GOP Senators Push for $200 Billion Tax Cut Without Congressional Approval

Sens. Ted Cruz (R-Texas) and Tim Scott (R-S.C.) are urging Treasury Secretary Scott Bessent to enact roughly $200 billion in tax cuts without the approval of Congress, focusing on capital gains taxes. The proposal aims to lower the federal tax on profits from the sale of stocks, bonds, real estate, and other investments.

The Proposal: Indexing Capital Gains for Inflation

The senators propose indexing capital gains taxes for inflation. Currently, investors pay capital gains tax on the full profit from an asset sale. Indexing would adjust the original purchase price to reflect inflation, reducing the taxable income. For example, an investor who bought $100 worth of stock in 1990 and sold it today for $300 would currently owe capital gains taxes on the full $200 profit. The senators argue this adjustment would incentivize investment and spur economic growth.

Justification and Potential Impact

Cruz and Scott contend that the Treasury Department has the existing executive authority to implement this change, framing it as a way to end an “unfair inflation tax on everyday Americans.” They estimate the shift would reduce tax revenue by approximately $200 billion. The senators believe this tax break could incentivize long-time property owners with significant equity to sell, potentially increasing the supply of homes available to buyers. The U.S. Housing supply gap was estimated at 4.03 million homes in 2025, up from 3.8 million in 2024, according to Realtor.com.

Broader Legislative Efforts

This proposal comes alongside other legislative efforts to address capital gains taxes and housing affordability. In 2025, a bipartisan group of lawmakers introduced the “More Homes on the Market Act,” which would double the current capital gains exemptions for primary home sales and adjust those figures annually for inflation. The Republican Study Committee also proposed eliminating capital gains tax on properties sold to first-time homebuyers and on sales of rental homes to tenants. Former President Donald Trump expressed interest in eliminating capital gains tax on primary home sales in July.

Who Pays Capital Gains Tax?

According to a 2025 report from the National Association of Realtors, an increasing number of property sellers are exceeding the current capital gains exclusion limits. The report estimates that 29 million homeowners (34%) could exceed the $250,000 exemption for single filers, and 8 million (10%) could exceed the $500,000 limit for married couples filing jointly. Those who exceed the limit can pay up to 20% capital gains tax on excess profits, plus a potential 3.8% net investment income tax for higher earners.

Expert Opinions and Concerns

Experts are divided on whether capital gains tax reform is an effective solution to the housing affordability crisis. Some conservative and low-tax organizations support the “More Homes on the Market Act,” arguing that it would encourage home sales and increase supply. However, other tax policy experts, such as Howard Gleckman of the Urban-Brookings Tax Policy Center, believe the impact would be minimal. Gleckman suggests that other factors, such as older homeowners’ reluctance to move, are more significant barriers to increasing housing supply. A February report from Brookings indicated that most senior households would not benefit from expanded capital gains exemptions, and the policy would likely do little to change seller behavior.

Legal scholars and some administration officials also disagree with Cruz and Scott’s assessment of the Treasury’s authority to act unilaterally.