It's Time to End the Inflation Tax
Club for Growth Calls for a Real Economic Stimulus Plan
Dump Rebates and Index Capital Gains for Inflation
Washington - With the stock market tumbling, the Club for Growth called on President Bush to use his executive order power to enact an economic stimulus plan that will actually stimulate the economy: Index capital gains for inflation.
Because capital gains are not indexed for inflation, an investor is charged for what are essentially phantom gains-gains due to inflation, not increases in actual wealth. If you purchased a company's stock in 1990 for $100 a share and sold it in 2007 for $200 a share, the IRS imputes and taxes the $100 "gain" even though inflation accounts for $59 of it. This is both unfair and detrimental to economic growth. If President Bush signed an executive order, you would only have to pay taxes on the real capital gains that you earned, $41.
"It is clear that the economy needs a shot in the arm, and it is equally clear that the market is not reassured by the timid steps that have been proposed so far," said Club for Growth President Pat Toomey. "Temporary rebates, as many have discussed, are merely a redistribution of wealth from one group of taxpayers to another, without changing the underlying factors that drive economic growth. They won't help us avoid a recession."
"In contrast, permanently indexing capital gains for inflation will boost the economy by encouraging capital formation and investment. It will almost certainly boost the stock market instantly. If President Bush wants to stimulate the economy immediately, rebates won't do the trick, but indexing capital gains for inflation will be a big help."
The Club for Growth commends Mayor Giuliani for including this proposal in his tax-cutting plan and encourages all candidates to make it part of their economic stimulus plans.
Posted at Press Release at 11:19 AM | TrackBack
