Donald Trump has precisely one legislative achievement to show for his first 14 months in office, a gigantic tax cut that may prove a total disaster but will at least save him and his ilk many, many billions of dollars over the next few years. The fact that something so fantastically unlikely as comprehensive tax reform came to pass under this most unlikely and erratic of presidents was broadly the doing of one man: former National Economic Council director Gary Cohn. Cohn managed to shepherd this particularly unlovely piece of legislative sausage through the hard way: Getting this particularly fractious Congress to vote it into law, an especially impressive feat given the necessary ideological compromises involved in something like comprehensive tax reform, and its politically-poisonous ramifications.
For this hard and reputation-shattering work, Cohn was rewarded by being totally ignored about something really near and dear to his heart, which is not starting unnecessary trade wars on a whim and the word of a madman. When he resigned on this particular point of principle, one might imagine that President Trump might seek an NEC chief a little more simpatico with his own ideas about really sticking it to China and Mexico. Instead, he hired a guy who was just as aghast as Cohn about Trump’s new tariffs and literally begged Cohn not to quit, even though Cohn was adamant that Kudlow not get anywhere near the NEC, let alone lead it. Why, exactly, Trump wanted a less-qualified and likely less-successful version of Cohn to fill Cohn’s job was a bit of a mystery, until now: Larry Kudlow is telling the president that he can just impose the tax policies he wants without even having to speak to Mitch McConnell on the phone.
An old but provocative tax-policy idea—adjusting capital gains for inflation—has renewed life, thanks to a push from conservatives and a new ally in the White House….
“Some believe Potus could do it as exec order,” he wrote, referring to President Donald Trump.
Those people do not include Kudlow’s fellow Reagan administration veteran and person who hasn’t had an honest job since the mid-1990s, George H.W. Bush, who considered the very same thing before deciding that he lacked the authority. Now, no one—Kudlow included—knows whether the president supports such a change or has even spent so much as an instant thinking about it. But Kudlow knows the president would like to be able to run things in a slightly more Putinesque way, and Vladimir Putin certainly expends no energy considering whether he has the authority to enact tax policies to benefit his fellow oligarchs. So even if President Trump doesn’t care a whit about inflation-adjusted capital gains, he might just be convinced to do it to show that he can.
“It’s very possible, precisely because it’s the type of thing President Trump would look at and decide it fits his agenda….”
“It makes sense to index the whole tax system, at least in theory,” said Mr. Burman, a Treasury official under President Bill Clinton. “There are practical consequences that make it difficult.”
The benefits, he said, would flow to high-wealth households, who are most likely to be sitting on appreciated assets.
“This would be another huge windfall on existing capital,” he said. “It wouldn’t produce a wave of new investment.”