At 8:27 PM 8/14/96, Greg Hopper wrote:

When you consider that capital gains tax rate schedules are not indexed for inflation, the situation's even worse than Tim's analysis implies. Since you pay tax on the nominal rather than the real capital gain, the effective capital gains tax rate is really higher than the quoted rate. ---------------------------------------------------------------------- Greg Hopper |Disclaimer: The opinions expressed are

Research Department |my own and not necessarily those of Federal Reserve Bank |the Federal Reserve Bank of Philadelphia of Philadelphia |or the Federal Reserve System.

I certainly agree with Greg here, and find it too bad that his views do not actually express the views of the Federal Reserve. (Actually, they may, as I remember reading Alan Greenspan's stuff in Rand's books in the late 60s, e.g., "Capitalism: The Unknown Ideal.") Not only is there inflation to consider, there is the double taxation I should've emphasized more than I did. Wages are typically corrected for inflation (for competitiveness reasons), but capital gains are not. That stock I bought for $20 in 1975 dollars and am now selling for $40 in 1996 dollars, and paying 40% in taxes on the "gain," is clearly not really a doubling. --Tim May Boycott "Big Brother Inside" software! We got computers, we're tapping phone lines, we know that that ain't allowed. ---------:---------:---------:---------:---------:---------:---------:---- Timothy C. May | Crypto Anarchy: encryption, digital money, tcmay@got.net 408-728-0152 | anonymous networks, digital pseudonyms, zero W.A.S.T.E.: Corralitos, CA | knowledge, reputations, information markets, Licensed Ontologist | black markets, collapse of governments. "National borders aren't even speed bumps on the information superhighway."