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Indexing Capital Gains Taxes to Inflation Would Benefit Americans Across the Country


– Hi, Grover Norquist. I serve as president of
Americans for Tax Reform. We’re the taxpayer group that
fights to keep taxes low. We ask all candidates to
sign a written pledge to you that they will never,
ever vote to raise taxes. We try and make sure that
they keep that pledge so taxes stay down. Then we work to reduce taxes to make the economy grow faster; national level, state, and local level. There’s a new idea that’s out in front of the American people, and that’s ending the
inflation tax in capital gains. When you sell a home or stock or land, you no longer pay taxes
on the inflation part of that gain, but only the real gain. You had a lot of inflation
in the 1970s and ’80s that has made your house more expensive or more valuable, or
stock you owned, or land. When you sell that, you don’t pay taxes on the inflation, just on the real gain. Be a tremendous economic
boost for the economy. Here’s the discussion that
we’re having nationally; can the president do it unilaterally? Can the secretary of treasury do it? The answer is, the Supreme
Court in 2002 said yes, that cost can be defined as
what you paid for something or cost plus inflation, the real cost. That takes the inflation out of the price when you sell it. The good news is, this can be done without fighting with Congress or asking anybody else’s permission. It can be done by, in effect, an executive order redefining cost. What will it do and for who? Some on the left have said, oh, this is just for rich people. They kind of say that whenever
we cut taxes on anybody, including gasoline taxes
for Heaven’s sakes. But do they have a point? 55% of American adults
own shares of stock. Many, many Americans, tens
of millions, own homes. More and more young
people own 401k’s and IRAs and have stock inside that. How will this benefit people? The big winners right
away are older Americans, say, over 55, 60, who’ve lived through the
inflation of the 1970s. Their stock, their land, and so on has really gone up in value largely because of inflation. This could cut their capital gains taxes when they sell an asset by 80% or so, so it’s a very big deal
for older Americans. It’s a very big deal for people even in the middle of the country. If you live in a more rural area, the land, your home didn’t go up as much as San Francisco did, and in fact, inflation is a bigger
part of the capital gain that you would have to pay taxes on. It’s particularly helpful
for people in rural areas, people in the Midwest, in the Rust Belt, who were very badly damaged
by taxing inflation gains. Younger Americans just getting a 401k or an IRA and putting some stock in or buying a home, the value
of your home will go up. The value of your stock will go up; why? Because when you sell it in 30 years, you’re not paying taxes
on all the inflation, so your asset is more valuable. All assets in America
would be more valuable getting rid of the tax on inflation. And for the general economy, one corporate CEO, Fortune 500 CEO, estimated that $7 trillion
in corporate assets would be sold very quickly because the company didn’t
really want it anymore, land or a building, but
they didn’t like the idea of paying the very high tax on inflation. You’d see this incredible
redistribution of assets to higher and better use, and that’s good for productivity, and that’s good for wages for all people that are working in the United States. We can do it. The president, secretary of
treasury has the authority. Two, it’ll tremendously help
most Americans directly, and it’ll help all Americans
by growing the economy. Watch for this as we move
to index capital gains. Or another way of putting it is, end the taxation of
inflation in capital gains.

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