The Trump Administration's proposed capital gains tax cut could add nearly $1 trillion to the national debt within the decade, think tank warns | Fortune

"The Committee for a Responsible Federal Budget warned in a report published on Tuesday that the executive action would slash tax revenue, heaping an additional $170 to $950 billion onto the national debt by 2035, citing data from the Yale Budget Lab."

"The last thing we need is more deficit-financed tax cuts-especially ones enacted by executive fiat. With debt approaching record levels and interest expenses exceeding $1 trillion a year, we need more revenue, not less."

"Proponents argue adjusting capital gains for inflation prevents investors' phantom gains from being taxed, and that taxing investments should be curtailed to incentivize injecting more money into the economy."

Republican lawmakers are urging Treasury Secretary Scott Bessent to implement capital gains tax indexation through executive action, which would adjust asset cost basis for inflation and reduce taxable gains. The Committee for a Responsible Federal Budget warns this policy could increase the national debt by $170 to $950 billion by 2035. Proponents argue indexation prevents taxation of phantom gains and encourages investment spending and economic growth. Critics contend that with national debt exceeding $39 trillion and annual interest expenses surpassing $1 trillion, additional tax cuts worsen fiscal conditions. Similar efforts occurred during Trump's first administration, with Senator Ted Cruz proposing indexation legislation in 2018.

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