U.S. Sen. John Cornyn (R-TX) introduced legislation that would defer capital gains taxes on mutual funds growth.
The Retirement Ownership Through Long-Term Holding (GROWTH) Act would help Americans save for their futures and accumulate wealth, Cornyn said. Companion legislation was introduced by U.S. Reps. Beth Van Duyne (R-TX) and Terri Sewell (D-AL) in the House.
“Deferring taxes on reinvested mutual fund capital gains distributions until the investor sells their shares is a no-brainer and would help provide parity with other investment options,” Cornyn said. “This bill would empower hardworking Texans to let their money work longer, build toward personal savings and retirement goals, and create generational wealth.”
Currently, mutual funds distribute realized capital gains each year – whether paid in cash or reinvested – which are taxed. The GROWTH Act would defer the taxes on mutual funds until the shares are sold.
The legislation is supported by the Investment Company Institute, an asset management industry serving individual investors, as well as the U.S. Chamber of Commerce and Americans for Tax Reform.
“The GROWTH Act will help level the playing field for American mutual fund investors by preventing them from being charged capital gains taxes when they haven’t yet realized any gains,” (ICI) President and CEO Eric J. Pan said. “Having them pay taxes only when they exit the fund or sell their investment is just logical and will incentivize Americans to save and invest for their long-term goals without having to worry about unexpected tax bills, helping them secure their financial futures.”