Originally Posted by GomangoCuda
One thing I don't get. Let's say I bought a car 50 years ago for $3000 and sell it today for $30,000. That's not profit, that's inflation.
Gasoline and many other things costs at least 10 times what they cost 50 years ago. Why should I have to pay income tax on inflation? The new owner of the mythical car above is already paying state sales tax on it and now they want me to pay income tax on the inflation as well. musik


That is why the government likes inflation, they get to tax you for it. That is just how the tax code is written and it is the main reason why the capital gains tax rate was cut to 15%. Assets which have been held a long time should be taxed at a lower rate due to inflation. A lot of people don't fully understand this issue which is why a lot of people want to raise the tax rate on capital gains. People who hold assets for long periods of time can really get screwed with the combination of taxes and inflation. It is one of those things that you have to pay attention to.