The Capital Gains Tax Indexation Debate Is Back

  • AEI
  • by:
The Capital Gains Tax Indexation Debate Is Back
Photo Credit: Dinner - N by nao-me is licensed under Flickr CC BY-ND 2.0
The longstanding debate over whether capital gains taxes should be indexed for inflation has resumed in full force.  The arguments are familiar and the principles are unchanged.  Indexing capital gains taxes by regulation would still be a mistake.

Capital gains tax indexation initially seems appealing.

Consider an investor who buys an asset for $100 and sells it decades later for $250.  If consumer prices doubled during that time, the investor needs $200 to get back the buying power she gave up to purchase the asset.  So, selling the asset for $250 really leaves her only $50 ahead.  Under indexation, she would be taxed on that $50 real gain rather than the $150 apparent gain taxed under current law.

At first glance, that looks like the right result.


Help FAIRtax Get In The Presidential Debates in 2020

Enacting the FAIRtax must be a prominent topic on the Presidential Debate stage. We did it before, we can do it again, but we need your help!

Your gift of $25, $50, $100 – even $1,000 or more if you can possibly spare it – will help bring an end to the IRS and promote a FAIRtax. So, I urge you, please give as generously as you can.
To donate by check:
Americans for Fair Taxation
PO Box 4929
Clearwater, FL 33758

If you need to make changes to your existing Monthly Re-Occurring Donation with new card or billing address information, then Please call Adam Yomtov our New York State Co-Director. He is assisting with the administration of our donations, technology services, and website.

Please note: Inputting your new information at our website won't update your donation. The only way to update is by calling Adam Yomtov 917-689-3931 mobile.

Americans for Fair Taxation® is a 501(c)(4) non-profit, non-partisan grassroots organization solely dedicated to replacing the current income tax system with a fair, simple and transparent national consumption tax – the FAIRtax® Plan. We rely entirely on contributions from concerned citizens like you who want a tax system that will generate jobs and stimulate the economy. Welcome to the FAIRtax team!