Forty-two Democratic senators are urging the Trump administration against taking unilateral action to cut capital gains taxes after a group of Senate Republicans last week pressed the administration to do so.
“This unilateral move would almost exclusively benefit the wealthiest Americans, add to the ballooning federal deficit, further complicate the tax code, and ignore longstanding Justice Department policy,” the Democrats wrote in a letter Wednesday to Treasury Secretary Steven MnuchinSteven Terner MnuchinTrump to hold Hamptons fundraisers; top ticket is 0K: report China stabilizes the yuan a day after being labeled a currency manipulator China warns of financial chaos after US labels it a currency manipulator MORE.
The Trump administration has been considering executive action to reduce capital gains taxes by indexing capital gains to inflation, reducing the amount of investment gains that are subject to taxes.
Twenty-one GOP senators sent a letter to Mnuchin last week urging him to move to index capital gains, arguing that doing so would build on the economic growth seen following the enactment of Trump’s 2017 tax-cut law. The move also has the strong support from conservative groups, including Grover Norquist’s Americans for Tax Reform.
But Democrats, who all opposed the 2017 tax law, argued in their letter Wednesday that indexing capital gains would exacerbate the fact that the 2017 law is not paying for itself. The Democrats cited an analysis from the Penn-Wharton Budget Model that found that indexing capital gains would cost about $100 billion over a decade and predominantly benefit those in the top 1 percent of income.
The Democrats also said that “the proposal would do little to nothing to boost the economy as it would provide a windfall for existing capital assets rather than incentivize new investment.”
Additionally, the Democrats argue that Treasury doesn’t have the authority to index capital gains by regulation. The senators said they support a 1992 Justice Department memo that concluded that capital gains couldn’t be indexed by regulation, and they noted that Congress has considered but never enacted proposals to index capital gains.
“A major policy change like this one should be considered by Congress through regular order, where it can be weighed against competing priorities, like upgrading our failing national infrastructure, investing in health care or shoring up Social Security,” the Democratic senators wrote.
Signers of the letter included Senate Finance Committee ranking member Ron WydenRonald (Ron) Lee WydenConservatives buck Trump over worries of ‘socialist’ drug pricing Interior took notes from FBI while developing controversial FOIA policy Trump casts uncertainty over top intelligence role MORE (D-Ore.), Senate Banking Committee ranking member Sherrod BrownSherrod Campbell BrownSherrod Brown now says he’ll join Trump during Dayton trip Sherrod Brown says he has no plans to meet with Trump during Dayton visit Democrats point to Trump rhetoric on immigration in wake of two mass shootings MORE (D-Ohio), Senate Minority Leader Charles SchumerCharles (Chuck) Ellis SchumerTrump’s Nixon-to-China moment on guns Schumer, GOP Rep. King urge McConnell to give background check bill a vote Pelosi says House recess could be cut short if Senate passes background checks bill MORE (D-N.Y.) and every Democratic senator who is running for president.
House Ways and Means Committee Chairman Richard NealRichard Edmund NealJustice Democrats endorses two progressives challenging Democratic incumbents Judge temporarily blocks NY from sharing Trump tax returns Democratic chairman pens Wash Post op-ed on his Trump tax return request MORE (D-Mass.) also said in a statement last week that he strongly opposes any potential executive action to index capital gains to inflation.
Senate Finance Committee Chairman Chuck GrassleyCharles (Chuck) Ernest GrassleyConservatives buck Trump over worries of ‘socialist’ drug pricing Judiciary Democrats go after Kavanaugh’s White House records FARA should apply to Confucius Institutes MORE (R-Iowa) said last week that he’s not going to say whether he thinks the administration should index capital gains unilaterally until the administration determines that it has the legal authority to do so.