By Liesel Nygard
masslive.com
(TNS)
March 4 — Two senators are asking the Trump administration to approve a $200 billion tax cut without congressional approval.
U.S. Sens. Ted Cruz, R-Texas, and Tim Scott, R-S.C., asked the Treasury Department to cut capital gains taxes on investors. That would lower the tax burden on Americans selling stocks, businesses, homes and other assets, The Washington Post reported.
“This inflation tax unfairly penalizes savers and locks up capital that would otherwise flow back into the economy through new investment and higher wages, which slows economic growth,” Cruz and Scott wrote in a letter to U.S. Treasury Secretary Scott Bessent, according to The Hill.
The senators claim that the administration does not need congressional approval for this effort, even though some conservative legal experts and Treasury officials beg to differ.
A 2018 Penn Wharton Budget Model found that the top 1% of income earners would receive around 86% of the benefits from indexing capital gains to inflation, while the bottom 80% of earners would receive 1%.
“Not good tax policy if you don’t adjust other parts of the system for inflation, most importantly reducing people’s interest deduction to only real interest—no longer allowing deductions for the inflation component of interest,” Harvard professor Jason Furman said on X, adding that the senators’ proposal is illegal.
Kyle Pomerleau, a tax policy expert at the conservative American Enterprise Institute, also called the change illegal and said that it “won’t have much of an impact on the economy one way or another.”
According to a 1992 Justice Department Office of Legal Counsel opinion, the Treasury Department cannot make such a change on its own without including Congress. Any attempt to do so through executive action could result in legal challenges.
While the plan could face legal challenges, Cruz and Scott have claimed that the tax relief would resolve instability in the housing market.
“Many Americans are choosing not to sell their homes to avoid substantial capital gains taxes, creating a lock-in effect that discourages downsizing even when their homes no longer meet their current needs,” the lawmakers wrote, according to The Hill. “Adjusting the capital gains cost basis for inflation incentivizes those who have held property for decades to downsize and list their single-family homes for sale—increasing the supply of family housing.”
It remains unclear whether Bessent will respond to the lawmakers’ proposal, the Post reported.
The proposal could gain traction after President Donald Trump said on Truth Social in January that he would pay “special attention” to the housing market.
During Trump’s first term, then-Treasury Secretary Steven Mnuchin considered the option before concluding that Congress should act instead.
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©2026 Advance Local Media LLC. Visit masslive.com. Distributed by Tribune Content Agency LLC.
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