Donald Trump’s renewed pledge to “Make America Great Again” requires nothing less than reigniting economic growth and prosperity. Wealth creation is essential. Yet as Congress prepares to extend and expand upon Trump’s landmark Tax Cuts and Jobs Act of 2017, he can take matters into his own hands by issuing an executive order to index capital gains for inflation.
Taxing inflationary “phantom” capital gains is an unfair and ill-advised policy that punishes risk and success.
Consider this: You invest $1,000, and after four years of Joe Biden in the White House, you sell that investment for $1,100. But since inflation raged during Biden’s tenure, the $1,100 you receive will be worth less in real terms than the $1,000 you invested. And yet, under current law, you will pay a tax on your $100 capital “gain.”
Talk about perverse!
“As has been well documented,” writes Alan Auerbach, University of California economist, “realized capital gains may be subject to tax rates that easily exceed 100% of real gains in the presence of inflation.”
But it’s the law. And not only would eliminating it be the fair thing to do for investors, it would ignite a surge of American prosperity.
Eight years ago, the late Treasury economist Gary Robbins estimated that indexing capital gains for inflation would, by 2025, create an additional 400,000 jobs, grow the U.S. capital stock by $1.1 trillion and boost GDP by roughly $500 billion. Because capital gains were never indexed, average household income today is $3,600 lower than it could have been otherwise.
However, it’s never too late to start doing the right thing.
Congress has repeatedly toyed with indexing capital gains. In fact, indexing capital gains used to be a bipartisan issue. In the early 1990s, congressional Democrats touted indexing as an effective way to boost economic growth and benefit workers.
“If we really want to increase growth,” said a youthful Chuck Schumer, the then-future Senate minority leader, “there are proposals that we can do. I would be for indexing all capital gains, savings and borrowings.”
Having mastered the ways of the D.C. swamp, Schumer now opposes indexing capital gains. Listen to Congressman Schumer, not Senator Swamp.
Indeed, as Trump emphasized in 2019, “Indexing is something that a lot of people have liked for a long time. It’s something that would be very easy to do. It’s something that I am certainly thinking about.”
Looking forward, the Congressional Budget Office estimated last month that federal capital gains tax receipts will total $2.8 trillion over the decade ahead. If only one-fourth of those tax receipts—a conservative estimate—are due to taxing phantom gains, American taxpayers will pay $700 billion in taxes on income that doesn’t exist.
Opponents of capital gains indexation say the subsequent revenue loss would be too great. But inasmuch as inflationary gains should not have been taxed in the first place, a revenue loss is a good thing. It represents the correction of a tax injustice.
The second-order effects that Robbins documents should remove any reservations based on revenue loss. Without the federal tax on inflationary gains, asset prices will adjust until they reach a new, higher equilibrium. Investors will see their portfolios appreciate bigly.
It’s a safe bet that millions of American investors and pensioners would choose a Dow Jones average of 50,000 with indexation over a Dow Jones average of 44,500 without indexation.
As taxpayers realize real capital gains, the federal government will collect billions of dollars in new tax revenue. Federal tax revenue may ultimately be higher with indexation, not lower.
There is the question of whether Trump has the legal authority to issue an executive order instructing the Treasury secretary to issue new regulations indexing the capital gains cost basis for inflation. It comes down to whether the governing Internal Revenue Code section covering the definition of the word “cost” is sufficiently ambiguous to allow regulatory reinterpretation. Congress never specifically mandated that “cost” was to be determined in nominal terms, nor did it prohibit the use of real valuation.
According to a watershed 2012 paper by Charles Cooper and Vincent Colatriano in the Harvard Journal of Law & Public Policy, “jurisprudential developments over the last two decades have confirmed . . . that Treasury has regulatory authority to index capital gains for inflation.” With that justification, Trump has little reason to hold back.
James Carter is a contributor to The Daily Caller News Foundation and a principal with Navigators Global. He previously headed President Donald Trump’s tax team during the 2016-17 transition and served as a deputy assistant secretary of the Treasury for then-President George W. Bush.
During his campaign and since taking office, President Donald Trump often repeated his desire to bring back the same “drill, baby, drill” oil and gas agenda that characterized his first term in office.
But that term began 8 long years ago and much has changed in the domestic oil business since then. Current market realities are likely to mitigate the industry’s response to Trump’s easing of the Biden administration’s efforts to restrict its activities.
Trump’s second term begins as the upstream segment of the industry has enjoyed three years of strong profitability and overall production growth by employing a strategy of capital discipline, technology deployment and the capture of economies of scale in the nation’s big shale play areas. Companies like, say, ExxonMobil and Oxy and their peers are unlikely to respond to the easing of government regulations by discarding these strategies that have brought such financial success in favor of moving into a new drilling boom.
