Additionally, the change wouldn’t be significant enough to spur much more spending and boost the economy, said Alan Viard, a tax and budget specialist at the American Enterprise Institute, a conservative policy group. “The effects would be really minor,” Viard said. “I don’t know that you would ever see them.”
The inflation adjustment would amount to a several percentage point tax cut for investors, depending on the type of asset and how long it’s held, according to 2018 estimates from the non-partisan Congressional Research Service.
Corporate stock with dividends held for 10 years would be currently be subject to an effective tax rate of 24.3%. That same holding indexed to inflation would be subject to a 21.4% tax rate, CRS said.
This article was provided by Bloomberg News.