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By Dr. David Edward Marcinko; MBA MEd

SPONSOR: http://www.MarcinkoAssociates.com

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President Donald Trump is considering a new economic pitch to voters ahead of the November midterm elections: cutting capital gains taxes and expanding an exemption for home sales. The idea surfaced publicly when National Economic Council Director Kevin Hassett told Fox Business host Larry Kudlow that Trump wants to give voters fresh incentives to back Republicans this fall. Kudlow, who ran the same council during Trump’s first term, added that he had recently discussed indexing capital gains to inflation with Trump directly.

The mechanics of the proposal matter here. Indexing capital gains means taxes would only apply to the portion of an investment’s growth that exceeds inflation, rather than the full nominal gain. Under current law, if someone bought an asset years ago and its price rose partly because of inflation and partly because of real appreciation, they pay tax on the entire increase. Indexing would shrink the taxable base substantially, especially for long-held assets like stocks and real estate. This is not a brand-new idea. Republican administrations, including Trump’s first term, have explored implementing it unilaterally through Treasury regulation without going through Congress, but legal experts have warned that approach would likely draw court challenges. That legal uncertainty appears to be why the current push involves calling on Congress to act instead.

The second piece of the plan targets home sales. The existing capital gains exemption for a primary residence sits at $500,000 for married couples, a threshold that hasn’t been adjusted in decades despite substantial home price appreciation in many markets. Raising that cap has a broader coalition of support than the capital gains indexing idea, since middle-class homeowners in high-cost areas increasingly bump against the current limit. That gives the home-sale piece a more bipartisan flavor than the capital gains change, which tends to draw sharper partisan lines.

Politically, the timing reflects the reality that midterms are historically rough on the party holding the White House, and this cycle appears no exception. Republicans currently hold narrow majorities in both chambers of Congress, and Democrats are looking to build on gains from off-cycle elections. Trump’s team appears to be searching for policy pledges that can be presented as pocketbook wins heading into November, when control of the House and Senate will be decided.

The proposal, however, carries an obvious political vulnerability: both elements would disproportionately benefit wealthier households. Indexing capital gains helps most those with the largest unrealized gains sitting in investment portfolios—commentary around the plan has pointed to how someone like Warren Buffett, who has held stakes in companies like Coca-Cola and American Express for decades, would see outsized savings under an indexing scheme, even if a total tax bill of zero remains unlikely. Critics on the left have already characterized the plan as another tax break aimed at high-income donors rather than working- or middle-class voters, arguing it echoes distributional criticism leveled at other recent tax legislation.

It’s worth noting that nothing here is settled policy. The White House has been careful to keep distance between the trial-balloon commentary and any formal proposal. A White House spokesman said Trump is “always exploring new ideas” but that any actual policy announcements would come directly from the administration, not from allies speaking to the press. No legislative language or executive order has emerged. Whether this becomes an actual midterm campaign plank—or the latest example of policy floated more for headline value than legislative follow-through—will depend on whether the White House decides the political upside outweighs the “tax cuts for the wealthy” attack lines it hands to opponents.

EDUCATION: Books

SPEAKING: Dr. Marcinko will be speaking and lecturing, signing and opining, teaching and preaching, storming and performing at many locations throughout the USA this year! His tour of witty and serious pontifications may be scheduled on a planned or ad-hoc basis; for public or private meetings and gatherings; formally, informally, or over lunch or dinner. All medical societies, financial advisory firms or Broker-Dealers are encouraged to submit an RFP for speaking engagements: CONTACT: Ann Miller RN MHA at MarcinkoAdvisors1738@outlook.com -OR- http://www.MarcinkoAssociates.com

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