David Kamin
@davidckamin
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Professor @nyulaw, former Biden and Obama administrations
Joined December 2016
RT @TaxLawCenterNYU: We are excited to launch a project to remake federal tax administration. Effective tax administration is critical to t….
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RT @George_A_Callas: I’ll have more to say in the days to come, but David is right. I support making the income tax more economically neut….
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RT @Brendan_Duke: If the Trump Admin goes through w/ trying to index capital gains for inflation by fiat. imagine what it would do to econ….
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@DanielJHemel Congress sometimes writes loopholes. But, it didn't write that one! Which brings me back to the first point--Treasury does not have the authority to unilaterally and significantly cut capital gains taxes.
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@DanielJHemel Finally, unilateral executive indexing would mean parts of the system (basis) would be indexed when other parts (interest expense) wouldn't be. And that is a recipe for tax gaming (gains reduced by inflation, deductions include inflation).
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@DanielJHemel Again, on direct effects, it's wildly regressive, with almost all the benefits going to the very top.
An analysis of indexing capital gains for inflation in 2018 found that literally 99% of the benefits flowed to the top 20% with almost 90% flowing to the top 1%.
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@DanielJHemel Putting the legal arguments to the side, it is also a bad policy idea, certainly as unilateral executive action. Start off with just the direct effects. Back in the first Trump administration, it was estimated to cost $100 to $200 billion over 10 yrs. It should be more now.
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@DanielJHemel Treasury does not have the authority to now say "we're effectively re-writing vast portions of the tax code by redefining basis to include inflation." And that's what it'd be--a dramatic rewrite. (FWIW, it'd make opportunity zones less valuable. ).
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@DanielJHemel Take one part of the just-enacted budget bill. I don't like Opportunity Zones. But, Congress gets to write the tax laws, and here's a section having to do with capital gains deferral / reduction and lots of references to "basis" as happens in many parts of the tax code.
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@DanielJHemel And since we wrote that paper, the fall of Chevron--no more deference to agency interpretation--and the rise of the major questions doctrine makes an already implausible legal argument even more so. Treasury can't radically change how "basis" works throughout the whole tax code.
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As @DanielJHemel and I explained in the last round, Treasury does not have the authority to do this. The Bush administration came to that conclusion in 1992 and doctrinal developments since further strengthened that position--it'd be contrary to law.
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It's back. With a (bad) budget bill done, there's apparently a push to get the Trump administration to do what it rightly rejected in the first administration--and use executive authority to cut capital gains taxes.
washingtonpost.com
Fresh off passage of the “One Big Beautiful Bill,” some anti-tax advocates hope to push the administration to change how taxable capital gains are calculated.
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RT @dashching: THREAD. Lawmakers are realizing “surprises,” “airdrops” &“mysteries” are buried in the bill. Time to take a beat: seems more….
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RT @riccoja: The TCJA, whatever you think of it, was a genuinely reform-minded bill. It improved horizontal equity—the idea that tax rates….
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RT @dashching: THREAD: This SALT “deal” in the latest Senate bill is a nonsensical approach to tax policy. It preserves (and lessens) a li….
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RT @dashching: Some of the surprise new tax breaks that popped up overnight in the new Senate text they're trying to shove towards a vote:….
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Current policy is apparently only used to disappear costs from prior expirations -- never when you set up the expirations to begin with.
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Reported details here. The budget gimmick is particularly egregious given the Senate is using what it says is a "current policy baseline" to score the bill. A consistent current policy baseline would assume the more generous cap never expires--but that's not how they'll treat it.
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If this reporting is accurate, this will be a SALT cap with a giant budgetary gimmick (expire more generous level after 5 yrs) while blessing legally dubious workarounds that mean cap only applies to higher income employees who can't figure out how to become partners / owners.
NEWS: Republicans plan to ENTIRELY DROP new limits on pass-through businesses’ SALT deductions as part of pending deal w/ blue-state House R’s, per multiple sources. HUGE win for biz groups fighting the crackdown. It raised btwn $35B & $40B. MORE in Midday from me & @JakeSherman.
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Just to emphasize: On one of the largest and most progressive (in a wildly regressive bill) revenue raisers, the budget bills are leaving gaping holes on workarounds for certain biz owners and the Senate bill could well be giving away more $$$ than the House.
THREAD: GOP Senators say they're trying to scale back the SALT cap relief in the House bill. But could their approach to SALT end up *more* generous & costly overall than the House bill? Do Senators – or does anyone – even know, despite the intense political focus on SALT?.
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