The Trump administration hasn’t committed yet to index capital gains to inflation, Treasury Secretary Steven Mnuchin said, even as White House officials continue to pursue the plan for a tax break that would largely benefit the wealthy.
“Right now there’s no commitment to getting it done or not getting it done,” Mnuchin said in an interview Thursday in Chantilly, France, where he was meeting with Group of Seven counterparts. “It’s a policy that has been under consideration and remains under consideration.”
Mnuchin’s ambivalence suggests a divide between Treasury and the White House, where officials are working rapidly to deliver the tax cut ahead of the 2020 election, possibly while bypassing Congress, according to a person familiar with the matter.
The change would likely come in the form of an executive order as soon as September, according to the person, who requested not to be identified because the discussions aren’t public.
Revamping capital gains taxes without congressional approval would likely prompt legal challenges, a concern that reportedly caused former President George H.W. Bush’s administration to drop a similar effort. The prospect of a legal battle is of particular concern in Treasury, according to the person.
Indexing capital gains to inflation would slash tax bills for investors when selling assets such as stock or real estate. The change would adjust the original purchase price so no tax is paid on appreciation tied to inflation.
The top 1% of households by income would receive 86% of the benefit from the change, according to estimates in 2018 by the Penn Wharton Budget Model. The policy may reduce federal tax revenue by $102 billion over a decade, the model found.
Those figures have prompted criticism by Democrats, who say the White House is overreaching its authority to cut taxes for the wealthy.
This article was provided by Bloomberg News.