by Washington Examiner · August 5, 2018
When Treasury Secretary Steven Mnuchin said the Trump administration would consider adjusting the capital gains tax to account for inflation, left-wing media inevitably framed the story as Republicans giving a handout to greedy rich people who have more than they need.
“Trump Administration mulls a unilateral tax cut for the rich,” a New York Times front-page headline declared. Slate pitched it not as a giveaway but as theft: “Trump Might Cut Taxes Without Congress. It’s His Ultimate Heist for the Rich.” Vox did its wonkish thing and analyzed the cut as no small-potatoes: “Trump has a $100 billion tax cut for the rich he wants to enact without Congress.” By $100 billion, they mean $10 billion a year for 10 years, but let’s not get picky.
Envy never looks good once it’s stripped of its camouflage of concern for fairness. And this tax proposal should be viewed unadorned with the moral decorations that attended its arrival in the news.
It’s a bit of a stretch to describe indexing of capital gains to inflation as a tax cut. True, people will owe less in capital gains taxes as a result, but that’s because the federal government will no longer use fake gains to take take real money away from them. If you buy a stock at $20 and it grows to $30, but $8 of that gain is because of inflation, 80 percent of your gain is notional, not real. Why should you be taxed on $10 when you only made $2?
Taxing people for inflation is a form of federal plunder.
There’s an extra layer of hypocrisy about the Left’s outrage over giveaways for the rich. Let’s not forget that Democrats are fighting a ridiculous lawsuit to reinstate the state and local tax deduction, which, before Republicans capped it in 2017, was a giant handout to the wealthy mostly in Democratic states.
Some tax cuts for the wealthy are more equal than others!
Finally, it’s not true that indexing capital gains tax for inflation would exclusively benefit the rich. According to Gallup, 55 percent of Americans have money invested in the stock market. That’s not just filthy lucre helping the rich get richer, it’s savings for retirements, and investments to help businesses grow. All investors and the business environment will benefit from adjusting capital gains tax rates for inflation. And thanks to new investing apps such as Acorns, investing is easier than ever for workers on small salaries.
The Trump administration is wise to support indexing. But the change should happen through Congress, as part of “Tax Reform 2.0″ efforts, so future presidents cannot repeal it and demagogue it as a victory for the poor against their wealthy oppressors. “Tax Reform 2.0″ should also adjust the child tax credit for inflation, repeal the death tax, and make tax cuts permanent rather than sunsetting them after 10 years.
America is a country founded on the idea of opportunity, perhaps especially the opportunity to create and accumulate wealth. That opportunity should include not having the long arm of the taxman reaching for your wallet because another arm of the government stoked inflation and made your money worth less.
Washington Examiner · by Washington Examiner · August 5, 2018