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Commentary: Ted Cruz and his GOP colleagues are pushing yet another tax break for the 1%
America’s beleaguered 1%, backed by their supporters in Congress, are pleading for your sympathy.
They say they’re treated unfairly by the federal tax code, you see, because inflation has sapped the value of their most cherished tax break, the preferential tax rate on capital gains. And they want it fixed.
Inflation, says Sen. Ted Cruz (R-Texas), the leading proponent of this idea, has been “turning gains into an unfair tax burden.” Last year, he proposed to rectify this injustice via the Capital Gains Inflation Relief Act of 2025.
That was a rerun of similar bills he introduced in 2018 and 2021. None of them passed, so this time around, he’s proposing to circumvent Congress entirely by persuading President Trump to enact the break by presidential fiat.
The argument proponents make sounds logical until you think about it.
— Steve Wamhoff, Institute on Taxation and Economic Policy (2019)
The reaction by legal and economic experts outside the GOP echo chamber has been overwhelmingly negative. Whether Trump could enact the tax break via executive order is dubious , they say, and in any event the break is unwarranted and economically unwise.
“The argument proponents make,” wrote Steve Wamhoff of the Institute on Taxation and Economic Policy in 2019, “sounds logical until you think about it.” The legal and economic considerations haven’t changed since then.
As Wamhoff observed, there’s a certain amount of superficial logic underlying the argument that inflation in effect raises the tax rate charged on capital gains — the profits investors pocket from increases in the value of their stocks and bonds over time.
That’s because of how the gain is calculated. The math starts with the “basis,” the price originally paid for the asset, and proceeds to the final sale price. The difference is subject to the capital gains tax.
If the asset has been held for more than a year, the gain is taxed at a rate that tops out at 20%. This year, the rate is zero for taxpayers with income up to $48,350 ($96,700 for couples) and 15% for those with income up to $533,400 ($600,050 for couples). The top rate of 20% kicks in for those with incomes higher than that.
Gains on assets held for less than a year are taxed at the higher rates due on ordinary income, which this year top out at 37% on incomes over $640,600 ($768,700 for couples).
The issue raised by the proponents of change is that the basis is calculated on a pre-inflation value, but the gain on post-inflation values. Therefore, they assert, at least some of the gains reported by investors are due not to real advances in an asset’s value, but to inflation. They say no one should be taxed on inflation.
To illustrate, if you bought a share of stock for $5 a decade ago and then sold it for $9, your capital gain of $4 is subject to the tax. But if the value’s increase matched the inflation rate over that period, Wamhoff noted, “you have not genuinely profited.” Indeed, if your gain was less than the inflation rate, you might even be charged tax on an inflation-adjusted loss.
The remedy that Cruz proposes is to adjust the original basis for inflation. Say that due to inflation alone, that share of stock might have gained $3 in value. If one raises the basis by $3, the real taxable gain would be $1, not $4, quite a difference for the taxpayer.
There are a few problems with this narrative. Among the chief rationales for the lower tax rate on capital gains is to counter the effect of inflation. Adding the inflation indexing of the basis would mean accommodating inflation twice.
Another issue would be finding the right inflation index. Proponents of indexing typically cite the consumer price index, but that’s only one of numerous inflation measures the government calculates. Because the index tracks changes in the price of purchased goods, it’s not necessarily the right measure to adjust the values of capital assets such as stocks and bonds.
Then there’s the question of why only capital gains should be singled out for a special inflation adjustment. “Inflation distorts all forms of capital income and expense, not just capital gains,” observed Elena Patel of the Brookings Institution earlier this month. “Interest, dividends, rents: all of them partly reflect inflation.”
The impact of this change on the federal budget can’t be overlooked. The cost over 10 years, according to the Yale Budget Lab, would be $169 billion if the indexing rule were imposed only on newly purchased capital assets, but nearly $1 trillion if it were applied retrospectively to stocks and bonds already held by investors.
Also at issue is whether America’s rich really need another tax break. The tax cuts delivered by Republicans and Trump in 2017, during his first term, are estimated to be worth $1.5 trillion or more over 10 years. They were made permanent by the GOP budget bill enacted last year; the fiscal hawks at the Committee for a Responsible Budget estimate the cost of those provisions at more than $2.4 trillion over the next decade.
