US Senators Push Treasury to Index Capital Gains to Inflation via Executive Action

Key Facts

1Senators Ted Cruz and Tim Scott urged Treasury Secretary Scott Bessent to use executive authority to adjust the tax cost basis for inflation.

2The proposal aims to eliminate 'phantom taxes' on gains resulting solely from inflation rather than real growth.

3Senators argue that this action does not require legislation from Congress and can be unilaterally implemented by the Treasury.

Senators Ted Cruz and Tim Scott have formally urged Treasury Secretary Scott Bessent to utilize executive authority to adjust the tax cost basis for inflation. The proposal seeks to eliminate "phantom taxes" on investment gains that result solely from inflationary pressures rather than genuine economic growth. According to the senators, this policy shift does not require Congressional approval and can be unilaterally implemented by the Treasury Department. Proponents argue that the move would stimulate economic growth, encourage savings, and potentially unlock liquidity in the housing market. By reducing the tax penalty on long-term unrealized gains, the action is expected to significantly boost after-tax returns for investors. Market analysts suggest this could drive substantial capital inflows into major indices and real estate investment trusts like SPY and VNQ.