Why won't Romney release his birth cer..err...his tax return?

[Winehole23]

pokes a big hole in your analogy

[CosmicCowboy]

pokes a big hole in your analogy

Does it?

How about this one...inflation is a tax too...

What do you mean by this?

Lets say I take the money I have left after paying my ordinary income taxes in 1970 and buy stock in company X.

Company X pays federal taxes from 1970 to 2012.

Lets say that in dollars my stock price has doubled in 42 years, but in inflation adjusted dollars the stock is worth the same or less.

Now when I sell this stock in 2012 I have a profit of 100% in dollars but 0% in inflation adjusted dollars.

Are you saying I should owe 40% of this non-profit in additional tax?

[Winehole23]

homesteads are treated differently

[Winehole23]

you glossed over that

[Winehole23]

Does it?

How about this one...inflation is a tax too...

why should you get a tax break for making unprofitable investments?

[CosmicCowboy]

Why don't you address the other example?

[Winehole23]

or for not taking profits when they were there?

[Winehole23]

Why don't you address the other example?

just did

[Blake]

What do you mean by this?

Generally speaking, home buyers don't normally buy a home with the intent to flip for a tangible profit.

[CosmicCowboy]

why should you get a tax break for making unprofitable investments?

How is that a tax break? The stock had the same inflation adjusted value as it did 42 years ago when purchased. It made no profit but you want to disregard inflation and treat the dollar face value difference as profit and tax it at ordinary income rates...

[Winehole23]

if your investments can't beat inflation that's your misfortune

[Winehole23]

plus, inflation isn't a tax

[CosmicCowboy]

if your investments can't beat inflation that's your misfortune

I defy you to consistently make investments that beat inflation AND a 40% tax rate.

[CosmicCowboy]

plus, inflation isn't a tax

[Winehole23]

investment entails risk. if you can't stand the heat...

[Winehole23]

explain how it is then, if it's so obvious

[Winehole23]

then explain how your analogy relates to Romney, if you can

[CosmicCowboy]

explain how it is then, if it's so obvious

Inflation tax
From Wikipedia, the free encyclopedia
Inflation tax is a term which refers to the financial loss of value suffered by holders of cash and fixed-rate bonds, as well those on fixed income (not indexed to inflation), due to the effects of inflation. This financial loss of value is often expressed as a loss of purchasing power. It may be better characterized as a wealth transfer than a tax - since many people including debtors, holders of hard assets and some equities may simultaneously gain. Many economists hold that inflation affects the lower and middle classes more than the rich, as they hold a larger fraction of their income in cash, they are much less likely to receive the newly created monies before the market has adjusted with inflated prices, more often have fixed incomes, wages or pensions, and lack the means to avoid domestic inflation by reallocating assets overseas. Some argue that inflation is a regressive non-linear consumption tax. [1] Nevertheless, inflation improves the economic position of people with outstanding fixed interest debt like student loans and mortgages. It can improve the nation's balance of trade - stimulating exports with a less expensive currency - and decreasing imports. A large portion of the "tax" also falls on foreign holders of fixed income debt in the inflated currency. It is important to note that this "tax" on creditors is coupled with a simultaneous transfer to debtors - reducing their debt burden. By transfering wealth to people who are more likely to spend it, an inflation "tax" can further increase real (inflation adjusted) economic growth (beyond its beneficial impact on trade). It may also hasten new purchases since inflation makes it costly to keep cash. Inflation can increase liquidity in depressed real estate markets since it would increase nominal asset values back above the loan values. This improved LTV allows for people to sell their homes, and move to pursue better economic opportunities and as such can improve efficiency of the labor markets. In this way, an "inflation tax" can improve real (inflation adjusted) economic growth and improve employment.

[CosmicCowboy]

Although not meant by the term "inflation tax", a related effect is the tax on interest and investment "income" when the tax is levied against the nominal interest rate or nominal gains.

For instance, if someone buys a bond with a nominal interest rate of 6% and the rate of inflation is 4%, their "real" interest is 1.92%.

If, however, they are taxed 25% of the 6% interest "income", or 1.5%, this can be thought of as composed of a tax on real income (0.5%) and a tax on inflation (1.0%). The same principle applies to capital "gains" taxes not adjusted for inflation. In any case, this "tax on the inflation tax" is essentially equivalent to a tax on holdings ("wealth tax") equal to the nominal tax rate times the inflation rate (in example above, 25% of 4% inflation equals 1.0%.) This "property tax" can even apply to non-monetary assets as well as money earning interest. Thus, money itself is subject to both the inflation tax and the tax on the inflation tax, while other assets, on which nominal profit or gains taxes are imposed, are subject only to the tax on inflation.

[Winehole23]

still seems more semantic than technically true. why the scare quotes around tax in the blurb?

[Winehole23]

lol "can be thought of"

[CosmicCowboy]

lol "can be thought of"

Who benefits from inflation?

[Winehole23]

dunno. who?

[Winehole23]

still waiting for how this all relates to Romney...

[CosmicCowboy]

Well, governments that have 14 trillion of debt for one...

Big losers are people on fixed incomes and salaries.