All that comes on top of a general reduction in top marginal federal income tax rates that have reduced them to the lowest level in a half-century.
As for the assertion by Cruz that inflation “will boost savings, spur investment, and create jobs nationwide,” there’s little evidence for that. Economists generally have calculated that whatever economic growth could be ascribed to the change would be washed out by the revenue loss from inflation-indexing only new purchases, and utterly swamped by the cost of indexing all holdings, past and future.
Nevertheless, Republicans have been relentless in trying to secure this tax break for their rich patrons. Legislation to enact the indexation of capital gains taxes was introduced in 1978, 1983, 1994, 1997 and 1998. Cruz introduced his own bills in 2018, 2021 and 2025.
All those efforts flopped in Congress. Accordingly, the advocates of inflation-indexing of capital gains have dusted off a workaround that first surfaced in 1992, during the George H. W. Bush administration. This is for the Treasury to rule on its own authority that “basis” means “inflation-adjusted cost.”
The Department of Justice and the Treasury subjected the question of whether the change could be made without congressional action to their gimlet-eyed scrutiny, and turned thumbs-down. “Not only did I not think we could, I did not think that a reasonable argument could be made to support that position,” then-Atty. Gen. William Barr said later. The Bush administration dropped the idea.
But Cruz, along with Sen. Tim Scott (R-S.C.) have urged Treasury Secretary Scott Bessent to revive it. Eight Republican lawmakers joined the parade, asserting in a March 5 letter that such a move would be “a straightforward administrative action grounded in fairness and sound tax policy.” (The Treasury Department didn’t respond to my request for comment.)
It should go without saying that with Democrats campaigning on an “affordability” platform, this idea sounds like political poison. It’s impossible to see it as anything other than a handout to the rich. How do we know this? Because it’s only the rich who have any significant exposure to the capital gains tax.
According to IRS data, about 75% of the income of the median American household, which earned about $84,000 in 2024, came from wages and only about 1.1% from capital gains. In the wealthiest households — those with $10 million or more in annual income— only about 12% came from wages but nearly half came from capital gains.
That may understate the value of capital gains for the wealthy. As Ed Kleinbard, the late taxation guru at USC, was fond of pointing out, the capital gains tax is our only truly voluntary tax. That’s because no one has to pay it until they sell the asset. If they hold it until their death, their heirs pay nothing, thanks to the “step-up” in basis for inherited wealth, which revalues the asset to its price as of the death of the owner, extinguishing the tax forever on what could be decades of gains.
After 48 years of unsuccessful politicking, one might be tempted to call the idea of indexing capital gains a certified washout. But when it comes to the GOP’s cherished hobby horses, it’s always too early to tell.
Bruce Bartlett, who served as an adviser to the Reagan and H. W. Bush administrations but has since become a most percipient critic of modern GOP economic nostrums, says the GOP’s peculiar genius is to keep even its unpopular policies simmering away in the expectation that, at some point in the future, a window will open up to get them enacted. That’s how they got abortion rights rescinded by the Supreme Court in 2022 — after 49 years of fighting against Roe vs. Wade.
When a GOP proposal fails to pass, Bartlett told me, “They put it on the shelf when the time isn’t right and when the situation changes they pull it off the shelf, dust it off, and they are ready to go again. … The left doesn’t do this. It waits until the political opportunity is ripe to even begin preparing. By the time they are ready, the opportunity has passed.”
The Republican fixation on relieving their rich patrons of the burden of capital gains taxes isn’t surprising. As I’ve reported in the past, the capital gains preference rate is the most valuable tax break the wealthy receive.
That’s because, in addition to being voluntary, as Kleinbard noted, it’s uncapped — unlike, say the deduction of mortgage interest.
This proposal doesn’t make sense even on its own terms. Isn’t it time for the proponents to drop the subject already?
A rule intended to prevent rent gouging in the wake of the Eaton and Palisades fires has lapsed in Los Angeles County, possibly exposing some renters to hikes.
