Several offices within the Trump administration are studying a policy that would lower taxes for investments such as stocks and real estate, according to a senior administration official.
The Treasury Department, the White House Office of Management and Budget, and the Council of Economic Advisers are studying the possibility of indexing capital gains to account for inflation, according to the senior official.
The review includes a look at the distribution table for savings to investigate whether the reform would disproportionately benefit wealthy people who are able to invest more of their money.
President Trump has publicly vacillated on the option as he mulls tax break options to invigorate the economy ahead of his reelection campaign and to offset a mounting trade war with China.
On Friday, Trump tweeted a link to an op-ed in favor of indexing capital gains written by Texas Republican Sen. Ted Cruz and Americans for Tax Reform President Grover Norquist.
“An idea liked by many?” Trump wrote.
An idea liked by many? https://t.co/Ev9uqa1hoj
— Donald J. Trump (@realDonaldTrump) August 30, 2019
The idea is one of the only major tax reforms that might be achieved without Congress. A payroll tax cut or redistribution of tariff proceeds have also been considered, but either would be tough sells in the Democrat-controlled House.
It’s unclear if the Justice Department is currently reviewing a possible indexing of capital gains. A 1992 opinion from the department’s Office of Legal Counsel says that the Treasury Department does not have the authority to make the change via regulation.
The White House and Justice Department did not immediately respond to requests for comment on whether the OLC is reviewing the matter.
Although Trump wrote open-mindedly on Twitter about the idea, about a week beforehand he told reporters he was skeptical because of its likely skewed impact.
“I’ve studied indexing for a long time. I think it will be perceived, if I do it, as somewhat elitist,” Trump said. “I want taxes for the — the middle class, the workers, the people that work so hard … I think indexing is really, probably better for the upper-income groups.”
Trump added: “I believe I could [do it]. But I’d need a letter from the attorney general.”
Many administration officials have supported the idea, including top White House economist Larry Kudlow, Vice President Mike Pence, and Office of Management and Budget Acting Director Russ Vought. Treasury Secretary Steven Mnuchin has seemed less eager.
