End the phantom tax on Hoosier savers
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In a major achievement, Congress has passed President Trump’s bold One Big, Beautiful Bill, which will drive growth and provide tax relief to Americans across the nation. However, while filled with common-sense policies, the final package missed an opportunity to end a surprise tax on middle-class savers.
Over the past few years, Americans have been struggling in the face of economic hardship from an inflation crisis that has driven up the cost of everyday necessities and made it nearly impossible to save. Nowhere is that more evident than right here in Indiana. In the face of these challenges, why is it fair that Hoosiers face a phantom tax on savings when they reinvest in mutual funds?
One of the lesser-known, but deeply damaging parts of our broken tax system is an unexpected and hidden penalty on Americans who invest in mutual funds outside of retirement accounts. Mutual funds are a widely popular investment product used by around 122 million Americans of all ages and incomes.
These Americans benefit from the low-costs and diversification mutual funds provide but come tax season are hit with capital gains taxes from trades generated within the fund. Even when those funds aren’t sold, investors are taxed on “gains” they never actually saw in their bank account. Every year, these phantom gains taxes cost American families $16 billion dollars. That’s not just bad policy – it’s fundamentally un-American. It punishes responsibility, it discourages saving, and it hits middle-class families trying to do the right thing.
Congress can do more to support Hoosiers building wealth for the future.
President Trump is once again leading with strength and common sense, and Hoosiers are already starting to feel relief. Gas prices have dropped, and families aren’t having to take out loans just to buy groceries. There’s real momentum behind a middle-class comeback.
Yet, for Americans to have a level playing field and the opportunity to achieve full economic freedom, Congress must address the unfair tax treatment of mutual fund investors.
That’s why Hoosiers need to push Senators Todd Young and Jim Banks to cosponsor legislation that would do just that: the Generating Retirement Ownership Through Long-Term Holding (GROWTH) Act introduced by Senator John Cornyn, R-TX.
Recently, President Trump’s Deputy Treasury Secretary Michael Faulkender brought up the issue of phantom gains taxes, pointing out that “capital gains should be deferred until realized.” He asked Congress to “get this done.” The GROWTH Act would do just that by deferring capital gains taxes on reinvested earnings until their owners sell those shares. In essence, it would simplify our overcomplicated tax code and make sure that Hoosiers don’t get a surprise bill from the federal government for saving for their future.
President Trump has already shown what’s possible when leadership meets common sense. Now it’s time for Hoosiers in Congress to follow his lead, finish the job, and restore the American Dream for Hoosiers and hardworking families across this great country.