Trump's Capital Gains Plan Could Save Investors Billions

A proposal in Washington to adjust capital gains taxes by accounting for inflation has investors buzzing, particularly around Warren Buffett's holdings. The idea, which is being weighed by the Trump administration, involves adjusting an investor's original purchase price upward to reflect accumulated inflation over the holding period.

This would help address a blind spot in current tax laws, where capital gains are taxed as if they were all real profit, rather than some portion due to inflation. Republican Sens. Ted Cruz and Tim Scott have previously pushed for this idea, but it has not yet become law.

Warren Buffett's holdings, which include Coca-Cola and American Express shares bought in the 1980s and 1990s, would see their tax bills reduced under this proposal. However, even with inflation adjustments, Buffett's real gains from these investments would still be substantial and taxable.