Norquist to Paulson: Just Index Capital Gains to Inflation

Index capital gains to inflation…brilliant. I mean, hey, why not? At this point, what have you got to loose.

Norquist states, that in doing so:

This creates a situation whereby an asset held for many years and later sold may generate a capital gains tax liability when much or all of that gain is purely from inflation. For example, a stock purchased in 1990 for $1000 and sold today for $1676 would face a capital gains tax liability on the $676 “profit.” But in reality, 100% of that “gain” is attributable to inflation.

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