This bias in favor of maintenance of the status quo is especially likely given that the big shale plays in the Permian Basin, Eagle Ford Shale, Bakken Shale, Haynesville and the Marcellus/Utica region have all advanced into the long-term development phases of the natural life cycle typical of every oil and gas resource play over the past 175 years. Absent the discovery of major new shale or other types of oil-or-natural gas-bearing formations, a new drilling boom seems quite unlikely under any circumstances.
One market factor that could result in a somewhat higher active rig count would be a sudden rise in crude oil prices, if it appears likely to last for a long period of time. Companies like Exxon, Chevron, Oxy and Diamondback Energy certainly have the capability to quickly activate a significant number of additional rigs to take advantage of long-term higher prices.
But crude prices are set on a global market, and that market has appeared over-supplied in recent months with little reason to believe the supply/demand equation will change significantly in the near future. Indeed, the OPEC+ cartel has been forced to postpone planned production increases several times over the past 12 months as an over-supplied market has caused prices to hover well below the group’s target price.
But it is wrong to think the domestic oil industry will not respond in any way to Trump’s efforts to remove Biden’s artificial roadblocks to energy progress. Trump’s efforts to speed up permitting for energy projects of all kinds are likely to result in a significant build-out of much-needed new natural gas pipeline capacity, natural gas power generation plants and new LNG export terminals and supporting infrastructure.
Instead of another four years of “drill, baby, drill,” the Trump efforts to speed energy development seem certain to result in four years of a “build, baby, build” boom.
Indeed, the industry is already responding in a big way in the LNG export sector of the business. During Trump’s first week in office, LNG exporter Venture Global launched what is the largest energy IPO by value in U.S. history, going public with a total market cap of $65 billion.
With five separate export projects currently in various stages of development, all in South Louisiana, Venture Global plans to become a major player in one of America’s major growth industries in the coming years. Trump’s Day 1 reversal of Biden’s senseless permitting pause on LNG infrastructure is likely to kick off a number of additional LNG projects by other operators.
The Trump effect took hold even before he took office when the Alaska Gasline Development Corporation entered into an exclusive agreement in early January with developer Glenfarne to advance the $44 billion Alaska LNG project. The aim is to start to deliver gas in 2031, with LNG exports following shortly thereafter.
America’s oil and gas industry has demonstrated it can consistently grow overall production to new records even with a falling rig count in recent years. Now it must grow its related infrastructure to account for the rising production.
That’s why Trump’s “drill, baby, drill” mantra is likely to transform into “build, baby, build” in the months and years to come.
David Blackmon is a contributor to The Daily Caller News Foundation, an energy writer, and consultant based in Texas. He spent 40 years in the oil and gas business, where he specialized in public policy and communications.
Another election has come and gone, and once again Arizona showed the nation that it doesn’t know how to count votes. Like a bad movie we are forced to watch every two years, rampant delays in processing early ballots left voters waiting over a week to find out who won key races in the state.
Virtually everyone around the country watching our slow-motion election train wreck, from major media outlets to national pundits, agreed that fixing Arizona’s tabulation process is long overdue.
Everyone, that is, except Governor Katie Hobbs and her partisan Democrat allies in the legislature.
This shouldn’t be a total shock to those who have followed previous attempts to reform our election system. Over the last couple of years, Democrats have opposed popular election reforms like requiring basic proof of citizenship to vote, all while millions were pouring in illegally through the southern border. They argued against commonsense voter ID laws, claiming our elections are safe and secure without them (and California democrats even banned voter ID outright).
And now, after Arizona was again one of the last states to finish ballot processing, the Democrats remain opposed to ensuring we have election night results…
The Left has done a great job of influencing the issue of birthright citizenship. Most Americans oppose granting automatic citizenship to children born to illegal immigrants, but they also believe that we’re stuck with this policy.
They’re told repeatedly that the practice is enshrined in the Constitution’s 14th Amendment, that it has been affirmed by the Supreme Court, that the jurisprudence around it is settled law, and that challenging the matter now is unconstitutional and disloyal.
None of that happens to be true, but in the meantime, we’re saddled with a logically incoherent immigration system. Yes, immigrants are central to America’s story. But immigration law must be dedicated to the common good, not the benefit of those willing to flout our laws.
Immigrants should be vetted to ensure that they are likely to assimilate and be of value to their adopted country. Instead, we incentivize illegal immigrant mothers to cross the border before birth so their offspring can be entitled to lifelong citizenship.
So, did the writers of the 14th amendment botch the job, subjecting their descendants to such a dysfunctional system? No. In language more commonly understood at the time, they plainly stated, “All persons born or naturalized in the United States and subject to the jurisdiction thereof, are citizens of the United States and the State wherein in they reside.”
