Trump considering yuge blow to the "inflation tax"

[bernorange 8363]

Quote

President Donald Trump said he’s considering a capital gains tax break by issuing a regulation that would index gains to inflation.

...

The capital gains change would slash tax bills for investors when selling assets such as stock or real estate by adjusting the original purchase price for inflation. The change has been a longtime goal of Trump’s top economic adviser, Larry Kudlow, who says the policy would spur job creation and economic growth because people wouldn’t be taxed on what he’s called “phantom income.”

https://www.sfgate.com/business/article/Trump-Says-Thinking-About-Indexing-Capital-Gains-13194688.php

This is an interesting end around to the issue that we discussed on the TOS regarding sound money and the inflation tax. 

[Hugo Stiglitz 23367]

Oh look, Trump is trying to cut his own taxes again.  

Kill pay raises for government workers, give self pay raise. 

[DanRydell 799]

The effect of inflation on capital gains is no more “phantom” than its effect on wages.

[bernorange 8363]

I think, were it to be enacted as presented in the OP, it would have a dramatic rebalancing effect with respect to precious metals and the dollar.  Of course, it would affect all asset classes, not just precious metals, but it would increase the opportunity for Joe Sixpack to save wealth in a fairly liquid vehicle (with no counterparty risk) again.

Edited August 31, 2018 by bernorange

[CO Horn 167]

Confused as to how it creates jobs and economic growth? I buy AMZN for 1,000 and sell it for 1,000,000. My inflation adjusted basis is $500k. I save tax on the $499k. Remind me again how this creates jobs and grows the economy?

[Hugo Stiglitz 23367]

Smells like more trickle down bullshit.  If you don’t have a shitload of assets in stock/real estate, you’re not going to see the benefits of this tax break.

[TwiceHorn 31534]

15 minutes ago, CO Horn said:

Confused as to how it creates jobs and economic growth? I buy AMZN for 1,000 and sell it for 1,000,000. My inflation adjusted basis is $500k. I save tax on the $499k. Remind me again how this creates jobs and grows the economy?

Because it attracts money to the capital markets, dude.  It's very important to the economy that the fuckers at GS are able to speculate and arbitrage with as many of our shekels as they can.

[Jiggy-Z 3435]

2 minutes ago, Hugo Stiglitz said:

Smells like more trickle down bullshit.  If you don’t have a shitload of assets in stock/real estate, you’re not going to see the benefits of this tax break.

...and lest we forget that capital gains taxation is already its own special wealth subsidy with a lower rate than income tax and almost unlimited deferment.

....which also ties in to some of the bullshit logic used for inheritance taxation....

As a student in the PPA/MPA program at UT we were dutifully taught that inheritance/estate taxation was a form of double taxation since the residual assets of an estate had already been taxed and paid by the deceased, which is true when considering their original basis.  However, assets long held in an estate have appreciated and would at least need to be taxed as capital gains. As it is, there is a step up in basis such that when and if the inheritors liquidate estate assets they are doing so with the stepped up basis and the lower capital gains tax.

This sound like a win for the average inheritor and it is, which is why there should be some threshold before taxation kicks in (like 10 million or so-consider the now debunked family farm line of reasoning).  Above that, current policy allows tax deferment and avoidance for the large estates.

If I remember correctly, estate taxation came about as a tool to break up some of the large family businesses (think Dupont's ,Morgans, Rockefellers etc) for the public good.

Rant over.

[Hugo Stiglitz 23367]

Let’s assume this went into effect.

Would this inspire a massive sell off of assets and stocks people have been holding for a long time? 

[Amobie 58]

4 minutes ago, Hugo Stiglitz said:

Let’s assume this went into effect.

Would this inspire a massive sell off of assets and stocks people have been holding for a long time? 

It would reduce the magnitude of speculative booms and busts.  Currency devaluation hurts the small guys much more than the wealthy.

[TexArcher 38052]

More trickle-down economic bullshit.  Shocked.

[BurntOrange&White 40003]

Doesn’t matter rich get richer poor get poorer

[TwiceHorn 31534]

1 hour ago, Jiggy-Z said:

...and lest we forget that capital gains taxation is already its own special wealth subsidy with a lower rate than income tax and almost unlimited deferment.

....which also ties in to some of the bullshit logic used for inheritance taxation....

As a student in the PPA/MPA program at UT we were dutifully taught that inheritance/estate taxation was a form of double taxation since the residual assets of an estate had already been taxed and paid by the deceased, which is true when considering their original basis.  However, assets long held in an estate have appreciated and would at least need to be taxed as capital gains. As it is, there is a step up in basis such that when and if the inheritors liquidate estate assets they are doing so with the stepped up basis and the lower capital gains tax.

This sound like a win for the average inheritor and it is, which is why there should be some threshold before taxation kicks in (like 10 million or so-consider the now debunked family farm line of reasoning).  Above that, current policy allows tax deferment and avoidance for the large estates.

If I remember correctly, estate taxation came about as a tool to break up some of the large family businesses (think Dupont's ,Morgans, Rockefellers etc) for the public good.

Rant over.

Estate taxation is a remnant of the feudal system, where the most extreme estate tax possible, escheat to the king, took place.  The ability to inherit and to inherit without confiscatory taxation was something of a sine qua non of post-feudal societies.

No civilized, liberal society at the time of the founding would have had major restrictions on inheritance or significant estate taxes.  It was viewed as a triumph of individual rights over those of the nobility/government and major estate taxation or escheat as an illegitimate way to fund the government.

 

There's a balance here, somewhere. I don't think capital gains tax should be cut, nor should it be entirely eliminated. 

Edited August 31, 2018 by TwiceHorn

[Captainant 27762]

1 hour ago, DanRydell said:

The effect of inflation on capital gains is no more “phantom” than its effect on wages.

Yeah but fuck those wage earners! It would actually be a pretty neat tax break for regular joes to get to deduct how much value their wages lost due to inflation from their taxes.