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Comment by tartoran | Hacker News Reader

That’s a tax on the poor

It would cause inflation, isn’t that sort of a tax on people who have more wealth than income? (Which includes people like retirees, so, I’m not saying this is a universally good thing).

No because assets hold their worth. Poor people have no assets

Poor people are hit a lot harder, but rich still have to pay capital gains on inflation even despite having no real change in value. So the rich pay inflation at the rate * 0.2. Poor pay it at the rate * 1.0 (5x the rate of the rich).

> rich still have to pay capital gains on inflation

“Pay” is doing a lot of work there. My house is half equity half debt. The debt gets to be paid off with inflated dollars. And I pay no capital gains on the appreciation. I can, however, tap it for liquidity if I need it.

Rich people don't tend to have a sizeable portion of their worth tied up in their primary residence (and even then, IIRC there is a cap on capital gains exception), otherwise property tax would turn into a wealth tax for them which obviously they want to avoid. Non-primary residences still require paying capital gains. The inflated value you paid off with debt for a non-primary residence still gets captured as capital gain in the end when you actually want to sell the house for money.

You're right, thanks.

> isn’t that sort of a tax on people who have more wealth

Classically, yes, particularly when that wealth is closer to productive capital. In modern economies, the rich also hold a lot of debt, which lets them benefit from inflation.

Theoretically yes, but in practice the wages of people already not making much have not tracked inflation and there's no reason to believe that they will now. That means any inflation is also a tax on them.

Isn’t it the opposite? Salaries are sticky while asset prices rise freely with the liquidity of the market for them

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