U.S. President Donald Trump is considering indexing capital gains to inflation, as indicated by him in a Bloomberg interview.
If implemented, the indexing could potentially lower tax liabilities on income generated from selling financial securities since the original purchase price would be adjusted for inflation. According to estimates from the non-partisan Congressional Research Service, corporate stock with dividends held for 10 years would be subject to an effective tax rate of 21.4% if the holdings are indexed to inflation, versus 24.3 % under existing law.
Trump’s economic adviser, Larry Kudlow says that the policy would boost job creation and economic growth. Treasury Secretary Steven Mnuchin said in July that his department was thinking about whether it could sidestep Congress and issue a rule that would let capital gains be indexed to inflation.