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What you're describing is a wealth tax, not capital gains. Capital gains taxes are applied to gains on capital, not to held property.

bpodgursky 5y ago
That's the point! Inflation causes fake capital gains on held property, which then turns into a wealth tax if you ever try to exchange the asset for another one!
- grumpitron 5y ago
  It does not turn into a wealth tax. A wealth tax is a tax on the entire value of the property. A capital gains tax is a tax on the gains. The only, extremely narrow situation in which they’re the same for a particular investment is when someone has a $0 cost basis on their investment. Runaway high inflation will have them trend closer to one another, but we don’t have that.
  - bpodgursky 5y ago
    The "runaway high inflation" is exactly what I'm saying is a possibility. But it's not even necessary. Capital gains is a LOT compared to any proposed wealth tax, _and_ it affects most people (as opposed to the "billionaire tax"). 2x inflation (which is very plausible over a decade) translates into a 10% wealth tax, even at 20% cap gains. 4x inflation is 15%. Those are real numbers!
    - grumpitron 5y ago
      Those ARE real numbers - though we may disagree on how likely those levels of inflation are. Does higher inflation increase capital gains tax bills? Yes, we'll agree on that. Do capital gains impact more people than any proposed wealth tax I've seen? Also, yes we'll agree there too. However, one fundamental difference between capital gains taxes and wealth taxes is that capital gains taxes are only imposed on the gains on the disposition of an asset, whereas a wealth tax is applied to an individual's entire net worth, and all proposals I've seen are applied annually. This is relevant to the original comment that said "all property" would be subject to a 20% tax - but my point was that's not the case, regardless of inflation.
    - loeg 5y ago
      2x inflation over 10 years would require something like 7.2% annualized inflation. We're nowhere near that and haven't been for decades. Average over the last 20 years is around 3%, and it's been even lower over the past decade. 4x requires historically high inflation over a decade.
      - imtringued 5y ago
        It's also unlike a wealth tax in the sense that you are not approaching a legislated minimum. If there is 1000x inflation you still only lose the capital gains taxes. If the government introduces a 5% wealth tax you lose everything after 100 years.

bpodgursky 5y ago

That's the point! Inflation causes fake capital gains on held property, which then turns into a wealth tax if you ever try to exchange the asset for another one!

grumpitron 5y ago
It does not turn into a wealth tax. A wealth tax is a tax on the entire value of the property. A capital gains tax is a tax on the gains. The only, extremely narrow situation in which they’re the same for a particular investment is when someone has a $0 cost basis on their investment. Runaway high inflation will have them trend closer to one another, but we don’t have that.
- bpodgursky 5y ago
  The "runaway high inflation" is exactly what I'm saying is a possibility. But it's not even necessary. Capital gains is a LOT compared to any proposed wealth tax, _and_ it affects most people (as opposed to the "billionaire tax"). 2x inflation (which is very plausible over a decade) translates into a 10% wealth tax, even at 20% cap gains. 4x inflation is 15%. Those are real numbers!
  - grumpitron 5y ago
    Those ARE real numbers - though we may disagree on how likely those levels of inflation are. Does higher inflation increase capital gains tax bills? Yes, we'll agree on that. Do capital gains impact more people than any proposed wealth tax I've seen? Also, yes we'll agree there too. However, one fundamental difference between capital gains taxes and wealth taxes is that capital gains taxes are only imposed on the gains on the disposition of an asset, whereas a wealth tax is applied to an individual's entire net worth, and all proposals I've seen are applied annually. This is relevant to the original comment that said "all property" would be subject to a 20% tax - but my point was that's not the case, regardless of inflation.
  - loeg 5y ago
    2x inflation over 10 years would require something like 7.2% annualized inflation. We're nowhere near that and haven't been for decades. Average over the last 20 years is around 3%, and it's been even lower over the past decade. 4x requires historically high inflation over a decade.
    - imtringued 5y ago
      It's also unlike a wealth tax in the sense that you are not approaching a legislated minimum. If there is 1000x inflation you still only lose the capital gains taxes. If the government introduces a 5% wealth tax you lose everything after 100 years.