American taxpayers should be encouraged by President Trump’s recent remarks on indexing capital gains taxes to inflation. As he said, “Indexing is something that a lot of people have liked for a long time and it is something that would be very easy to do. A lot of people have been talking about indexing for many years. It is something that I am certainly thinking about. I can say that a majority of the people in the White House, at the level that does this kind of thing, they like indexing. So it is something I’m thinking about.”
Indexing capital gains taxes to inflation will build on the success of the Tax Cuts and Jobs Act in growing the economy and increasing the wealth of American middle-class families. Taxing inflation is wrong and unfair.
ATR President Grover Norquist applauded President Trump’s comments today saying, “Today, President Trump endorsed a powerful action to further grow the American economy—to end the taxation of inflation on capital gains. This would greatly strengthen the American economy.”
There is already broad support among conservative groups for indexing capital gains. A coalition of 51 conservative groups sent President Trump a letter in January urging him to end the inflation tax on savings and investment saying “American families and job creators should not have to pay taxes on phantom income.”
Sen. Ted Cruz and twenty other Republican senators recently sent a letter that urged Secretary Steven Mnuchin to “eliminate inflationary gains from the Department of Treasury’s calculation capital gains tax liability.”
Trump has the authority to index cap gains, as shown by ATR’s legal memo here.