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The White House's Plan to Indexing Capital Gains to Inflation

Bloomberg’s Saleha Mohsin reports on the Trump administration’s plan to index capital gains to inflation. Citing PWBM’s analysis, Mohsin highlights that indexing capital gains will disproportionately benefit those with high incomes. 

Previously, PWBM showed that the proposal reduces individual tax revenues by around $100 billion in the first decade. In fact, PWBM used its OLG model to further show that the effects on economic growth are minimal, creating roughly zero net additional growth in the upcoming decade. It is projected that the proposal may cause an additional loss of $5 billion over the next two decades. 

Bottom line? Indexing capital gains to inflation:

  1. Doesn’t lead to economic growth.

  2. Costs about $100 billion in the first decade.

  3. Benefits those in top income groups.