Letter to the Hon. Steven Mnuchin, Secretary of the Treasury - HonKing Presses Treasury Secretary to Reject Proposal to Unilaterally Cut Taxes for Wealthy

Letter

Dear Secretary Mnuchin,

I write to you to express my serious concern over numerous reports that the Administration may consider a proposal from the Treasury Department to issue a rule that would allow capital gains to be indexed to inflation by regulation - without Congressional approval. This maneuver would effectively grant an approximately $100 billion tax cut to the wealthiest Americans and comes on the heels of last year's tax cut, which is causing our federal deficit to balloon to new highs. I urge you to consider indefinitely shelving the proposal and resist pursuing bad policy that simply provides more money to the wealthiest Americans.

I'm all for commonsense tax reform that benefits hardworking families in Maine and across the country, but this proposal is not that: rather, applying inflation indexing to capital gains would almost exclusively benefit the wealthy. If implemented, 86 percent of the benefits will go to the top 1 percent of American taxpayers, and over two-thirds will go to the 0.1 percent--those who need tax cuts the least.

According to a Wharton School of Business budget model, indexing capital gains to inflation would remove $10 billion from annual revenues, resulting in over $102 billion added to the deficit over the next ten years. This estimate does not include any revenue lost by those who would game the system by utilizing tax shelters. Continuing to add to our federal deficit when the Tax Cuts and Jobs Act (TCJA) is pushing it up more rapidly than experts expected is like adding fuel to a fire. Bottom line: We cannot afford to continue piling onto the national debt and passing along the bill for our children and grandchildren to pay.

The legal case supporting unilateral action by the Department to execute this change to the tax code is weak. A similar action was considered and ultimately rejected in 1992 by President George H.W. Bush's administration. The Department of Justice concluded that the Treasury does not have the regulatory authority to index capital gains for inflation -- not then, and not now.

I urge you to adhere and respect the 1992 opinion. Indexing capital gains to inflations would blow an even an even larger hole through the deficit, and for no need or benefit to the vast majority of the American people. I look forward to hearing from you on this issue.

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