A coalition of conservative groups and Republican lawmakers is pressing the Treasury Department to unilaterally index capital gains for inflation, a move proponents call a fair tax cut, but which opponents decry as an illegal executive action that would disproportionately benefit the wealthy and add hundreds of billions of dollars to the national debt.
Indexing Proponents argue that taxing gains resulting purely from inflation is unfair. Under current law, when an asset is sold, the capital gain is calculated based on the difference between the sale price and the original purchase price, or “cost basis.” Indexing would adjust this cost basis for inflation, meaning taxes would only be levied on the “real” gain in value.
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