Donald Trump’s administration is considering a tax cut worth $100 billion that would mainly benefit the well off and be delivered without legislation, it emerged on Tuesday.
The US Treasury is looking at whether to allow people to take account of inflation when they work out what capital gains tax they owe.
Steven Mnuchin, the US treasury secretary, said in a recent interview that officials were looking at whether the change could be achieved through regulation rather than legislation, according to The New York Times. Such a move would mean Congress would be bypassed.
Capital gains tax is usually levied around 20 per cent for Americans and is paid on assets, such as property or stocks, when they are sold.
Under the current system, the tax is paid on the difference between the original purchase price and the new sale price.
Under Mr Mnuchin’s idea, the original price would be adjusted for inflation – dramatically reducing the amount which would be hit by the tax.
He was quoted as saying: “If it can’t get done through a legislation process, we will look at what tools at Treasury we have to do it on our own and we’ll consider that
“We are studying that internally, and we are also studying the economic costs and the impact on growth.”
Democrats criticised the suggestion that such a change could be adopted without full legislation going through Congress.
Chuck Schumer, the most senior Democrat senator, said: “At a time when the deficit is out of control, wages are flat and the wealthiest are doing better than ever, to give the top 1 percent another advantage is an outrage and shows the Republicans’ true colours.
“Furthermore, Mr Mnuchin thinks he can do it on his own, but everyone knows this must be done by legislation.”
George Bush reportedly considered the move while president in 1992 but rejected it after concluding the Treasury Department did not have the power to make the change on its own.
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