or her taxable “gain” to $700,000. That would save the investor $40,000.
If it can’t get done through a legislation process, we will look at what tools at Treasury we have to do it on our own and we’ll consider that,” Mnuchin told the Times, emphasizing that he had not concluded whether the Treasury Department had the authority to act alone.”
As the news hit the streets, Democrats pushed back. Senator Elizabeth Warren (D-Massachusetts) took to Twitter to voice her disgust, saying “@realDonaldTrump wants to go around Congress & hand $100 billion to his rich buddies on top of $1.5 trillion he gave away to billionaires & big corporations last year. DC works great if you’re rich & powerful. How about a gov’t that works for everyone?
An NBC News/Wall Street Journal poll fielded in April found that the Tax Cuts and Jobs Act already had lost its luster among American voters. Just 27% of the electorate called it a good idea, down from 30% in January. A 36% plurality called it a bad idea, while the rest had no opinion.
Research contact: @mmurrarypolitics