Excerpt from The National Pulse:
While much of the attention in Washington D.C. has turned to the GOP’s “Tax Cut 2.0” blueprint, yesterday The New York Times reported that a “Tax Cut 1.5” may be in the works. According to the story, the Trump administration is considering a unilateral move to index capital gains to inflation.
As I have written before, indexing capital gains to inflation would be a huge move to turbocharge economic growth. Currently, when individuals invest in stocks (without using a tax-exempt vehicle like a 401k) or real estate, they are subject to real capital gains taxes on fake gains. This is because the IRS does not account for any devaluation in the dollar (inflation) when calculating the net-profit on an investment. This tax bill gets extremely costly when compounded over years or decades.
In addition to cutting taxes, this policy is also pro-growth because it adds greater certainty to the market. One will no longer need to factor to what extent inflation could erode potential gains prior to making a long term investment.
Read more at The National Pulse.