Club for Growth Leads Coalition Urging Trump to End Taxation of “Phantom Income” Through Executive Order
Washington, DC – Today, ahead of President Trump’s first State of the Union address, Club for Growth along with nearly 30 other conservative groups sent a letter to President Trump and Treasury Secretary Steve Mnuchin asking that they issue an executive order that would index capital gains to inflation so that taxpayers are no longer forced to pay taxes on “phantom” gains.
This letter is a companion letter to one Club for Growth and conservative allies sent to President Trump and Secretary Mnuchin last fall. Below is the text of the letter along with the full list of organizations who signed it.
January 29, 2018
Dear President Trump and Secretary Mnuchin,
On behalf of the following organizations representing millions of American taxpayers, we congratulate your strong leadership in helping pass the Tax Cuts and Jobs Act of 2017. It’s extremely pro-growth, delivers real tax cuts to working families, and signals to the private sector that Washington is not interested in smothering the economy through bigger government.
To follow up on that success, we write to strongly recommend that you use your executive power as president to end the tax injustice that is currently included in the computation of capital gains. Specifically, we request an Executive Order that would index capital gains to inflation so that taxpayers do not pay taxes on “phantom” gains.
For much the same reason that regular income tax brackets were indexed to inflation over 30 years ago, we believe that it is only a matter of fairness to do the same for capital gains.
For example, if someone saving for retirement purchased an S&P index fund for $1,000 in 2008 and dutifully held it for ten years, they could now sell it for $1934. That’s a gain of $934. Unfortunately, the full amount would be subject to taxation. But $168 of that $934 isn’t a real gain at all. It’s phantom income that was eaten away because of inflation. And yet, taxpayers are currently forced to pay taxes on this nonexistent income.
Signing this Executive Order would have an immediate, pro-growth effect on the American economy. The real after-tax rate of return on all equities would immediately be priced higher – thereby increasing the wealth held by the millions of working and retired Americans who own 401ks, IRAs, mutual funds, and brokerage accounts. It would further encourage people to expand their savings, and incentivize people to start doing so. By preventing the money from unjustly going to the government, it could be re-invested in the economy, allowing businesses to expand, innovate, and create more jobs.
We endorsed this Executive Order in 2017, but we suspended our efforts so that it did not confuse the tax reform debate. Now that tax cuts has been successfully passed into law, we believe now is the right time to continue your successful leadership in bringing about real economic growth through additional tax cuts. This executive order would do just that.
Club for Growth
Americans for Tax Reform
Vice President of Legislative Affairs
Heather R. Higgins
President and CEO
Independent Women’s Voice
Independent Women’s Forum
Center for Worker Freedom
60 Plus Association
Family Business Coalition
President & CEO
Small Business & Entrepreneurship Council
Sal J. Nuzzo
Vice President of Policy
The James Madison Institute
Center for Freedom and Prosperity
Center for Individual Freedom
Americans for Limited Government
National Taxpayers Union
Committee to Unleash Prosperity
Taxpayers Protection Alliance
Vice President of External Affairs
Americans for Prosperity
Executive Vice President
Freedom Partners Chamber of Commerce
The LIBRE Initiative
The American Conservative Union
Co-Founder & Co-Chair
Women for Trump
Campaign for Liberty