Supporters of the president believe the Trump administration should index the capital gains tax to inflation, calling it a pro-growth move. (Washington Post)
It is wrong to tax inflation.
Last week, President Trump agreed. He endorsed the idea of indexing capital gains so that no American would be taxed on the inflation gain on the sale of a house, land, a small business, stocks or assets of any kind. Trump said, “Many people like indexing, and it can be done very simply. It can be done directly by me.”
One day later, Trump told a press gaggle that he’s “not looking to do indexing. . . . But if I wanted to do it, I believe I could.”
The press gasped at the sudden shift from “I will” to “I won’t.” Greenland was ours for longer. But those who have worked to end the taxation of inflation in capital gains for almost 30 years noticed what did not change. The president stated and restated his view that his administration could define the cost of an asset for tax purposes as cost plus inflation. No vote by Congress required. This could happen whenever Trump chose.
Moreover, those most adversely affected by the status quo are older, rural, and Midwestern voters, a group critical to Trump’s re-election hopes.
Ending taxation on inflation for these and other Americans would dramatically increase the value of every asset held in the United States.