How the interaction of inflation with the tax code results in even greater theft from taxpayers.The Hidden Cost of Taxing Illusory Gains
You're likely already familiar with the concept of inflation: the steady erosion of a currency's purchasing power due to rising prices. But one of the most underappreciated and insidious consequences of inflation is how it interacts with the tax code.Because governments tax nominal gains (denominated in fiat) rather than real (inflation-adjusted) gains, they are effectively imposing two forms of taxation upon citizens: first through inflation itself by siphoning your spending power, and then again through taxes on effectively fake paper profits. Many tax credits, brackets, and benefit thresholds are not fully or frequently adjusted for inflation, meaning taxpayers often face higher effective burdens even when their real economic standing has not improved. This collection of effects constitutes a systemic and silent double (or even triple) taxation on citizens.
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55 sats \ 0 replies \ @Undisciplined 21h
Yes, inflation causes nominal appreciation of assets, such that you can even be selling at a loss in real terms and be taxed on the gain.
Relatedly, there's a concept of "bracket creep", which can allow politicians to seemingly lower tax rates, but push people into higher brackets with inflation and effectively raise tax rates.
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0 sats \ 0 replies \ @Machiavelli23 18h
True, prices rise in everything we need because of money printing, which mean less money for individuals and families and even when one earns more they are also taxed more which also leads to less money in everyone’s wallet, unless it’s a Bitcoin wallet
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0 sats \ 0 replies \ @SwapMarket 21h
been saying this since 2000
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