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Treasury considering "unilateral" (and probably "unconstitutional") tax cut for wealthy by changing "cost basis" calculation methodology for capital gains

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Trump Administration Mulls a Unilateral Tax Cut for the Wealthy


The Trump administration is considering bypassing Congress to grant a $100 billion tax cut mainly to the wealthy, a legally tenuous maneuver that would cut capital gains taxation and fulfill a long-held ambition of many investors and conservatives.


Steven Mnuchin, the Treasury secretary, said in an interview on the sidelines of the Group of 20 summit meeting in Argentina this month that his department was studying whether it could use its regulatory powers to allow Americans to account for inflation in determining capital gains tax liabilities. The Treasury Department could change the definition of “cost” for calculating capital gains, allowing taxpayers to adjust the initial value of an asset, such as a home or a share of stock, for inflation when it sells.


Oh, I just can't wait to see the baseline inflationary measure they come up with for this!  Essentially, Treasury would have to provide the benchmark that would be used to calculate the "stepped-up" cost basis of the asset.  Let's assume that it's the CPI-U (the most common inflationary measure), then the question is which year will be used as the baseline from which to determine the stepped-up cost basis.

  • Guillotine 1
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Where do I begin with this?


Does it only apply to "intangible" capital assets?


If not, does it apply to capital assets that have been subject to depreciation exoense and its associated tax benefits?


If so, how is that depreciation expense treated with regard to an inflation-adjusted stepped-up cost basis?

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Just now, b_m_b_m_b_m said:

Hasn't Congress delegated this authority to the president?

That's the entire question of the constitutionality of this idea: does this represent a usurpation of Congress's "power of the purse" because it represents such a fundamental change to a really significant component of tax law.

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