As of today, you need about 12% returns to break even after inflation and the IRS eat your return. Anything less than that and you are effectively losing. Especially annoying that capital gains taxes will be paid on any profits, even those less than inflation. Time for a new rule.
Inflation is a good reason why long term capital gains rates are lower than income tax rates.
You can argue about the timeframe and getting the whole break after 1 year versus maybe giving larger breaks the longer you hold, but that’s the weeds.
Principal should be adjusted for inflation. If I invest $10k and the investment is worth $11k today but we’ve experienced 10% inflation in that time then my actual profit is 0 and I should pay no tax on the $1k of proceeds.
I support minimum wages adjusting for inflation. Keep in mind most wage workers don’t pay taxes. And in fact actually receive credits which give them more back than they paid in. I’m not against that but it should be considered. If anything, include an inflation credit.
Yeah, unless you have it earmarked for something today it isn’t worth having cash lying around except for buffer funds. It’s a bad time all around right now. Best off sitting on investments for the foreseeable future.
