Independence Day has me thinking about tax protests. One, in Boston, shaped our nation’s history. Another is still taking shape in Seattle. Both reflect our complicated relationship with taxes and those who levy them. But that’s where similarities end. If you were a taxpayer participating in either, what might you do?
National Economic Council chair Larry Kudlow reportedly wants the IRS to redefine capital gains to include only returns from the sale of assets in excess of inflation. Were it feasible, it would make sense to measure all income and expense in real terms. But indexing capital gains alone by executive fiat would make no sense. It would cut capital gains taxes by up to $20 billion a year for the richest Americans and open the door to a raft of new, inefficient tax shelters. And it would do all this without the approval of Congress.