WASHINGTON, DC – U.S. Senators Sherrod Brown (D-OH), Ron Wyden (D-OR), and Jack Reed (D-RI) today blasted reports that the Trump administration is seeking to change the U.S. tax code in a way that would overwhelmingly benefit the wealthy and top 1 percent, while leaving working people and middle class families behind. Reports recently surfaced that President Trump is considering unilaterally adjusting the capital gains tax rules to substantially cut the taxes paid on the sale of stock, real estate or other long-held investments. Under current law, 70 percent of this benefit already accrues to taxpayers with incomes over $1 million. This change would amount to a $102 billion tax cut, 86 percent of which would flow to the top 1 percent of taxpayers. This is all while middle class families and working people continue to see costs rise and wages stagnate.
Brown, Wyden, and Reed led a group of 12 Democrats in penning a letter to Treasury Secretary Steven Mnuchin urging the administration to reject this plan, which only further enriches the top 1 percent of Americans. This proposal comes just one year after Republicans jammed their tax bill through Congress that overwhelmingly benefited the wealthy and corporations, which used their tax windfall to enrich their shareholders through stock buybacks instead of adding jobs or raising wages.
“We remain concerned by this Administration’s relentless preoccupation with cutting taxes for our country’s wealthiest taxpayers while leaving behind middle class families and working people – even to the extent that it would consider exceeding its legal authority to do so. We urge you to oppose this misguided proposal. As you consider the tax treatment of capital gains, we urge you to take steps to make our tax code fairer and allow us to make more significant investments toward an economy that actually helps workers and families get ahead,” the Senators wrote in their letter.
The letter was also signed by Senators Dick Durbin, Tom Carper, Ben Cardin, Bob Casey, Sheldon Whitehouse, Michael Bennet, Tim Kaine, Tammy Baldwin, Amy Klobuchar, Angus King, Jeff Merkley and Bernie Sanders.
Earlier this year, Reed joined with 46 Senate Democrats in introducing their Working Families Tax Relief Act. At a time when wages are stagnant and the cost of childcare has exploded, the Working Families Tax Relief Act would cut taxes for workers and families by expanding the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC). EITC and CTC are two of the most effective tools we have to put money in the pockets of working people and pull children out of poverty. Expanding them will give millions more Americans a foothold in the middle class.
A copy of the Senators letter can be found below:
July 11, 2019
The Hon. Steve Mnuchin
Secretary, Department of the Treasury
1500 Pennsylvania Ave NW
Washington, DC 20220
Dear Secretary Mnuchin:
We urge you to reject reported plans to use questionable authority to – yet again – lavish tax cuts upon our country’s wealthiest, while middle class families and working people continue to see costs rise and wages stagnate.
According to press reports, the White House is considering unilaterally changing the definition of capital gains, so that the original purchase price of assets is indexed to inflation. This change would produce yet another enormous tax cut for the wealthy – including foreign shareholders. Under current law, the benefit of taxing capital gains at lower rates than the rates on wages flows predominantly to wealthy individuals. The Urban-Brookings Tax Policy Center finds that 70 percent of this benefit accrues to taxpayers with incomes over $1 million.
The proposed change of indexing the basis price would similarly and overwhelmingly benefit the wealthiest of the wealthy. According to the Penn-Wharton Budget Model, this change amounts to a $102 billion tax cut, 86 percent of which flows to the top 1 percent of taxpayers. Of course, this proposal follows the Tax Cuts and Jobs Act, passed less than two years ago, which also cut taxes for the wealthy and rewarded companies who shipped jobs overseas, but did next to nothing for hard-working families finding it more and more difficult to keep up or get ahead.
This is not the first time an administration has considered using their own questionable authority to make this change – President George Bush also pursued this proposal. At that time, the Treasury Department correctly concluded the Executive Branch lacked the authority to index the basis price to inflation by regulation. As a result, President Bush wisely abandoned this plan. It is our expectation that you will show similar prudence and urge the President to abandon this proposal which, in addition to being legally suspect, will only worsen inequality while failing to “pay for itself,” just as other tax cuts have.
We remain concerned by this Administration’s relentless preoccupation with cutting taxes for our country’s wealthiest taxpayers while leaving behind middle class families and working people – even to the extent that it would consider exceeding its legal authority to do so. We urge you to oppose this misguided proposal. As you consider the tax treatment of capital gains, we urge you to take steps to make our tax code fairer and allow us to make more significant investments toward an economy that actually helps workers and families get ahead.
Senator Sherrod Brown
Senator Ron Wyden
Senator Jack Reed
Senator Dick Durbin
Senator Tom Carper
Senator Ben Cardin
Senator Bob Casey
Senator Sheldon Whitehouse
Senator Michael Bennet
Senator Tim Kaine
Senator Tammy Baldwin
Senator Amy Klobuchar
Senator Angus King
Senator Jeff Merkley
Senator Bernie Sanders