President Donald Trump has ruled out for now slashing taxes on capital gains after a meeting with his advisers, a White House spokesman said on Wednesday.
Trump was meeting with his economic team Wednesday afternoon about possible tax policy changes, including one proposal he appeared to shy away from weeks ago.
Trump said last month that such a plan could be under consideration, before apparently reversing course, saying that indexing capital gains taxes to inflation could be perceived as elitist.
"President Trump was thoroughly briefed on the complex economic, legal and regulatory issues, and concluded that at this time he does not feel enough of the benefits will go to the middle class," White House spokesman Judd Deere said in a statement.
Tying capital gains taxes to the inflation rate could lower the taxes investors pay on profits from selling assets.
The president and his advisors have long pushed for tax cuts as a way to boost economic growth. As Trump seeks achievements to trumpet on the 2020 campaign trail, he and top aides will consider what tax tweaks they could accomplish in the coming months.
Trump's top economic advisor Larry Kudlow, Sen. Ted Cruz, R-Texas, and antitax crusaders such as Grover Norquist have advocated for the capital gains change. But the president recently said he may not push for the plan because it could be perceived as disproportionately helping wealthy Americans — even though he thinks he has the power to enact it without Congress.
If the Trump administration had embraced the idea, it would have had a tough time getting through Congress. The Democratic-held House likely would not approve the plan.
The meeting Wednesday capped a month of confusing messages from the Trump administration on tax policy. In late August, the president said he was "thinking about" cutting payroll taxes — only a day after a White House official denied he was considering it.
A day later, Trump said, "I'm not looking at a tax cut now." He said "we don't need it" because "we have a strong economy." He also downplayed the prospect of indexing capital gains to inflation at the time.
"It's probably better for the high-income people, and I'm not looking to do that. I want to do for the workers," he said.
Trump has touted the 2017 Republican tax cuts, the signature legislative achievement of his first term, as "rocket fuel" for the economy. However, the law has not juiced economic growth in the way the GOP had hoped. Trump has increasingly worried about fears of a looming recession.
Before the meeting Wednesday, Norquist, who has pushed for the proposal in conversations with administration officials such as Kudlow, said he believes Trump was previewing the arguments Democrats would make against indexing capital gains to inflation. He said Trump has supported the proposal for nearly a year and the White House was "seriously looking at" it.
"It's a very powerful political issue as well as a very good economic issue," he said.
Norquist argues reducing the tax burden on Americans' asset sales will help to boost economic growth: he said a CEO of a company gave him a rough estimate that $7 trillion in assets could be sold as a result of the change. He says it would help to "put a dollar figure on the value of electing Trump" because Democratic presidential candidates will likely oppose the plan.
Critics have pointed to a Penn Wharton Budget Model estimate that the top 1% of taxpayers would get about 86% of the benefit from indexing capital gains to inflation. It would also reduce government tax revenue by about $100 billion over a decade, according to the estimate.
Skeptics have also questioned how much it would kickstart economic growth relative to other tools that would give more relief to lower-income Americans.
Forty-two Senate Democrats, led by Minority Leader Chuck Schumer of New York and Sens. Ron Wyden of Oregon and Sherrod Brown of Ohio, wrote Treasury Secretary Steven Mnuchin in August asking him not to implement the capital gains changes.
"This unilateral move would almost exclusively benefit the wealthiest Americans, add to the ballooning federal deficit, further complicate the tax code, and ignore longstanding Justice Department policy," they wrote at the time.
— CNBC's Eamon Javers and Reuters contributed to this report.