Romney opposes Trump taking executive action to reduce capital gains taxes

Romney opposes Trump taking executive action to reduce capital gains taxes
© Aaron Schwartz

Sen. Mitt RomneyWillard (Mitt) Mitt RomneyBipartisan group of senators urges FDA to pull most e-cigarettes immediately Trump judicial picks face rare GOP opposition Overnight Health Care — Presented by Partnership for America's Health Care Future — Pelosi unveils signature plan to lower drug prices | Trump says it's 'great to see' plan | Progressives pushing for changes MORE (R-Utah) on Friday said that he doesn't think President TrumpDonald John TrumpJulián Castro: It's time for House Democrats to 'do something' about Trump Warren: Congress is 'complicit' with Trump 'by failing to act' Sanders to join teachers, auto workers striking in Midwest MORE should take executive action to reduce capital gains taxes, after the White House said Trump doesn't plan to take such action "at this time."

"Not only would such a change stand on dubious constitutional and legal ground, but it would primarily benefit wealthy investors without supporting American workers," Romney wrote in a letter to Treasury Secretary Steven MnuchinSteven Terner MnuchinOvernight Defense: Trump hits Iranian central bank with sanctions | Trump meeting with Ukrainian leader at UN | Trump touts relationship with North Korea's Kim as 'best thing' for US Trump says he's sanctioning Iran's national bank Lawmakers run into major speed bumps on spending bills MORE.

Romney's position contrasts with the stance of many other GOP senators and conservative groups, who have been pressing Trump to take executive action to cut capital gains taxes by indexing capital gains to inflation. Supporters of indexing argue that doing so would boost the economy and help taxpayers of all income levels.

Trump has sent mixed signals on indexing in recent weeks. Most recently, White House spokesman Judd Deere said Wednesday that Trump "concluded that at this time he does not feel enough of the benefits will go to the middle class.” 

Romney said in his letter that if the Trump administration again decides to consider supporting indexing capital gains, seek congressional approval.

The 2012 Republican presidential nominee argued that indexing capital gains would "mark a dramatic change in tax policy," since Congress has never done this. He also argued that unilateral action on capital gains "could create the potential for further arbitrage in our tax code."

Additionally, Romney wrote that the economy is strong and that "enacting a stimulus for financial markets signals uncertainty instead of supporting the strong fundamentals behind our economy."

Romney said that indexing capital gains to inflation would primarily benefit the wealthy, and said that tax cuts should be paired with spending cuts so that the tax cuts don't add to the debt.

And he pointed out that if Trump took executive action to index capital gains, the action would likely be subject to a court challenge. In 1992, the Justice Department's Office of Legal Counsel issued a memo concluding that the executive branch doesn't have the authority to index capital gains through regulations.

"At a minimum, doing so would raise significant legal questions," Romney wrote. "Regardless of the merits of this policy change, it would be counterproductive to proceed in a way that creates uncertainty for American families and businesses while those issues are resolved."

Americans for Tax Reform President Grover Norquist, a leader of the push for Trump to index capital gains, criticized Romney's comments in a letter to the senator Friday.

"Ending the inflation tax on capital gains has broad and deep support," Norquist wrote. "The growing list of supporters will not be discouraged by your letter."

- updated at 6:03 p.m.