Sen. Cruz, Rep. Davidson Introduce the Capital Gains Inflation Relief Act
WASHINGTON, D.C. – U.S. Sen. Ted Cruz (R-Texas) and Rep. Warren Davidson (R-Ohio) today introduced the Capital Gains Inflation Relief Act, legislation to ensure an individual’s cost basis in a capital asset receives the same fair and equitable treatment as other areas of the tax code by indexing the basis for inflation. According to the U.S. Bureau of Labor Statistics, inflation has increased 5.4 percent from September 2020, which matches the highest rate since 2008.
Cosponsors of the Capital Gains Inflation Relief Act include Sens. Thom Tillis (R-N.C.), Mike Braun (R-Ind.), John Barrasso (R-Wyo.), Pat Toomey (R-Pa.), Jim Inhofe (R-Okla.), and James Lankford (R-Okla.). Sen. Cruz previously introduced this legislation in 2018.
Upon introduction, Sen. Cruz said:
“The Biden administration’s inflation crisis is causing prices to skyrocket, destroying the purchasing power of Americans’ hard-earned dollars. By indexing the costs basis of capital assets to inflation, we are protecting hardworking Americans from being punished by the cruel tax of inflation created by this administration’s reckless spending. This bill would promote savings and investment, encouraging people to save for things like a child’s college education and for retirement, and would help job creators hire more people and raise wages when Americans need it most. I will continue to lead the fight in the Senate for a fairer, simpler tax code and for fiscal sanity as this administration threatens to destroy the wealth of Americans.”
Rep. Davidson said:
“As Biden’s economy continues to spiral, it’s critical that Congress make every effort to protect the value of Americans’ hard-earned dollars. Adjusting the tax code to account for rising prices by indexing the tax basis of capital gains for inflation is a simple first step to defend Americans from the invisible tax of inflation.”
Grover Norquist, President of Americans for Tax Reform, added:
“Senator Cruz should be commended for reintroducing the Capital Gains Inflation Relief Act. Not only does this bill end the unfair practice of taxing inflationary gains, but it will help grow the economy by encouraging saving, investment, and innovation. It is always a good idea to index capital gains to inflation but because of Joe Biden’s inflation, it is more important than ever to do it now.”
The Treasury Department currently determines capital gains taxes by the sticker price at the time of purchase without considering the inflation-adjusted cost of the asset in today’s dollars. As a result, an individual who sells a capital asset must pay tax on the gain even if the asset’s value only grew and kept pace with inflation.
The Capital Gains Inflation Relief Act indexes certain assets to inflation for the purpose of determining a gain or loss which ensures the capital gains tax is treated equitably to other sections of the federal tax code, such as individual income tax brackets, the standard deduction, and income thresholds of certain tax credits. Sen. Cruz’s previously introduced legislation has been updated to include digital assets, such as cryptocurrency and NFT’s.
Read the full text of the bill here.
Read Sen. Cruz’s op-ed on President Biden’s inflation crisis here.