GOP tax writer introduces bill to reduce capital gains taxes
Rep. Devin Nunes (R-Calif.) this week introduced legislation that would reduce the amount people pay in capital gains taxes, as conservatives press the Treasury Department to take action on the topic.
The bill from Nunes, a senior member of the tax-writing House Ways and Means Committee, would index capital gains to inflation. He argues that the measure would build off the tax-cut law President Trump signed last year and incentivize investment.
“This bill will continue the tax-cutting trend that began with the tax relief bill last year,” Nunes said in a statement Friday. “This is a common-sense reform that will remove an unjust tax, contribute to economic growth, and help both large and small investors keep more of their own money.”
Under current law, taxpayers pay capital gains taxes on the difference between what they pay for an investment and what they sell it for. Nunes and other Republicans want that formula changed to the difference between what they paid for an investment, plus inflation, and the amount for which the investment was sold.
Sen. Ted Cruz (R-Texas) has also introduced legislation that would index capital gains to inflation. And GOP lawmakers are considering including a provision to index capital gains as part of a “phase two” of tax cuts that the House is planning to vote on in September.
However, the Senate is unlikely to pass a second round of tax cuts since doing so would require the support of some Democrats. A group of Democratic members on the Senate Finance Committee have expressed opposition to indexing capital gains, saying it would increase the deficit and largely benefit the wealthy.
Prominent conservatives like Americans for Tax Reform President Grover Norquist have been urging Treasury Secretary Steven Mnuchin to issue regulations to index capital gains. They argue that the department has the authority to do so as a result of a 2002 Supreme Court ruling. Democrats say the Treasury Department cannot take that kind of executive action regarding capital gains.
Mnuchin told the Wall Street Journal last month that he thinks Congress should take the lead on indexing capital gains.
“Consider that with, obviously, other parts of Tax 2.0,” he said. “If we’re not able to complete Tax 2.0, then we’ll go back to the drawing board and decide whether we want to consider this on a nonlegislative basis.”