Letter: Indexing Capital Gains to Inflation

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Dear President Trump and Secretary Mnuchin,

 

On behalf of the following organizations representing millions of American taxpayers, we write to strongly recommend that you end the tax injustice that is currently included in the computation of capital gains.  Specifically, we request an Executive Order that would index capital gains to inflation so that taxpayers do not pay taxes on “phantom” gains.

 

For much the same reason that income tax brackets were indexed to inflation over 30 years ago, we believe that it is only a matter of fairness to do the same for capital gains.

 

For example, if someone saving for retirement purchased an S&P index fund for $1000 in 1997 and dutifully held it for 20 years, they could now sell it for $2665.  That’s a gain of $1665.  Unfortunately, the full amount would be subject to taxation.  But $538 of that $1665 isn’t a real gain at all.  It’s phantom income that was eaten away because of inflation.  And yet, taxpayers are currently forced to pay taxes on this nonexistent income.

 

Signing this Executive Order would have an immediate, pro-growth effect on the American economy.  The real after-tax rate of return on all equities would immediately be priced higher – thereby increasing the wealth held by the millions of working and retired Americans who own 401ks, IRAs, mutual funds, and brokerage accounts.  It would further encourage people to expand their savings, and incentivize people to start doing so.  By preventing the money from unjustly going to the government, it could be re-invested in the economy, allowing businesses to expand, innovate, and create more jobs.

 

We strongly believe that this Executive Order is a pro-growth “down payment” that will help ignite the broader conversation about tax reform.  And our groups look forward to the opportunity to continue working with the Administration to enact comprehensive tax reform this fall.

 

Sincerely,

 

David McIntosh, President 

Club for Growth                  

 

Adam Brandon, President

FreedomWorks  

 

Michael Needham, Chief Executive Officer

Heritage Action

 

Phil Kerpen, President

American Commitment 

 

Jenny Beth Martin, Co-Founder  

Tea Party Patriots

 

Judson Phillips, President

Tea Party Nation

 

Larry Kudlow

Committee to Unleash Prosperity

 

Brian Wesbury, Chief Economist

First Trust Advisors, LP

 

Pete Sepp, President

National Taxpayers Union

 

James L. Martin, President

60 Plus Association

 

Lewis K. Ulher, President

National Tax Limitation Committee

 

Heather Higgins, President

Independent Women’s Voice

 

Rick Manning, President

Americans for Limited Government           

 

Grover Norquist, President

Americans for Tax Reform

 

Karen Kerrigan, President & CEO

Small Business and Entrepreneurship Council

 

Andrew F. Quinlan, President

Center for Freedom and Prosperity

 

Becky Norton Dunlop      

Former Advisor to President Reagan

 

Ryan Ellis, Senior Tax Advisor

Family Business Coalition

 

Dan Weber, President     

Association of Mature American Citizens

 

Bob Carlstrom, President

The Carlstrom Group, LLC

 

Jeffrey Mazzella, President

Center for Individual Freedom

 

Tim Huelskamp, Ph.D., President

The Heartland Institute  

 

Chrissy Harbin, Vice President of External Affairs

Americans for Prosperity

 

Jorge Lima, Executive Director

The Libre Initiative

 

Nathan Nascimento, Vice President of Policy

Freedom Partners Chamber of Commerce

 

David Barnes, Policy Director

Generation Opportunity 

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