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August 27, 2019

Trump Walks Back Consideration of Capital Gains, Payroll Tax Cuts

Glasses sit on top of tax form.

President Trump walked back consideration of capital gains and payroll tax cuts on August 21, less than 24 hours after signaling his support.

Trump: Tax Cuts Not Needed

"I’m not looking at a tax cut now; we don’t need it. We have a strong economy," Trump told reporters at the White House on August 21.

However, Trump alluded otherwise the day before when he told reporters on August 20 in the Oval Office that he had been looking at payroll and capital gains tax cuts for "a long time." To that end, Trump stated that his administration was currently considering "various tax reductions."

Trump: Not Looking to Index Capital Gains to Inflation

Moreover, Trump told reporters on August 20 that he could "directly" index capital gains to inflation, referencing a recent uptick in debate between Republican and Democratic lawmakers on the legality of such an executive move. Notably, Trump followed up his initial assertion of authority to circumvent Congress on the tax policy issue by stating on August 21 that if he wanted to unilaterally index capital gains to inflation, he would need a letter from the Attorney General.

However, the longstanding Republican and Democratic debate as to whether the executive branch has authority to index capital gains to inflation, at least for the time being, appears to be moot.

"I’m not looking to do indexing," Trump said on August 21. "I’ve studied indexing for a long time. I want tax [cuts] for middle-class workers. I think indexing is probably better for the upper income groups; I’m not looking to do that."

 

2019 Business Tax Planning Supplement


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