In another body blow for the downtrodden 0.1% (who everyone knows have suffered mightily under Donald Trump’s Aristocracy-Kleptocracy combo regime), the White House has ruled out indexing capital gains to inflation – at least for now.
On Wednesday, Trump was scheduled to meet with his economic team to discuss the proposal for the umpteenth time.
It’s got the backing of Republicans and would be yet another boon for the rich on top of the president’s original tax cuts.
In addition to being a $100 billion handout to the wealthy, the move would likely involve a legally dubious end-around lawmakers. Those two things together make for particularly poor optics. “Trump resorts to illegal tactics to subvert Congress and hand the rich $100 billion” would not be a great headline headed into an election year that could see Trump square off against a left-wing populist in either Elizabeth Warren or Bernie Sanders.
And so, sadly, Trump has abandoned the idea.
“President Trump was thoroughly briefed on the complex economic, legal and regulatory issues, and concluded that at this time he does not feel enough of the benefits will go to the middle class”, White House spokesman Judd Deere said in a statement.
In other words, “at this time”, Trump doesn’t think it’s advisable to aggravate working people, who, according to recent polls, are increasingly concerned about the state of the economy.
As a reminder, when you combine indexing capital gains to inflation with Trump’s original tax cuts, you end up with a perpetual motion machine for inequality. The tax cuts incentivized buybacks, which in turn levitated stock prices. Because stocks (and other financial assets) are overwhelmingly concentrated in the hands of those with more money, the benefits of higher stock prices accrue exponentially, not linearly.
Once you allow those who have enjoyed the benefits of stock price appreciation to index capital gains to inflation, the circle is complete – it’s a self-feeding loop that exacerbates the wealth divide.
Trump has waffled on the issue when pressed publicly.
“We’ve been talking about indexing for a long time”, he told reporters last month. “And many people like indexing and it could be done very simply”, he added, an allusion to the idea that he could make the change by decree.
Less than 24 hours later, he slammed it into reverse. “I’m not seriously looking at doing indexing”, he remarked. “It’s not something I love”.