EAlert: Tax Cuts on Capital Gains

Earlier this week, the Trump administration proposed cutting taxes on capital gains as a follow-up to the tax laws passed last year. The current 20% tax rate on long term capital gains is applied to the difference between an asset’s value at the time of purchase versus when it is sold.

The purpose of the indexing of inflation for capital gains is intended to further more capital investment and increase wages, household net worth and returns to shareholders. Technically, it makes logical sense, however, there are some unanswered questions:

  1. How are you going to track the index for inflation, especially for stock with no financial market and real estate investments?
  2. What types of assets would be covered by indexing?
  3. Whether or not indexing can generate an investment loss or increase an investment loss
  4. Whether or not this inflation indexing should apply to past inflation or just future inflation
  5. Is this change in the tax law going to be revenue neutral or not

President Trump is also proposing to pass this proposition by circumventing congress, which is a source of contention among certain members of congress. According to Steven Mnuchin, Treasury Secretary, the Administration is studying the economic costs and the impact on growth this would have.


Raymond Haller Raymond is a Tax Partner at Grassi. Raymond has over 20 years of experience in all areas of tax compliance, projections, planning financial due diligence and income tax provision work. Raymond also has represented individuals, corporations, partnerships and estates before the Internal Revenue Service (IRS). In addition, Raymond is well versed in state taxing authorities at the pre-audit, audit and appeal stages. Raymond has... Read full bio

Jeffrey G. Cohen Jeffrey G. Cohen, CPA is the Partner-in-Charge of Tax Services at Grassi. With over 30 years of experience, Jeff specializes in serving companies within the Manufacturing and Distribution Industry, with an emphasis on the Food & Beverage and Pharmaceutical sectors. A leading tax expert in the New York Metropolitan area, Jeff has enabled his clients to realize significant tax savings through proper Income and... Read full bio

Categories: Tax