Trump to revisit capital gains tax cut in White House meeting

President Donald Trump is scheduled to meet with economic advisers Wednesday to discuss the possibility of cutting the tax on capital gains by indexing gains to inflation, a person familiar with the matter said.

The advisers plan to update Trump on the issue, and a final decision on whether to pursue the policy isn’t expected at the meeting, according to the person, who asked not to be identified because the meeting hasn’t been publicly announced. Trump said last month that cutting capital gains taxes would be perceived as “somewhat elitist” as the move would benefit the wealthy.

Trump’s comments in August on the capital gains tax — as well as the possibility of cutting payroll taxes — came as the U.S. economy has shown warning signs that could presage an economic slowdown and a possible recession. The idea of cutting the tax on investments contrasts sharply with proposals from Democratic candidates vying to challenge the president next year that are largely aimed at more heavily taxing the wealthy.

President Donald Trump in the Oval Office
President Donald Trump in the Oval Office

Ahead of his 2020 re-election bid, Trump has blamed the Federal Reserve for suppressing the U.S. economy and has said his trade war with China has hurt the stock market’s performance. But cutting the capital gains tax affects few middle-class taxpayers and would do little to spur economic growth.

Indexing capital gains would slash tax bills for investors when selling assets such as stock or real estate by adjusting the original purchase price so no tax is paid on appreciation tied to inflation.

Trump has said he could allow indexing of capital gains without congressional approval. According to the president, he’d only need a letter from the attorney general saying he could do it.

“We’ve been talking about indexing for a long time,” Trump said Aug. 20. “And many people like indexing and it could be done very simply.”

But a day later, Trump indicated he’s disinclined to make the move.

“I’m not looking at doing indexing. And I haven’t been seriously looking at it,” he said. “It’s not something I love.”

Revamping capital gains taxes through a rule or executive order likely would face legal challenges, a concern that reportedly prompted former President George H.W. Bush’s administration to drop a similar plan. White House officials had previously indicated they had hoped to advance a plan on capital gains taxes as soon as this summer.

The Wall Street Journal reported the meeting earlier. The White House declined to comment.

— Saleha Mohsin, with assistance from Laura Davison
Bloomberg News