Capital gains injustice

Carmel Pine Cone, April 17, 2026

There’s a quiet injustice baked into the tax code, and it’s hitting older Americans right where they live.

In 1997, under President Bill Clinton, Congress set the capital gains exclusion on the sale of a primary residence at $250,000 for individuals and $500,000 for couples. Then they walked away. No adjustments for inflation. No recognition for what was coming. And what came was a housing market explosion.

Today, in California, a modest home bought decades ago can carry a gain that turns a retired couple into “the wealthy” for about 15 minutes, just long enough for the tax bill to hit. After that, they’re simply older Americans with less money to downsize, relocate, or live more comfortably. So, they don’t move. They stay put in homes that no longer fit their lives, and live near schools their children no longer attend. Meanwhile, young families circle the block, locked out of neighborhoods where there should be natural turnover. The result? A housing market that doesn’t move and a tax system that punishes mobility. This isn’t fairness. It’s a policy failure hiding in plain sight. Rep. Jimmy Panetta has a real opportunity here. Not a symbolic one. Not a virtue-signaling one. A meaningful one. Fix the exclusion. Index it to inflation. Or better yet, bring back the ability to roll gains forward when someone reinvests in another house.

This isn’t a giveaway. It’s about common sense. Government collects nothing when people don’t sell. But when they do, they spend, invest, and move the economy forward. Everyone benefits.

Right now, the system rewards one thing: staying put until you die so your heirs get a stepped-up basis. That’s not tax policy. That’s perverse incentive design.

The question is simple. Will Panetta step forward and lead on this, or let it remain one of those problems everyone agrees on, but no one quite takes ownership of? It’s the kind of fix that doesn’t require fanfare, just a willingness to act. And if he does, a lot of Californians will notice and be grateful.

Rosemarie Barnard,

Prunedale