Every once in a while the Trump administration does—or seriously considers doing—something that’s so on the nose, you wonder if there is, in fact, a cartoon villain living in the White House. On Monday, we got the latest example of President Trump and his rich buddies’ shamelessness in trying to enrich themselves and their golfing partners with the New York Times report that Trump’s Treasury Department is pondering ramming through a $100 billion tax cut almost exclusively to the very wealthiest in America by overhauling how the capital gains tax is calculated. To make matters even more underhanded, the White House is studying whether it can bypass Congress and make the move by executive fiat by arguing it’s a simple regulatory change rather than a legislative one.
The broad outline of the change is that the new capital gains cut would factor in inflation of any asset being sold, thereby slashing the difference—on paper—between what you bought, say, your house for and what you sold it for. That, in turn, would reduce what you pay in capital gains tax. Here’s a more detailed explanation from the Times:
Currently, capital gains taxes are determined by subtracting the original price of an asset from the price at which it was sold and taxing the difference, usually at 20 percent. If a high earner spent $100,000 on stock in 1980, then sold it for $1 million today, she would owe taxes on $900,000. But if her original purchase price was adjusted for inflation, it would be about $300,000, reducing her taxable “gain” to $700,000. That would save the investor $40,000.
Unsurprisingly, the Times notes, good faith independent analyses of recalibrating the capital gains tax in this manner found that almost all of the money—more than 97 percent of the benefits—would go into the pockets the top 10 percent of income earners, 86 percent would go to the top 1 percent, and nearly nearly-two thirds of that cash would go to the top 0.1 percent. This is a move long-coveted by conservatives and, in Trump, they see their opportunity to claw back money by fiddling with the government definition of “cost” in order to include inflation, rather than the actual amount you paid for your house. It’s a move previous Republican administrations have considered and decided ran afoul of the law.
