The Money Mustache Community
Learning, Sharing, and Teaching => Taxes => Topic started by: jpdx on July 31, 2018, 11:45:05 PM
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https://www.npr.org/2018/07/31/634396871/trump-administration-eyes-capital-gains-tax-cut
What do you make of this?
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A stay will be issued almost immediately and the case will wind its way to the SC.
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Applying inflation is just silly. There is no shame in the cash grabbing.
Let's look at the opposite of this. Will mortgages start to have a provision that raises your monthly payment based on inflation?
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I think applying inflation to capital gains makes a lot of sense. We already have our tax brackets indexed to inflation, because we recognize that the number of dollars representing a certain amount of wealth changes over time, so the number of dollars at which you start owing extra tax should change with it.
If you bought an asset for $1,000 in 2000 and sold it for $1,200 in 2018, you have gained dollars but lost wealth. If you had exactly kept up with inflation, you would have instead had more like $1,500. I think it's fairer to tax changes in wealth rather than changes in dollars.
That said, I'm very skeptical that such a significant change can be enacted by executive fiat rather than through an act of Congress, and I also think the rationale for having a lower tax rate for capital gains becomes much weaker if you're taxing changes in wealth rather than changes in dollars.
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"The administration is studying a proposal to...."
This sentence has been completed in numerous ways, probably ever since George Washington's first term. Most of those never happened.