Should Capital Gains be Indexed for Inflation?
Broken Pie Chart · Broken Pie Chart
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Show Notes
No one likes paying capital gains tax (although better than losses). Yet what if you were paying on gains only due to inflation where your purchasing power didn't grow? Recently some U.S. Senators wrote a letter to the Treasury Secretary Steve Mnuchin urging him to consider indexing capital gains for inflation. What would that mean for individual investors?
What would it mean to index capital gains for inflation?
Examples showing differences in capital gains tax due when cost basis is indexed for inflation
Would it result in opening opportunities to diversify if the tax bill was reduced?
How gains due to inflation don't equate to increased buying power
Senator Ted Cruz Coke Stock example showing capital gains due even though loss after inflation adjustment
How this could help long time homeowners
Can the Treasury just instituted indexing for inflation or does Congress have to pass a law?
Mentioned in this Episode:
Current capital gains rate tables https://www.schwab.com/public/schwab/investing/retirement_and_planning/taxes/current-rates-rules/dividends-capital-gains-tax-brackets
Barron's article around indexing for capital gainshttps://www.barrons.com/articles/indexing-capital-gains-to-inflation-makes-no-economic-sense-51564833600
Book: Broken Pie Chart https://amzn.to/31oy1hE
Razor Wealth Management www.razorwealth.com