Republican Study Committee (RSC) and Congressional Real Estate Caucus members, led by Rep. Mark Alford (R-MO), are transmitting a letter Friday morning to Treasury Secretary Scott Bessent, urging the department to use existing authority to index capital gains calculations to inflation, arguing the change could be implemented administratively without requiring new legislation.
“We write to urge you to utilize existing executive authority to remove the inflation tax on savings and investment by indexing the Department of the Treasury’s calculation of capital gains tax liability to inflation,” the lawmakers wrote in the letter to Bessent.
The signatories are Mark Alford (R-MO), Tracey Mann (R-KS), August Pfluger (R-TX), Ben Cline (R-VA), John J. McGuire III (R-VA), John Rose (R-TN), Jimmy Patronis (R-FL), and Scott Perry (R-PA).
“As co-chair of the Real Estate Caucus and chair of the RSC Messaging Task Force, I believe we should reward long-term investment — not punish it,” Alford exclusively told Breitbart News. “When families hold a home or property for decades, much of the price increase reflects inflation, not real gain. Indexing capital gains to inflation is a common-sense reform that will free up housing inventory, promote investment, and make it easier for the next generation to achieve the American Dream of homeownership.”
They write that “homeownership and long-term real estate investment remain central to achieving the American Dream for millions of families,” but that the current tax treatment requires taxpayers “to pay capital gains taxes not only on real economic appreciation, but also on nominal gains attributable solely to inflation.”
According to the letter, this treatment is “inconsistent with basic tax fairness and undermines incentives for long-term investment in housing and real property.”
The lawmakers note that a similar argument has been made previously. “In 2019, a group of Senate Republicans led by Senator Ted Cruz urged the Treasury Department to use its existing authority to eliminate inflationary gains from the calculation of capital gains,” the letter explains. The senators contended that “defining cost basis in a manner that removes the unfair inflation tax on savings would be a positive, pro-growth reform the Administration could undertake without additional legislation.”
“We agree with that assessment,” the House members added.
The letter places particular emphasis on the impact on homeowners who hold property over long periods of time. “Families who purchase a home or small real estate investment often hold that asset for many years or decades,” the lawmakers point out. “Over long holding periods, a substantial share of the nominal gain may reflect inflation rather than true increases in real value.”
They add that “taxing these phantom gains can discourage housing mobility, lock up housing supply, penalize long-term homeowners, and distort real estate investment decisions.”
The letter also references inflation during the previous administration, stating: “Four years of runaway inflation under President Joe Biden have only intensified this problem.” The lawmakers write that families have “already seen their purchasing power eroded” and argue homeowners should not face “an additional tax penalty driven by inflationary pressures beyond their control.”
They continue: “Administration should not be hamstrung by the inflationary environment inherited from the Biden era. Indexing capital gains to inflation would provide immediate, targeted relief by ensuring taxpayers are taxed only on real gains, not price-level distortions.”
“Homeownership is central to the American Dream, and families deserve a tax code reflecting that fact. President Biden’s runaway inflation greatly eroded purchasing power, and Americans should not be taxed on top of that inflation. Indexing capital gains tax to inflation is a fair, pro-growth reform that will help strengthen homeownership for the next generation. I thank Rep. Mark Alford for leading this effort and encourage Secretary Scott Bessent to seize this opportunity,” said Pfluger, who chairs the Republican Study Committee.
The lawmakers also connect the proposal to housing supply concerns. “Reducing these distortions would help improve housing market fluidity at a moment when many communities face tight inventory and elevated home prices,” they wrote, arguing that reducing the tax burden tied to nominal gains could “help free up existing housing stock, encourage reinvestment in local communities, and support a healthier, more affordable housing market for first-time buyers and growing families.”
“Homeownership is a cornerstone of the American Dream,” remarked Mann. “When outdated tax policies penalize long-term investment and discourage homeowners from selling, it locks up housing supply and makes affordability challenges even worse. Indexing capital gains for inflation would remove that barrier, unlock housing supply, and encourage reinvestment. This pro-growth reform would help more Americans build wealth through homeownership and invest in the communities they call home.”
The letter cites analysis from the Tax Foundation stating that “a significant share of unrealized capital gains reflects inflation rather than real growth.”
“Indexing capital gains to inflation would ensure taxpayers pay tax only on real income, aligning capital gains treatment with the inflation adjustments already applied elsewhere in the tax code, including individual income tax brackets,” the lawmakers wrote.
They further argue that the Treasury already has the authority to make the change. “Legal scholarship spanning decades indicates that the Treasury Department has authority to define cost basis for purposes of capital gains calculations,” the letter states. “Utilizing this authority to exclude inflationary gains would be a straightforward administrative action grounded in fairness and sound tax policy.”
The letter concludes: “American families, homeowners, and job creators should not be taxed on phantom income created solely by inflation. We therefore respectfully urge you to direct the Department of the Treasury to implement inflation indexing of capital gains as expeditiously as possible.”
Lawmakers’ push comes as housing affordability remains a central economic issue after years of rising prices and inflation during the Biden administration. Home prices reached record levels in 2024 amid an ongoing housing shortage and elevated mortgage rates, conditions that Bright MLS’s chief economist described as creating the “most unaffordable housing market in history.”
At the same time, the share of purchases by first-time buyers fell to just 24 percent that year — the lowest level since the National Association of Realtors began collecting the data in 1981. The median age of first-time homebuyers also rose to 38 in 2024, highlighting the challenges younger families face entering the market.
The Trump administration has indicated it is working to address the affordability pressures that developed during the Biden years. During a White House briefing, Press Secretary Karoline Leavitt emphasized the president is making “significant progress” in tackling the affordability crisis after years of elevated inflation, noting that inflation “remains under control” while wages for American workers have increased. She added that the administration is continuing efforts to improve economic conditions, saying President Donald Trump “will not stop working until he solves it.”
Earlier this year, Treasury Secretary Scott Bessent argued during a congressional hearing that immigration policies under the Biden administration contributed to housing inflation by increasing demand for the limited housing supply. “Housing, especially for working Americans, a Wharton study has shown that the mass unfettered immigration, adding 10-20 million new people demanding housing, Congresswoman, is what caused a great deal of housing inflation for working Americans,” Bessent said.
In a January interview discussing the Trump accounts, he remarked how “financial literacy” has improved, thus producing “well-informed consumers.” He further stated, “If you don’t have a home, you’re not going to start a family. The Trump administration is the most pro-family administration in history, and this is for the long term.”
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