Republican reconciliation bill should index capital gains to inflation |
Republican reconciliation bill should index capital gains to inflation
Senate Republicans have coalesced around a skinny reconciliation bill to fund the Department of Homeland Security. But House Republicans should take advantage of their governing majority to pass a broader budget package that builds on last year’s historic tax cuts. This would give them another clear, pro-growth victory to take to voters before Election Day.
Republicans’ top tax priority should be indexing capital gains to inflation. This long-overdue reform would fix a quirk in the tax code that unfairly requires small businesses, farmers, homeowners, investors, and ordinary Americans to pay capital gains taxes on phantom gains driven solely by inflation.
In 1986, President Reagan indexed income tax brackets to inflation. Since then, workers no longer have had to worry about being pushed into a higher tax bracket simply because their wages kept pace with rising prices.
Unfortunately, capital gains were left behind. As a result, Americans face large tax bills when they sell assets, even when the real, inflation-adjusted value hasn’t meaningfully increased.
Bidenflation made this problem worse. Inflation increased 21 percent over former President Joe Biden’s term. That translates into significant paper gains that are taxed as if........