The 14th amendment was written in 1868 to clarify that the newly emancipated slaves were granted all the privileges and rights of citizenship. There is nothing in the historical record to suggest that the authors had the slightest intent to grant citizenship to all born on American soil, much less those with parents living here illegally. The jurisdiction language was added specifically to prevent such an interpretation.
Advocates of constitutional originalism should also note that the author, Senator Jacob Howard of Michigan, explained it was meant to describe “a full and complete jurisdiction, the same jurisdiction in extent and quality as applies to every citizen of the United States now.”
He clearly is not describing an illegal alien. Senator Lyman Trumbull, an influential supporter of the amendment, also emphasized “jurisdiction meant not giving allegiance to anyone else.”
The legal scholar Lino Graglia points out that, as the authors would have understood it, those who are born to parents legally in the US “are subject to the jurisdiction there of and so would have constitutional claim to birthright citizenship.” Just as plain is the fact the 14th Amendment, as written, would not apply to those born to illegal aliens, soldiers posted in a foreign country, or foreign diplomats.
Birthright advocates claim that the 1897 Supreme Court case of Wong Kim Ark clinches their claim that children of illegal immigrants born here are entitled to the full citizenship. Wong had traveled back to China with his parents and was unjustifiably denied reentry until the decision was overturned by the Court. They ruled that to bar Wong would be “to deny citizenship to thousands of persons of [European] parentage who have always been considered and treated as citizens of the United States.”
That makes sense, since Wong had the necessary documentation and his parents had been on American soil legally at the time of his birth, there being no laws defining them otherwise at the time. This is exactly the reason why this much ballyhooed ruling does not apply to the practice of granting citizenship to the children of illegal aliens. In fact, the Supreme Court has never opined on the question.
The clear intent of the amendment, the language, and the historical record are all in accord. Yet the 14th Amendment has been completely untethered from its original meaning and impact. The Left and the Democratic Party have taken something meant to right a wrong and manipulated it to the advantage of those entering the country illegally.
There are at least 5 million children in America who have received citizenship inappropriately, or about one in eight U.S. births. That works well for those who relentlessly seek ways to produce millions of future Democrats.
The rest of us should continue to respect our Constitution and our history. The incredible privilege of citizenship should go only to those who merit it.
Dr. Thomas Patterson, former Chairman of the Goldwater Institute, is a retired emergency physician. He served as an Arizona State senator for 10 years in the 1990s, and as Majority Leader from 93-96. He is the author of Arizona’s original charter schools bill.
The federal government owns multiple trillions of dollars of federal assets — from land, to buildings, to patent rights, to mineral rights, to immigrant visas, to oil fields to trucks and trains and unused office furniture equipment.
The government could earn well more than $1 trillion and perhaps as much as $10 trillion by selling off these assets that are simply hoarded (figuratively) in the dark and dusty basement of government buildings. These assets could then generate added annual tax receipts once they are utilized for productive purposes.
I’m not talking about selling the Washington Monument or Yellowstone National Park. The sales could and in most cases should be limited to American citizens and American businesses.
I’m referring to NON-environmentally sensitive properties that could be put to use growing our economy and using the money to retire some of our $35 trillion national debt. The sales could and should in most cases be limited to American citizens or businesses.
It’s a win-win for taxpayers, our children (who will be handed a lower debt obligation) and the U.S. economy.
One of the most valuable assets that should be put on the auction block immediately is tracts along the electro-magnetic spectrum. The spectrum contains the invisible airwaves that power mobile phones, Wi-Fi and other wireless technologies such as 5g communications.
In the past, auctioning spectrum rights to telecommunication firms and tech companies has raised more than $100 billion for the U.S. Treasury.
Congress could raise at least another $100 billion in another round of spectrum auctions. This would sell or lease space that the military doesn’t need and that other agencies of government (such as local police and fire departments) are fine without.
This strategy would help stimulate the economy in two ways. First, as in the past, the revenues raised can offset any real or imagined revenue loss from the imperative of making the Trump tax cuts permanent.
A new report by the economic consulting firm NERA, finds that auctioning 100 megahertz of mid-band spectrum that’s licensed for 5G will boost U.S. GDP by more than $260 billion, and create 1.5 million new jobs
On at least four previous occasions, Congress has used dollars raised from spectrum auctions to offset tax cuts in reconciliation packages. That’s exactly what they should do again.
“Effectively allocating spectrum to meet the ever-growing need is critical to promoting American innovation and protecting our national security,” Chairman Richard Hudson said yesterday at the first House Energy and Commerce Subcommittee on Communications and Technology hearing of the new Congress.
He points out correctly that the U.S. government has been conducting spectrum auctions for the past 30 years, and they have a track record of success. They are much fairer than giving bureaucrats the power to decide who gets spectrum, which can lead to allocations that are politically or ideologically motivated, with the result that spectrum would be used inefficiently (or not at all) by beneficiaries.
