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This is a very interesting point. It seems to me that we should tax capital gains at normal income rates, but only after adjusting the cost basis for inflation.
by ericd 8y ago
This is a very interesting point. It seems to me that we should tax capital gains at normal income rates, but only after adjusting the cost basis for inflation. It’s a little insane that we pay tax on the inflation adjustments for TIPs and other supposedly inflation neutral instruments, which all but guarantees that they lose money every year.
- prostoalex 8y agoYes, incorporating inflation sets the stage for increasing the capital-gains tax. I am not sure what the counter-argument to that is, but one thing I can think of is increased complexity of a tax return for an average joe investor, who bought and sold a few funds in his portfolio. Opponents will also likely point that an official measure - CPI - can be manipulated for political purposes.
- ericd 8y agoHm yeah. I'd say that CPI is already manipulated for political purposes. Not sure if this would exacerbate it.