(Bloomberg) -- A Democratic senator is pushing back against the Trump administration’s plans to cut taxes by indexing capital gains to inflation, a move that he says would only help the wealthy and be illegal.
“We urge you to reject reported plans to use questionable authority to -- yet again -- lavish tax cuts upon our country’s wealthiest, while middle class families and working people continue to see costs rise and wages stagnate,” Senator Sherrod Brown of Ohio wrote to Treasury Secretary Steven Mnuchin in a letter dated Thursday. Nearly a dozen Democratic senators signed it.
The letter cited data from the Penn Wharton Budget Model, which showed that a reduction in capital gains tax would amount to a $102 billion tax cut, 86 percent of which would flow to the top 1 percent of taxpayers.
Brown is the ranking Democrat on the Senate Banking Committee.
The White House is developing a plan to cut taxes by indexing capital gains to inflation, Bloomberg News reported last month. The move may be done in a way that bypasses Congress.
Indexing capital gains would slash tax bills for investors when selling assets such as stock or real estate by adjusting the original purchase price so no tax is paid on appreciation tied to inflation.
Consensus is growing among White House officials to advance the proposal as soon as this summer to ensure the benefit takes effect before President Donald Trump faces re-election in 2020. Officials have not worked through the legal concerns around the move, or whether it would be done through an executive order or regulatory rule-making, according to people familiar with the matter.
Revamping capital gains taxes without Congress would likely would face legal challenges, a concern that reportedly prompted former President George H.W. Bush’s administration to drop a similar plan.
The White House has not yet asked the Justice Department for a formal legal opinion on the matter.
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