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  • Writer's pictureAIM Team

Conservatives eye new tax cut for capital gains

Conservatives are making a push to cut taxes on capital gains as a follow-up to the tax-cut measure President Trump signed into law last year.

Republican lawmakers and prominent conservative leaders such as Grover Norquist say they want capital gains to be indexed to inflation, saying it would give the economy a boost. They are pursuing both legislation and regulatory action in an effort to achieve that goal.

It’s unclear when or if it will happen, but conservatives are bullish about the possibility of a unilateral move by the Trump administration. They feel the odds have been bolstered by Larry Kudlow’s entry into the administration as National Economic Council director.

“It would be phenomenal for the economy,” Norquist said.

Currently, people pay capital gains taxes on the difference between the cost of purchasing an asset and the amount for which it was sold. But conservatives want to change that, so that people only pay taxes on the difference between what they paid for the investment plus inflation and the amount for which the investment sold.

It’s an issue of fairness,” said Andy Roth, vice president of government affairs at the Club for Growth. “There’s currently an injustice in the tax code that forces people to pay taxes on income that did not occur.”

Conservatives say that indexing capital gains to inflation would unleash more capital investment and increase wages, household net worth and returns to shareholders.

“It benefits rich, poor, middle class, everybody,” said Ryan Ellis, a senior tax adviser for the Family Business Coalition.



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