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The NIIT, for high-income taxpayers (defined as $250,000 and up for a married couple), subjected investment income to a 3.8% rate.

Raise your hand, HN, if you (and your spouse, if applicable) make >$250K/year. Wow, that's a lot of hands. Now, leave your hand up if you've ever heard of this "NIIT". Hmm, just the two of you, huh?

Or have I just not been paying attention?

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Anyone with gains on stocks who makes $250k (200k single) and sells shares at a capital gain pays NIIT. This has been the case since 2013 and the threshold is not indexed to inflation. I would guess a significant fraction of commenters here have indeed paid this tax (myself included).

That’s what really blows my mind. Why aren’t all thresholds automatically indexed to inflation by default. Especially in tax matters!

It means that every few years politicians can roll out "tax cuts" which are actually just bracket adjustments.

Because inflation ≠ inflation and what do you want to index it to?

Seriously: If it's related to investment, what makes the price of tomatoes more appropriate than the Dow Jones index as a basis for the threshold?

One good answer there is to trust your future self to choose better than some simple mechanism would do. So that's what legislatures often do.

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