Indexing Capital Gains Tax for Inflation Protection
CARPE DIEM
Professor Mark J. Perry's Blog for Economics and Finance
Thursday, September 23, 2010
About Me
- Name: Mark J. Perry
- Location: Washington, D.C., United States
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
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5 Comments:
does anyone in congress ever put this idea on the table?
sounds like it would be easy to implement
interestingly the one place where gains are not taxed is homes, at least until the gain gets big
Hey bix remember this back during the summer?
From The Hill: Ax may fall on tax break for mortgages
By Walter Alarkon - 06/08/10 06:00 AM ET
The popular tax break for mortgage interest, once considered untouchable, is falling under the scrutiny of policymakers and economic experts seeking ways to close huge deficits...
Personally I don't see anything happening to this deduction until after 2012 elections 'if' then...
Congressman Paul Ryan (R, WI) has a Tax Reform Proposal. Ryan's plan eliminates taxes on interest, capital gains and dividends!
"This plan discards a needlessly complex and manipulative tax code, replacing it with a simplified mechanism that promotes work, saving and investment." (emphasis mine)
A Republican Congress could adopt Congressman Ryan's very simple proposal after the November elections if the country is wise.
"A Republican Congress could adopt Congressman Ryan's very simple proposal after the November elections if the country is wise."
That's right. We need strong GOP control to give Ryan's plan any chance at all.
interestingly the one place where gains are not taxed is homes, at least until the gain gets big
True, but the amount in question isn't indexed for inflation and hasn't been adjusted since being created in 1997.
There are other less visible (yet nasty) items that aren't indexed for inflation:
The $3,000 limit on deducting capital losses against regular income. It's practically worthless if you have a large loss because of the monster recovery period, and don't forget that if you die with outstanding capital losses they die with you.
The $25,000 limit on deducting passive losses against regular income.
The $100,000 threshold for being eligible to make contributions to an IRA.
The $25,000 (?) threshold after which earned income reduces your Social Security payments, which is in effect a very large marginal tax rate on your earned income.
Corporate tax brackets haven't changed since the mid 1970s. That's some serious erosion in their value.
The capital raising limits under rules 504, 505, and 506 of Regulation D. Also, the limit on the number of unaccredited investors you can have as well as the limit on the number of investors you can have before being subject to SEC public reporting requirements and Sarbanes-Oxley (even though the company is not publicly owned).
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