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It increasingly looks as though there will be a second reconciliation bill, and House Ways and Means Chair Jason Smith (R–MO) says he wants tax provisions in it if it occurs. That’s fine, but there’s one tax cut idea floating around that he should exclude: indexing capital gains for inflation.

Capital gains indexation is popular among supply-siders. They argue that doing that would help unlock capital frozen in assets that owners won’t sell because of the taxes they would incur. Doing that, they contend, would recycle that money into productive investments, helping the economy grow.

Let’s stipulate that this might happen, although one can wonder whether enough assets would be sold to make a dent in a $31 trillion economy. The political downside to including this provision far outweighs any possible short- or medium-term economic gain.

Democrats already are making the traditional argument that Republicans only cut taxes for the rich. This is a canard, as the One Big Beautiful Bill Act and Trump’s 2017 tax cuts did help most individual taxpayers, too. But this provision would be particularly damaging because virtually the only people who could take meaningful advantage of it are the already rich and large corporations.

That’s........

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