WASHINGTON (Reuters) – The Trump administration is considering bypassing Congress to grant a $100 billion tax cut to wealthy Americans by allowing taxpayers to account for inflation while determining capital gains tax liabilities, the New York Times reported on Monday.
U.S. President Donald Trump speaks during a joint news conference with Italy’s Prime Minister Giuseppe Conte in the East Room of the White House in Washington, U.S., July 30, 2018. REUTERS/Carlos Barria
The newspaper, quoting from an interview with Treasury Secretary Steven Mnuchin, said the administration could change the definition of “cost” used to calculate capital gains, allowing taxpayers to adjust the value of an asset for inflation when it is sold.
Treasury officials were not immediately available to comment on the report, which said the administration has not concluded whether it has the authority to make such a change.
“If it can’t get done through a legislation process, we will look at what tools at Treasury we have to do it on our own and we’ll consider that,” the Times quoted Mnuchin as saying. “We are studying that internally, and we are also studying the economic costs and the impact on growth.”
The 20 percent capital gains tax rate is currently applied to the difference between an asset’s value when it is purchased and when it is sold. But the calculation does not take the effects of inflation into account, which can raise the size of the tax bill significantly depending on the inflation rate.
The U.S. Congress, led by President Donald Trump’s fellow Republicans, in December passed a tax reform bill that permanently slashed corporate tax rates and also provided tax cuts for some individuals and smaller businesses.
Reporting by David Morgan; Editing by Bill Berkrot