The executive order that blocked rent increases was issued by Gov. Gavin Newsom amid the devastating wildfires last year. Under the order, landlords couldn’t increase rents by more than 10% above their prefire levels.
The rule, which was supposed to be temporary and was repeatedly extended, ended Friday after a vote to extend it again failed to garner enough votes. Supervisor Lindsey Horvath, whose district includes Pacific Palisades, sounded the alarm in a motion to extend price protections that failed to pass at the Board of Supervisors’ May 19 meeting.
“These price gouging protections continue to be necessary as construction and rebuilding continue, and as thousands of people remain displaced,” the motion said. “Families which signed short-term leases could face drastic price increases of 50% or more without further price gouging protection.”
Los Angeles County is home to more than 1 million rental properties, though not all of them needed protection from the new rule. There are already stricter rent increase caps for many residences, depending on the location, type and age of the building. Despite the rent control in the region, the people of Los Angeles pay among the highest rents in the country.
It is uncertain whether renters will face rapidly rising rents now that the protection has lapsed. But some real estate experts and policymakers said there was no need for the temporary rule that was part of the governor’s state of emergency.
Supervisors Kathryn Barger, Janice Hahn and Holly Mitchell abstained from voting on the motion to extend the protection, while Supervisors Hilda Solis and Horvath supported it.
“I abstained because I did not see sufficient evidence to justify extending this emergency ordinance, nor did I see evidence to eliminate it entirely,” Hahn said.
Barger’s office said she supported allowing the protections to sunset while waiting to see whether new information emerged.
“Market data already shows countywide rents are only about 2% above pre-emergency levels and rental inventory has grown,” Barger representative Helen E. Chavez Garcia said. “The Supervisor is also mindful of the burden these ongoing protections place on small property owners throughout the county.”
Mitchell did not immediately respond to a request for comment.
There haven’t been steep rent hikes in neighborhoods within three miles of the Palisades fire, according to a Times analysis of data from Zillow, the property listing company.
In ZIP Codes within three miles of the Palisades fire, rent increased 4.8% from December 2024 to April 2025. In areas around the Eaton fire, which destroyed swaths of Altadena, rent jumped 5.2% in the same period.
In L.A. County, ZIP Codes farther from the fires saw only about a 2% increase.
A landlords representative, Jesus Rojas of the Apartment Owners Assn. of Greater Los Angeles, told the supervisors during public comment at the meeting that the county’s rent-gouging rules have “long outlived the emergency they were intended to address” and are now being “wrongfully used to harm thousands of rental housing providers throughout the county.”
“There is no proof that multifamily rental housing providers are hugely increasing rents for impacted homeowners,” Rojas said.
Indeed, there are strong signs that the property market in the Los Angeles area has at last begun to cool.
L.A. metro-area rent prices recently fell to a four-year low, with the median rent slipping to $2,167 in December.
Meanwhile, condominium sales had their slowest start of the year in decades. Condo sales in Los Angeles have plummeted to a 20-year low, with fewer than 2,000 units sold in January and February — the worst start to the year since 2005.
Newsom defended the price-gouging protections shortly after they went into effect.
“In the days following the Los Angeles firestorms, we worked quickly to protect Los Angeles survivors from any form of exploitation,” he said in February 2025. “The state has the tools in place to not only block price gouging during this emergency, but also to prosecute bad actors.”
The Los Angeles County Department of Consumer and Business Affairs said it received more than 2,000 complaints after the fires, alleging that retailers and landlords were taking advantage of people put in hardship by their losses, and sent out more than 2,000 cease-and-desist letters to businesses and landlords for alleged price gouging, said Morine Merritt, who oversees department investigations into consumer and real estate fraud.
“Close to 90% of the complaints that we received involved allegations of rent increases,” Merritt said in an interview. Now that the fire-related protections have expired, existing laws and “regular market conditions determine price increases for goods and services, including rents,” she said.
Crackdowns on fire-related rent gouging have been rare, said Chelsea Kirk of the activist organization the Rent Brigade, which analyzed L.A. County’s rental market in the year after the fires. It reported 18,360 potential examples of price gouging in listings but said that few lawsuits had been filed by authorities so far.
