So the Republicans want to cut the capital gains tax some more. They want to index things for inflation. For example, if the CPI has increased 10 percent since they bought the property, and they made a profit of 25 percent, then they only want to pay tax on 15 percent gain. They say, investors shouldn’t have to pay tax on inflation.
But they don’t have a problem keeping the whole 25 percent capital gain, which was all from inflation. That is the definition of inflation. All capital gains are unearned. We’re not talking about earnings or profits from doing something useful — those are taxed at normal rates.
Taxes on capital gains should be higher than taxes on earned income, not lower. In my opinion, investors shouldn’t even be allowed to take any gains or profits from residential property.