Trump Plans to Cut Capital Gains Tax to Win Midterm Elections

In an effort to reverse the downward trend in the midterm elections, Trump is proposing a tax cut package that includes linking capital gains tax to inflation and significantly increasing the tax exemption for property sales.

As the U.S. midterm elections approach, the Trump administration is brewing a new round of tax stimulus policies, attempting to attract voter support by releasing policy incentives. According to senior economic advisors at the White House and a former government official, Trump is currently considering calling on Congress to cut capital gains tax and establish large tax exemption clauses for specific property sales.

Recent polls indicate that Trump's electoral situation is extremely severe. According to comprehensive statistics from several organizations, including AP-NORC, the American Research Group, and the Pew Research Center, Trump's national approval rating has dropped to 36%, while the disapproval rate has surged to 59%, marking a historic low since his second term began.

Data shows that in all key battleground states, including Arizona, Georgia, Nevada, North Carolina, Pennsylvania, Wisconsin, Florida, and Ohio, Trump's net approval rating (approval rate minus disapproval rate) has turned negative, ranging from -11% to -22%.

Kevin Hassett, director of the National Economic Council, stated in an interview with Fox Business host Larry Kudlow on Tuesday that Trump hopes to provide more incentives to voters to ensure the Republican Party wins in the November elections.

Kudlow, who served as the chairman of the Senate Finance Committee during Trump's first term and remains an ally of Trump, mentioned that he has recently discussed the capital gains tax "inflation linkage" proposal with Trump.

The so-called "inflation linkage" means deducting inflation factors when calculating capital gains tax, taxing only the actual appreciation of assets. Additionally, Kudlow proposed exempting capital gains tax for homes sold for less than $2 million and revealed that Trump has shown "great interest" in these ideas. Kudlow pointed out that Trump strongly agrees with excluding the "inflated profits" caused by rising prices when calculating taxes and believes that significantly increasing the exemption limit can effectively reduce the tax burden on taxpayers.

Hassett further confirmed in the interview that Trump is actively planning new policies aimed at demonstrating to voters the promises that the Republican Party would fulfill if it continues to hold power. He expects that in the sprint phase before the midterm elections, the Trump administration will intensively release more policy signals, which is also the reason for Trump's recent frequent communications with advisors like Kudlow on core economic issues.

However, these grand tax reform visions face multiple obstacles in practical implementation. The first is the legislative threshold: most tax reforms must go through the congressional legislative process, meaning that these ideas are almost impossible to be realized before the midterm elections in November. Although there have been discussions in the executive branch about unilaterally promoting the linkage of capital gains tax to inflation through executive means, legal experts generally believe that this move is likely to trigger judicial lawsuits.

Secondly, there are internal party divisions and political risks. While some Republican lawmakers support capital gains tax reform, there is no consensus within the party on this issue. Furthermore, although increasing the tax exemption for property sales (currently, the exemption limit for married couples is $500,000) has some public support from both parties, overall, the reduction of capital gains tax often leans towards high-net-worth individuals, which may expose the Republican Party to accusations of "favoring the rich" in public opinion.

White House spokesperson Kush Desai stated in response to related comment requests that Trump is always exploring new ways to "make America prosperous again," but any formal policy announcements will be made directly by the government.

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