Last week, Rent Brigade announced what it said was the first private civil lawsuit brought by a family that claimed to be rent-gouged in the aftermath of the wildfires. Plaintiffs Randall and Candy Renick, whose Altadena home was damaged, said they were charged nearly three times the maximum permitted rate for nearly 10 months. They seek restitution of $96,000 plus civil penalties and attorneys’ fees.
The rental market has probably stabilized since the fires, Kirk said, but other families may still be “locked into illegal rents” that they agreed to pay when they were in a rush to find housing after they were displaced.
Dear Mr. Pelley:
I meant what I said in my letter last week to the 60 Minutes team: joining 60 Minutes is the honor of my career and I am grateful to be working alongside the people who have contributed to the most important television journalism brand this country has ever produced. While I’m new to 60 Minutes, I’ve devoted my career to investigative journalism and storytelling. I started this job excited to collaborate and to benefit from the wisdom and experience of the 60 Minutes veterans, with you among them. For that reason, one of the first things I did in my new role was call you to talk and invite you to dinner. It is a profound disappointment that you rejected that overture and chose ambush instead. Yesterday, you hijacked my first meeting with staff to disparage me, my qualifications, and my intentions with remarkable incivility and contempt. I welcome a diversity of viewpoints and respectful debate among the team, but this was nothing of the sort. Yesterday’s performative display of hostility enacted in front of the staff instead of in a civil, private conversation-demonstrated that you have no interest in contributing to the future success of the show, or approaching my new tenure with a mind open to collaboration and progress. I am here to deliver first-in-class news programming, not to make headlines about newsroom drama. I am eager to work alongside those who share this goal.
Despite yesterday’s misconduct, I had hoped that in sitting down with you today we could find a path forward together. You made clear that you are not interested in such a path.
Your antipathy to the future of the show has come through loud and clear. And I have heard you. I therefore write on behalf of CBS News, Inc. (“CBS”) to inform you that your employment with CBS is terminated for cause effective immediately. Enclosed is your formal termination letter.
Sincerely,
Nick Bilton
Executive Producer, 60 Minutes
The co-founder of Aspiration, Joseph Sanberg, was sentenced to 14 years in prison on Monday after defrauding investors and lenders of over $248 million.
The startup, an eco-friendly digital banking company boasting fossil fuel-free investments, carbon offsets for gas purchases, and a debit card with cash-back benefits for shopping at clean companies, was founded by Sanberg and Andrei Cherny. Cherny left the company in 2022 and has not been charged.
Sanberg, an Orange County native, pleaded guilty to wire fraud in October after being arrested in March last year. Aspiration subsequently filed for bankruptcy and liquidated all of its assets by July.
Sanberg and venture capitalist Ibrahim AlHusseini, who also faces charges, together forged a series of bank statements in order to obtain loans. From 2020 to 2021, the pair forged AlHusseini’s bank statements to show millions of dollars in assets in order to obtain millions of dollars from lenders.
Additionally, they forged a letter from their audit committee stating that $250 million in funds were available, when in reality Aspiration had less than $1 million. The amount of loans defrauded exceeded $248 million.
In 2021, Sanberg artificially inflated Aspiration’s 2021 revenue by $44 million by recruiting 27 fake customers to sign letters of intent pledging tens of thousands of dollars per month for tree planting services. Sanberg himself funded the contracts and used the inflated revenue numbers to obtain more loans.
The charges sparked an NBA investigation into salary cap allegations due to Aspiration’s connections with Clippers owner Steve Ballmer.
Ballmer personally invested $60 million in Aspiration, all of which was lost. He is now the target of a civil lawsuit alleging his participation in the scheme. Ballmer denies the allegations.
The team announced a $300-million sponsorship deal with Aspiration, and Clippers player Kawhi Leonard signed a four-year, $28-million marketing contract with the company, which reportedly performed no duties. The issue has raised concerns about how players are circumventing the NBA’s salary cap.
The team lost the $300-million sponsorship deal and an additional $20 million paid for carbon offset purchases.
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