Subject
Capital gains tax reform debates.
Significance
Last month, Treasury Secretary Steven Mnuchin floated reforming the US capital gains tax (CGT) system to take account of inflation between an asset’s purchase and sale. While this is still just an idea, it is one the administration might push on ahead of the midterm elections in November. If not, it may push for CGT reforms soon after.
Impacts
Inflation-adjusting CGT would likely stimulate more market activity, including buying and selling.
The money average earners could gain from selling assets under reformed CGT plans could aid social mobility.
Reforming CGT could stimulate building construction and the housing market, but prices could rise.
Tax Induced Trading: The Effect of the 1986 Tax Reform Act on Stock Market Activity
