SB 105-16: Capital Gains Inflation Deduction Act (Passed)

[AGA]

No, this has nothing to do with the financial transaction tax. This would also lower taxes, not raise them.

This bill simply allows people to deduct inflation from capital gains taxes. Consider a person who purchased an asset for $100 and sold it a year later for $102. If the inflation rate was 2%, then the real value of the asset did not change; its price only increased due to inflation. Under the current structure, the person would have to pay taxes on the $2 of capital gains even though there were no capital gains in real terms. This proposal would allow the person to pay no taxes by allowing inflation to be deductible. I believe that this makes the tax system more fair.

[AGA]

It seems that capital gains are taxed as income, so I would be open to raising income taxes to compensate for the shortfall of revenue. The point of this bill is not to provide a tax cut, but to reform the tax structure.

[AGA]

An amendment:

AN ACT
To reform the taxation system

Be it enacted by the Senate of the Republic of Atlasia assembled

Section I. Title

This act may be cited as the Capital Gains Inflation Deduction Act.

Section II. Definition

CPI is the Consumer Price Index as published by the Bureau of Labor Statistics for any particular moment in time.

Section III. Capital Gains Inflation Deduction

A. As explained in Section II B, the portion of any capital gain that can be attributed to inflation is exempt from taxation.

B. For each capital gain derived from the sale of an asset, the product of the percentage change in CPI from the purchase of said asset to its sale and the purchase price is added to an individual's capital gains inflation deduction.

C. The total amount of an individual's capital gains inflation deduction is deductible from said individual's total capital gains tax liability for any given year. This deduction shall not be deductible from any other form of taxable income.

Section IV. Effective Date

This act shall be incorporated into to the tax code immediatelystarting with FY2023.

Section V. Cost

This act is estimated to lower tax revenue by $15 billion annually.

[AGA]

Wouldn't it be better to do the estimate with regards to inflation % * X billion ?

Are you talking about the cost estimate? The number I gave was a very, very rough estimate, so if you have a better idea to share, go ahead.

[AGA]

I will not sign this bill unless equal measures are in place for losses.

Could you elaborate what you mean by this? If one experiences capital loss, this just would just add onto that deduction.

[AGA]

It seems that the PPT send the wrong bill to the President. The sent bill is missing the amendment to Section IV. If it is possible to redo this, the PPT may have the authority to change "Section II B" to "Section III B" as a spelling correction.