The New York Times is reporting that the Trump administration is looking into changing the rules for the taxing of capital gains, a move that would create a $100 billion windfall that would mainly benefit the top 0.1 percent of the tax bracket. “Steven Mnuchin, the Treasury secretary, said in an interview on the sidelines of the Group of 20 summit meeting in Argentina this month 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,” The Times observes.
The most notable aspects of this policy proposal are that it would be a major change in taxation done without legislation. As such, it would be open to a court challenge for overstepping congressional rights to set tax policy.
The other significant fact is that this tax cut would be hugely regressive. “Independent analyses suggest that more than 97 percent of the benefits of indexing capital gains for inflation would go to the top 10 percent of income earners in America,” The Times notes. “Nearly two-thirds of the benefits would go to the super wealthy—the top 0.1 percent of American income earners.”
The tax cut the Trump administration passed last year already polls badly since it is seen as benefitting the rich. Going into the mid-term elections, the Trump administration might be handing Democrats another issue by pushing for a further regressive tax cut without even getting congressional approval.