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Strategies & Market Trends : Buy and Sell Signals, and Other Market Perspectives
SPY 691.97-0.3%Jan 30 4:00 PM EST
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To: sandeep who wrote (35113)7/17/2012 3:15:27 PM
From: Brian Sullivan  Read Replies (2) of 222741
 
sandeep, I think that what would make things fairest is to taxes both at the same rate but to allow for inflation as well.

So let’s say you purchase $1000 or Gold or some other Commodity that is intended to hold its value with respect to inflation.

You hold it for ten years, and the final price of what you are holding simple increases by whatever the inflation rate is.

So if over 10 years the annual inflation rate is 0% the final value is the same $1000.

If the annual inflation rate is 3% the final value is $1343.90

If the annual inflation is 10% the final value is $2593.70

If the annual inflation rate is 20% the final value is $6191.70

In all cases you didn't really profit at all what you had at the end would purchase the same item(s) that it would at the start.

With a capital gains tax rate of 28% the government would take $1453.70 of the $6191.70 (as there would be a gain of $5191.70 since inflation is not factored into capital gains) Thus the government would be taking 23.5%
of your property via capital gains taxes if we are running under 20% inflation.

If the inflation rate remains very low or zero then this is not a problem.
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