President Donald Trump talks following the U.S. Congress passed sweeping tax reform legislation, on the South Lawn of the White House at Washington, December 20, 2017.
Jonathan Ernst | Reuters
President Donald Trump will meet with his economic team Wednesday afternoon about potential tax policy changes, including one suggestion he seemed to shy away from weeks past.
The president and his advisers have pushed for tax cuts as a means to boost economic development. As Trump seeks accomplishments to trumpet on the 2020 campaign trail, he and top aides will consider what tax tweaks they can accomplish in the coming months.
The White House is expected to discuss indexing capital gains to inflation during the meeting Wednesday, among other subjects. Trump’s top economic adviser Larry Kudlow, Sen. Ted Cruz, R-Texas, and antitax crusaders like Grover Norquist have advocated for the change. However, the president recently said he might not push the plan as it may be perceived as helping wealthy Americans — even though he believes he has the ability to enact it without Congress.
If the Trump government adopts the idea, it might have a difficult time passing it in Congress. The Democratic-held House likely wouldn’t approve the plan. The White House economic team is expected to discuss Wednesday if it could index capital gains to inflation without lawmakers’ approval.
The assembly will cap a month of confusing messages in the Trump government on tax policy. In late August, the president said that he had been “thinking about” cutting payroll taxes — just a day after a White House official denied that he was considering it.
A day later, Trump said, “I’m not looking at a tax cut now.” He explained “we don’t need it” since “we have a strong economy.” He also downplayed the possibility of indexing capital gains to inflation at the moment.
“It’s probably better for the high-income people, and I’m not looking to do that. I want to do for the workers,” he explained.
Trump has touted the 2017 Republican tax cuts, the trademark legislative accomplishment of the first term, as “rocket fuel” for the market. However, the legislation hasn’t juiced economic growth in how the GOP had expected. Trump has increasingly concerned about fears of a looming recession.
Norquist, who has pushed to the proposal in discussions with government officials like Kudlow, said he considers Trump was previewing the arguments Democrats would make against indexing capital gains to inflation. He said Trump has supported the proposal for almost a year and the White House is “seriously looking at” it.
“It’s a very powerful political issue as well as a very good economic issue,” he explained.
Norquist argues decreasing the tax burden on Americans’ asset sales will help boost economic growth: he said a CEO of a firm gave him a rough estimate that $7 trillion in assets could be sold because of the shift. He says it would help to “put a dollar figure on the value of electing Trump” since Democratic presidential candidates will probably oppose the plan.
Critics have pointed to a Penn Wharton Budget Model quote the top 1 percent of taxpayers would get about 86percent of the benefit from indexing capital gains to inflation. It would also reduce government tax revenue by roughly $100 billion within a decade, according to the estimate.
Skeptics also have questioned how far it would kickstart economic development relative to other tools that would give more relief to lower-income Americans.
Forty-two Senate Democrats, led by Minority Leader Chuck Schumer of New York and Sens. Ron Wyden of Oregon and Sherrod Brown of Ohio, wrote Treasury Secretary Steven Mnuchin in August requesting him to not execute the capital gains changes.
“This unilateral move would almost exclusively benefit the wealthiest Americans, add to the ballooning federal deficit, further complicate the tax code, and ignore longstanding Justice Department policy,” they wrote at the time.
— CNBC’s Eamon Javers contributed to this report.