Auctions are open and transparent, minimizing the risk of shady backroom deals. They ensure that the spectrum goes to those who value it most and can use it most effectively.
Anyone who is concerned about ensuring the uninterrupted connectivity of our electric grid system and our daily Internet connection should be all for these auctions — especially as the world goes wireless and communicates less through cables and more through satellite beams.
This is also critical to maintaining our technology lead against the Chinese communist government. One Chinese news agency reported last July that, “China’s 5G network now covers every city and town in the country, as well as more than 90 percent of its villages.”
We are dangerously lagging behind and without timely spectrum auctions the gap will grow wider.
Auctions of the spectrum and other federal assets will drive progress and prosperity — and raise revenue to pay for tax cuts or retire our debt that is soon to eclipse $40 trillion. What’s not to like about that?
Stephen Moore is a contributor to The Daily Caller News Foundation, a visiting fellow at the Heritage Foundation, and a co-founder of Unleash Prosperity. His latest book is “The Trump Economic Miracle.”
There seems to be significant misinformation surrounding immigration and deportation, and as a legal Colombian migrant, I feel the need to clarify a few things.
First, there is a massive backlog of individuals who already have deportation orders. In most cases, U.S. Immigration and Customs Enforcement (ICE) does not catch these individuals off guard. Most are well aware of their deportation orders and have had ample time to make arrangements, especially if they have children.
At the same time, it’s critical to acknowledge that our country cannot sustain an infinite number of people crossing the border illegally, unvetted, and unchecked. Simply crossing illegally, claiming credible fear, and applying for asylum does not make it right, especially when one did not arrive legally and does not have credible fear. Most individuals who apply for asylum do not qualify, and many fail to follow through with their legal appointments. This process, already overwhelmed by years of backlog, often results in denied claims, something the applicants are frequently aware of.
It’s frustrating to watch media outlets like CNN focus on “gotcha” questions directed at individuals like Tom Homan, instead of addressing the bigger picture with logic and reason. Deportations prioritize criminals and those with criminal backgrounds. If undocumented individuals happen to be caught alongside a criminal, they may also face deportation as collateral. Once the immediate threats to national security are addressed, the system will move on to others. However, this process will take time and require more funding and resources to scale effectively.
We need to set emotions aside and recognize the hard truths: human trafficking and exploitation must end. Migrants are often misled and lured by false promises of opportunities or legal status. Many die during their journey, are trafficked, go missing, or suffer horrendous abuses, including rape. When they arrive, they often become a financial burden and face years of uncertainty.
Given the current situation, and as a legal Colombian migrant, I believe I have the right to speak up. Beyond the logistical and legal issues, I find it deeply disrespectful, both to Americans and to legal immigrants like me, that the previous administration’s open-border policies disregarded the rule of law and encouraged such reckless disregard for human life. The treatment of migrants in this system has been appalling, and it’s heartbreaking to see leaders like Colombian President Gustavo Petro exploit the situation further.
Why are we spending so many resources on undocumented migrants while neglecting veterans, those struggling with addiction, the homeless, and natural-born Americans, naturalized citizens, and legal immigrants? What about DACA recipients, those who filed paperwork, and others who have been waiting for years for real solutions? At the same time, we are sending billions of dollars abroad while our own people are suffering here in America.
In addition, how do you explain all this to Angel Parents, those who have lost their children to crimes committed by undocumented migrants? Their pain and their losses are a stark reminder of the magnitude of this crisis.
I know the current issue with our immigration system is a complicated one, and I want to emphasize that we must have compassion for everyone equally, including undocumented migrants. However, I want to make perfectly clear that the previous administration did not care for you, me, legal immigrants, citizens, and certainly not the undocumented migrants. Many people filed their legalization cases here in America and others filed abroad waiting to be united with their families for years and years. Many refugees in camps and foreign countries are losing hope because it feels like it’s taking an eternity.
And what about those undocumented migrants who have been here for 20 years or more, who have not committed crimes, who pay taxes, own businesses, create jobs, and have U.S. citizen children who are productive members of society? They feel offended because the previous administration forgot them and did not offer a path to legalization but instead opened the border. One could argue that they should be helped before those crossing.
Lastly, I do not approve of illegal immigration in any way. But we must be realistic. They are already here. How about giving them a fine and creating some sort of path to permanent residency if they meet certain very strict criteria? By no means should we enable illegal immigration, but ignoring the realities of the situation is not a solution either.
Our immigration system must reflect fairness, logic, and compassion. This means addressing those who have committed crimes or pose a security threat, while also considering solutions for those who have demonstrated their commitment to contributing positively to this country. It’s a balance we must strive for—one that ensures the dignity of all while upholding the rule of law.
