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.
The centerpiece of the new tax law is a cut in the corporate tax rate from 35 percent to 21 percent. Proponents promise the lower rate will bring jobs and investment to the United States and boost economic growth significantly.