In a recent tweet, President Donald Trump asked whether indexing capital gains taxes to inflation, an idea he has previously supported, is an “idea liked by many.”
There is significant support for indexing capital gains taxes to inflation including almost two dozen Senators, the Vice President, the President’s Chief Economic Advisor, conservative leaders, and business groups.
Indexing capital gains taxes to inflation would also benefit Americans across the country from workers saving for retirement to farmers and ranchers selling off a parcel of land to acquire capital for new equipment and machinery that would help grow their family business.
Inflation makes up a significant portion of capital gains taxes paid. For instance, a taxpayer who purchased one share of Coca-Cola stock in 1998 paid $32.38. If they sold the stock earlier this year at $48.13, they would have a nominal gain of $15.76 and pay $3.75 in tax. The inflation-adjusted basis in today’s dollars, however, would be $50.50 meaning the taxpayer would have to pay $3.75 in taxes on a $2.38 loss.
A list of supporters is below:
- Senator Ted Cruz (R-Texas) and 20 other Senators released a letter in July urging the administration to index capital gains taxes to inflation.
- Cruz was joined by Senators Kevin Cramer (R-N.D.), Jim Inhofe (R-Okla.), Marsha Blackburn (R-Tenn.), Thom Tillis (R-N.C.), Pat Toomey (R-Pa.), John Boozman (R-Ark.), James Lankford (R-Okla.), Steve Daines (R-Mont.), John Barrasso (R-Wyo.), John Kennedy (R-La.), Mike Braun (R-Ind.), Ron Johnson (R-Wis.), Cindy Hyde-Smith (R-Miss.), John Cornyn (R-Texas), Rand Paul (R-Ky.), Richard Burr (R-N.C.), Roy Blunt (R-Mo.), Roger Wicker (R-Miss.), Jim Risch (R-Idaho), Ben Sasse (R-Neb.).
- The President’s Chief Economic Adviser Larry Kudlow wrote in support of the policy in a CNBC in August 2017.
- Vice President Mike Pence introduced legislation in 2007 indexing capital gains taxes to inflation. This legislation was sponsored by 88 Members of Congress including Ways and Means Republican Leader Kevin Brady (R-Texas).
- The National Federation for Independent Business endorsed the policy in July 2018.
- The Chamber of Commerce wrote a letter supporting indexing capital gains taxes to inflation in July 2019.
- Then-Congressman Chuck Schumer (D-N.Y.) endorsed indexing in a 1992 floor speech. Schumer correctly stated that indexing would increase growth and lead to more savings and borrowing.
- The Small Business and Entrepreneurship Council wrote in support of indexing capital gains taxes in a July 2019 letter.
- The Republican Study Committee called for indexing capital gains taxes to inflation in their recent budget proposal.
- The Farm Bureau supports indexing capital gains taxes to inflation.
- Conservative activists including former Senator Jim DeMint and former Attorney General Ed Meese endorsed indexing in a July 2019 Conservative Action Project memo.
- 51 conservative groups including ATR, the American Conservative Union, American Commitment, the Club for Growth, FreedomWorks, and National Taxpayers Union urged Trump to end the inflation tax in a January 2019 letter.
- The Asian American Hotel Owners Association released a letter in July in support of indexing capital gains taxes to inflation.