White House Plans Bold Move on Taxes

Treasury might change how capital gains are figured, benefiting wealthiest Americans
By John Johnson,  Newser Staff
Posted Jul 31, 2018 6:01 AM CDT
Updated Jul 31, 2018 6:33 AM CDT
Treasury Secretary Steven Mnuchin: “If it can’t get done through a legislation process, we will look at what tools at Treasury we have to do it on our own and we’ll consider that."   (AP Photo/Gustavo Garello)

(Newser) – The wealthiest Americans may be getting some good news on taxes from a big shift under consideration by the Treasury Department. The change would affect how capital gains taxes are figured in regard to inflation, with the upshot being that the amount owed to the government would be less, reports the New York Times. The example used by the newspaper: If someone bought a stock for $100,000 in 1980 and sold it for $1 million today, they'd pay taxes on the profit of $900,000. Under the change, the initial price would be adjusted for inflation and raised to $300,000, reducing the profit and saving the investor about $40,000 in taxes. The other controversial aspect of the change is that Treasury is considering doing this under its own power, instead of through Congress.

“If it can’t get done through a legislation process, we will look at what tools at Treasury we have to do it on our own and we’ll consider that,” says Treasury chief Steven Mnuchin. However, making such a fundamental change through executive power "would be highly unusual and could be vulnerable to a legal challenge," explains the Washington Post. The White House of George HW Bush considered the same thing back in 1992 but ultimately concluded Treasury didn't have the authority. Still, it would be politically dicey to ask Republicans in Congress to approve the measure, especially given quotes like this one collected from Chuck Schumer by the Times: "At a time when the deficit is out of control, wages are flat and the wealthiest are doing better than ever, to give the top 1 percent another advantage is an outrage and shows the Republicans’ true colors." (Read more capital gains tax stories.)

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