Ethics & Public Policy Center

Trump’s New Tax Idea Would Devastate Him Politically

Published in The Washington Post on September 2, 2019


Long holiday weekends have always been ideal for either floating trial balloons or dumping bad news. In that vein, a Friday tweet from President Trump seems to suggest he is still considering signing an executive order indexing the capital gains tax to inflation. That would be a terrible political move for the already beleaguered president.

From a political perspective, any economic stimulus should be provided to the maximum number of people. That’s even more true in this instance, since much of the current drag on the economy could be ascribed to the president’s tariffs against imported Chinese goods. Indexing the capital gains tax would accomplish the opposite goal.

The conservative group Americans for Tax Reform recently released an analysis showing how indexation could give millions of Americans direct tax relief. Looking only at the three key Midwestern states whose voters will likely decide the 2020 election, the group found that nearly 1.1 million households in Pennsylvania claimed a capital gain in 2016, along with about 540,000 in Wisconsin and 750,000 in Michigan. Assuming that every household contains two adults and every adult is a regular voter — both highly favorable assumptions — that means between 1 million and 2 million voters in each state might get a tax cut in 2020 under indexation.

Click here to read the rest of this piece at the Washington Post’s website.

Henry Olsen is a senior fellow at the Ethics and Public Policy Center.

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