Carlos Schmidt Co-Authors Bloomberg Law Op-Ed on Fixing Inflation and Capital Gains
Index capital gains for inflation the responsible way — through statute, paired with a higher rate, so the fix pays for itself rather than adding to the deficit.
Carlos Schmidt, founder of La Presa Partners, co-authored an op-ed published this morning in Bloomberg Law’s Tax Insights & Commentary, written with Stuart Leblang, head of Akin’s tax practice and a former Treasury international tax counsel, with contributions from Akin’s Amy S. Elliott.
The piece takes up the renewed push by Senators Cruz and Scott to have Treasury index capital-gains basis for inflation by regulation. The authors argue that approach likely exceeds Treasury’s legal authority and, per a Congressional Budget Office estimate near $855 billion over ten years, is fiscally reckless at a moment when prominent voices in finance — Stanley Druckenmiller, Jamie Dimon, and Ray Dalio among them — have each warned this year that the growing federal debt load risks a genuine bond-market crisis.
Their alternative: index the basis for inflation through statute, paired with a higher top long-term capital-gains rate — roughly 30 percent, up from the effective 23.8 percent — so the change is revenue-neutral, with an elective transition rule for existing holdings modeled on a similar compromise Australia adopted. The piece also addresses how the current system’s “lock-in effect” discourages the sale of long-held homes and stock.
Read the full op-ed at Bloomberg Law: Inflation Taxation Needs a Fiscally Responsible Fix From Congress
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This alert is for general information only and is not tax, legal, investment, or accounting advice. Consult your own advisers before acting. Carlos A. Schmidt, MBT, MBA, CPA · Managing Member · carlos@lapresallc.com · (917) 558-6393.