Should Capital gains tax be linked to inflation?
If you buy an asset and it appreciates in value, but Inflation makes that appreciation a net loss. Then Inflation just made your taxable event worse.
For example, if your Stocks go up 10% and inflation goes up 20% since buying. If you sell for that ‘10% profit’ but lost more value due to inflation. You actually ‘realized a gain’ but lost value. So you owe the IRS money when you lost value.
Talk about gains. So much gain that you gained a loss.
It’s like saying you got a 2% raise when inflation is 3%. Yes you’re getting a raise, but also, you’re getting a pay cut. Two steps forward, three steps back.
What’s worse about inflation for people who get raises that don’t outpace inflation- Is that you may receive a raise, but your taxes are the same bracket.
So not only are you getting fucked by inflation, but your taxes are still taking money from you based on the tax bracket that you’re in. Technically speaking, if taxes don’t change, then more inflation actually means you are taxed less value. It may be taxed less value, but it’s still the same amount-ish.
But also, due to you not receiving more money, you’re losing money due to inflation.
To make matters worse
Because the cost of shit is going up to pace with inflation. That means Everyone’s buying power diminishes.
As it turns out, the government is included in that basket called ‘everyone’. So if the Government’s buying power diminishes, then they’ll have to offer budget cuts (unlikely) or raise taxes (likely).
Meaning that Inflation would incentivize Governments to further dig into debt and take from the public to pay for things. Meaning more taxes for you.
Meaning get fukt.
And even if Capital Gains Tax was linked to inflation, that would just diminish Tax Value for the government, thereby having to raise more taxes anyway. So that’s not even a solution. Lmao.
Inflation and Taxes are both fucking you over time. If not one, it’s the other, and sometimes it’s both.
Is the Deficit going down? No. Is there a Debt Ceiling? Theoretically? Are we just going to launder more money in Foreign Aide and blow up Ally Infrastructure? Maybe.
*Not Valid Financial, Legal, Life, or Any Advice