The Tax Act’s Unfinished Business

The Tax Act’s Unfinished Business

The wealthiest Americans were already pretty happy with the 2017 Republican Tax Act. It bequeaths corporations with $1.7 trillion in tax cuts at the expense of funding for social programs, and 83 percent of the law’s benefits will go to the top 1 percent by 2027, when most of the individual income changes will have expired.

But greed works in not-so-mysterious ways, and it seems these gifts weren’t enough. During the G20 summit earlier this month in Argentina, Treasury Secretary Steven Mnuchin told The New York Times that the Trump administration was considering dodging Congress to reduce capital gains taxes through regulation. Larry Kudlow, Donald Trump’s top economic adviser, has long advocated indexing capital gains to inflation, meaning that when an investor sells an asset, the initial price they paid for it would be adjusted for inflation so that the amount they’re taxed on (how much they earned when they sold it) would be lower.

The possible Treasury action, reported by the Times on Monday, is likely illegal. But as the Prospect outlined in its summer issue, which was devoted entirely to the 2017 Tax Act, Trump and his allies may stop at nothing to slash taxes for the wealthy. Even in the face of strong opposition, Republicans and the administration were determined to get their bill through, despite the fact that the tax cuts were demonstrably unpopular among voters. (The articles in that issue cover everything from who benefits the most, to how Democrats should respond, to debunking the claims of those promoting the law.)

During the 2016 presidential campaign, Trump had promised to close the carried interest loophole that allows hedge fund managers to pay the lower capital gains rate on the money they make from an investment, but the loophole survived the 2017 bill and doesn’t seem likely to be revisited in the so-called Tax Reform 2.0 proposals currently being floated by Republicans on Capitol Hill.