“It is a pro-growth, pro-investment policy decision, because what it would do is encourage people … to invest more capital in businesses,” Cruz said at an Americans for Tax Reform event in early April.
A House bill may be introduced soon, possibly sponsored by Ways and Means Committee Chairman Kevin Brady (R., Texas), who co-sponsored a bill to index capital gains to inflation in 2007 when it was introduced by Mike Pence, at the time an Indiana congressman.
The odds for legislation that would create a capital gains inflation index, however, are a long shot in a midterm election year where it would become a political football for Democrats claiming it benefits the wealthy.
The Penn Wharton Budget Model, a nonpartisan initiative that looks at the economic impact of public policy, recently estimated that indexing capital gains to inflation would lower the government’s tax revenues by some $100 billion over 10 years. But advocates of indexing say this money belongs to Americans, who should be able to reinvest it in businesses, job creation and homes.