Josh Scandlen Podcast

Long Term Capital Gains are taxed favorably relative to interest income, which is taxed at ordinary income rates.  But did you know that Capital Gains are NOT indexed to inflation? I bet you didn't! In this video I use an article from the Tax Foundation https://taxfoundation.org/inflation-adjusting-capital-gains/ to show you the incredible penalty we pay in taxes because of not adjusting for inflation.  For example,  say you bought a stock for $100 ten years ago.  After 2.26% inflation and 4.25% real growth that $100 would grow to $187 today. You have a "gain" in this case of $87.  If you sold that stock, you'd pay long term capital gains tax of 15% on that $87 gain.  The tax would be $13, leaving you with $174. Yet the problem is that 25% of that 'growth' is due to nothing more than inflation. It's a fake gain! You earned nothing.  Imagine if you could buy a calculator for $100 ten years ago. But now, because of inflation, that same calculator costs $125.   S