Saturday, May 29, 2021 | 2 a.m.
View more of the Sun's opinion section
The May 19 letter “Capital gains tax is nothing new” misses the main point of the letter it was responding to: that in many cases, the “gains” that are to be taxed are not real, but rather reflect long-term inflation.
For my example, I used a house whose value had risen over a long period of time, as I thought almost everyone could relate to this. The letter writer, though, uses a fairly short-term change in price that truly does appear to be a capital gain.
For assets most affected by the proposed loss of this “step-up in basis” that is at the heart of Democrats’ proposal, much of the “gain” targeted for taxation is actually compound inflation in disguise, and so represents no increase in value. The effect of this policy is to retroactively tax the capital that was used to buy the asset in the first place, capital upon which the required income tax has been already paid.
Democrats now propose to tax that income again. For baby boomers and their heirs, this suddenly and dramatically alters the rules during a game that’s been underway for decades.
