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Trump administration in the face of evasion of Congress to receive tax cuts for the wealthy



You can get her wish. Steven Mnuchin told the New York Times that the administration is considering whether it could use its regulatory powers to explain to investors the effects of inflation when calculating how much their investments have grown. The Ministry of Finance, according to a Finance Ministry spokesman, estimates the economic impact and the process by which it can be achieved.

When investors sell stocks or other assets that are subject to capital gains, they are taxed on the difference between what they receive for sale and what they originally paid for it. This tax rate is usually 20%, which is lower than the tax rate on their income.

By adjusting capital gains to match inflation, the White House could cut billions of dollars in tax laws for its richest investors a year.

For example, if an investor purchased $ 1

00,000 of stock directly after the stock market crash in 1987, that stock could easily be worth $ 1.4 million today. The tax would be calculated on the profit of $ 1.3 million, which would mean that the investor owes more than $ 250,000 in capital gains tax when he sells the shares. When adjusted for inflation, a process known as indexing, the original $ 100,000 cost of the stock would be estimated at more than $ 200,000, saving taxpayers more than $ 20,000 in taxes.

All these savings would add up. The lack of indexation has raised tax revenue by $ 34 billion over the past fiscal year, according to an estimate by the Congressional Research Service.
The sale of stock that would otherwise not occur would lead to an increase in tax revenues should indexing be introduced. But even with these additional sales, the net effect of indexing would be a $ 102 billion reduction in tax revenues over a 10-year period, according to a study at the Wharton School of Business at the University of Pennsylvania.

This study estimated that 86% of this benefit would go to the richest 1% of the nation, with more than 60% to the top of a tenth of 1%.

Households Over $ 500,000 A Year According to Lars Larry Kudlow, who joined the US government in March as director of the National Economic Council, he has long been an advocate of the president, taking unilateral action. to index capital gains. And conservative groups such as the Americans for tax reform led by Grover Norquist have long argued for a presidential action to index capital gains. Mnuchin told the Times that the Trump administration is considering whether to take unilateral action – without waiting for the congress.

"If it can not be done through a legislative process, we'll look at what tools we need to do in the Treasury and we'll take that into account," he told the newspaper.

But in 1992 the Treasury Department under Republican President George HW Bush wondered if they had the power to index capital gains, and decided that Congress would intervene to effect the change. Although such legislation would have substantial support among Congressional Republicans, including Kevin Brady, chair of the Ways and Means Committee, which writes tax laws, such a change by Congress could be extremely difficult as the Democrats have enough seats in the Senate to Block Them

Proponents of the change argue that they would give new impetus to economic growth by inducing investors to sell assets they hold due to the tax cuts they face. But a July report by the bipartisan Congressional Research Service called this claim into question.

"It is unlikely, however, that any significant or any impact on economic growth would come from a stand-alone indexing proposal," the group said in its report

carried by Cristina Alesci, Donna Borak, Tami Luhby and Jeanne Sahadi from CNN on this report.


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