What would happen if the tax system was indexed by accounting for the effects of inflation?

Question

Would only real interest earnings be taxed?
Would there be an end to taxing capital gains?
Would it increase the average tax rates?

Answer 1

In the US long term capital gains is already tax at a rate less than ordinary income and most capital gains are due to a real increase in value, so it would not make much difference. about 20% of income goes to debt payments but probably less than 3/4 would be real so as a rough estimate 5% of tax revenue would be lost. To keep revenue the same would require an increase in income taxes rates of about 5%. Since much of the interest is for home mortgages or business expenses which are tax deductible, some of the lost tax payments could be made up by only allowing deductions for real interest paid.

Answer 2

if certainty learn that no longer extending the Bush tax cuts will volume to a great blow for undesirable and center income human beings because it somewhat is. in case you intensionally had to decrease companion and little ones spending, only tax all of us a million/2 to dying and watch the financial device plummet into melancholy. i've got made below $18 ok when you consider that 1998. The final twelve months of Clinton budgets, I paid over $800 in Fed income tax Afetr the Bush tax decrease surpassed off, I PAID no longer something on the same income SO... a million) i'm no longer wealthy on $17-20 ok consistent with twelve months...until your a Democrat 2) the top of the tax decrease will harm fairly some human beings, and maximum of them understand that the Bush tax decrease saves their Beacon!!!! solid good fortune Obama!...no longer!