Capital gains tax cut idea puts pressure on Trump
administration
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[August 03, 2018]
By David Morgan
WASHINGTON (Reuters) - The Trump administration came under pressure on
Tuesday from both critics and allies over whether it should proceed with
another tax cut for investors and do so without consulting the U.S.
Congress.
A White House official confirmed that the U.S. Treasury is looking into
the possibility of circumventing Congress to protect gains on capital
assets from higher tax bills resulting from inflation. The New York
Times reported on Monday that such a move could cut capital gains tax
revenues by $100 billion.
"There has been a great deal of interest in this provision for a long
time. Treasury is currently evaluating the economic impact and whether
it can be achieved without legislation," said White House spokeswoman
Lindsay Walters.
Only Congress can change U.S. tax law. But in a move that could be
politically explosive in the run-up to the Nov. 6 congressional
elections, Treasury officials are trying to determine whether they have
the authority on their own to change the way capital gains taxes are
calculated.
"At a time when the wealthiest are doing better than ever, to give the
top 1 percent another advantage is an outrage," Senate Democratic leader
Chuck Schumer said.
Representative Richard Neal, the top Democrat on tax policy in the House
of Representatives, warned that such a move by Treasury would be
"legally dubious" and meet with "stiff and vocal opposition" from
Democrats.
The 20-percent capital gains tax rate is now applied to the difference
between an asset's value when it is purchased and sold. The calculation
does not account for inflation, which can raise tax bills significantly
depending on the inflation rate.
The issue has surfaced as House Republicans consider a new election-year
tax bill that would make permanent the temporary tax cuts for
individuals included in President Donald Trump's 2017 tax overhaul.
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U.S. President Donald Trump waves upon arriving at Tampa
International Airport in Tampa, Florida, U.S., July 31, 2018.
REUTERS/Carlos Barria
Last year's tax bill permanently cut the corporate income tax rate to 21 percent
from 35 percent, which has hastened the rise of the U.S. federal budget deficit.
House Republican Devin Nunes introduced legislation this month that would adjust
capital gains for inflation. But the provision has not been included in the
House Republican plan.
No new tax bill can become law without support from Senate Democrats, who want
any further tax cuts paid for.
Americans for Tax Reform, a group that advocates for lower taxes and less
government, sought to press home its argument in favor of the tax cut on the
Trump administration.
"Yes, Treasury has the authority," the group declared in a release listing top
House and Senate Republicans and White House officials as supporters of the
effort. "Issue the regulation immediately. As a definitional regulation, this
does not require public comment or any time lapse."
(Reporting by David Morgan and Roberta Rampton; Editing by Kevin Drawbaugh and
James Dalgleish)
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