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CF&P  Press Release, September 20, 2010

Center for Freedom and Prosperity Foundation

For Immediate Release
Monday, September 20, 2010
202-285-0244
www.freedomandprosperity.org

New CF&P "Economics 101" Video Explains
Why Capital Gains Should Be Indexed to
Protect Taxpayers from Inflation

(Washington, D.C., Monday, September 20, 2010) In the latest "Economics 101" video released today by the Center for Freedom and Prosperity Foundation (CF&P), Christina Sochacki, a student at The George Washington University School of Law, explains how the failure to index capital gains taxes for inflation reduces prosperity by penalizing investors and entrepreneurs. Entitled "Indexing the Capital Gains Tax to Protect Taxpayers from Inflation," this new CF&P Foundation video demonstrates the insidious way in which the government taxes imaginary gains due solely to rising prices.

At a time when policymakers are seeking ways to encourage investment, the failure to index the capital gains tax to inflation adds insult to the injury caused by a tax that imposes a counterproductive layer of double taxation. As the examples in the video show, this hidden inflationary tax makes it likely that effective tax rates will be much higher than the advertised rate of 15 percent. The lack of indexing for inflation means the government imposes capital gains taxes at rates of 50 percent, 75 percent, or even 100 percent and beyond.

Links to the video: YouTube | Yahoo | Capitol Hub

"It's hard to imagine anything more despicable than collecting taxes on assets that have lost value in real terms," said CF&P Foundation President Andrew Quinlan, "but because capital gains are not indexed to inflation, that's exactly what the government is often doing."

"Ideally, the capital gains tax should be abolished," added Dan Mitchell of the Cato Institute. "Absent an outright end to this destructive tax, bureaucrats should at least stop taxing phantom gains."

Executive Summary

    The capital gains tax is a perverse form of double taxation that should be abolished. This bad tax is especially damaging because families often are taxed on gains that are solely the result of inflation. This video explains how taxpayers could be protected by indexing the capital gains tax so the levy only applies to inflation-adjusted gains.

This new video is part of CF&P's Economics 101 video series, which is designed to explain free market concepts, with particular emphasis on reaching students and young people. This is the ninth video in the series.

The other Econ 101 videos: Repealing Obamacare and Restoring a Free Market in Healthcare, The Job-Killing Impact of Minimum Wage Laws; Deficits, Debts and Unfunded Liabilities; Cost of the Internal Revenue Code; Lessons Learned From Sweden; Government Monopolies; Moral Hazard; and Don't Copy Europe's Mistakes.

Web Page for Economics 101 Videos:
http://www.freedomandprosperity.org/econ101/econ101.shtml

CF&P Foundation has also released more than three-dozen mini-documentaries since 2007.

In May CF&P Foundation released an Economic Lessons video on Six Reasons Why the Capital Gains Tax Should Be Abolished"

Other videos include Tax Competition Primer, VAT-Hidden Tax, Global Flat Tax Revolution, Cutting the U.S. Corporate Income Tax, Promoting Prosperity, Obama's So-Called Stimulus, Obama's Deferral Proposal, Case Against Class-Warfare Tax Policy, President Obama's Dishonest Demagoguery on Tax Havens, Six Reasons Why the Capital Gains Tax Should Be Abolished, a three part series on the Benefits of Tax Havens and another three-part series on the Laffer Curve.
Link: http://www.freedomandprosperity.org/videos/videos.shtml

 

Web Links:

For additional comments:
Andrew Quinlan can be reached at 202-285-0244, andy@freedomandprosperity.org
Dan Mitchell can be reached at 202-218-4615, dmitchell@cato.org

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