Now that the republican-led congress has pushed the Tax Cut and Jobs Act (TCJA) through, it’s looking to continue the momentum. Next on the radar are capital gains taxes. And recently, republican senator Devin Nunes, from California, introduced legislation that would lower the amount taxpayers fork over for capital gains.
Nunes, who is a senior member of the tax-writing House Ways and Means Committee, argues that indexing capital gains to inflation would build off the TCJA and incentive investment. Nunes says the bill would continue the tax-cutting trend started by the TCJA. He said: “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.”
Currently, people pay capital gains taxes on the difference between the amount they pay for the stock and the amount they earn when they sell it. The new bill would change that formula. Instead investors would pay the difference between how much they paid for the investment, plus inflation, and how much the investment was sold for.
Many conservatives are pushing the Treasury Department administration to make it happen. However, democrats say the Treasury Department does not have that kind of power. Treasury Secretary, Steen Mnuchin, for his part, has said he thinks the battle over indexing capital gains should be fought in Congress.