s an effective income tax increase on capital gains approximating 14.3 percent.
A capital gain results from the appreciation in value of a capital asset (Rice, 12/3 12/5). Inflation can distort the taxation on capital gains. As the discussion of the rationale of the contention that inflation distorts taxation illustrated, however, the distortion, while real and significant, is not as severe as its critics make it out to be. Nevertheless, the argument that the real capital gain should be taxed, as opposed to the nominal capital gain, is a sound one.
Any action which either moderates the effects of the inflationary distortion over the long term, or eliminates the inflationary distortion on capital gains taxation would have positive effects in the economy, because such action would stimulate investment. Thus, the knowledge provided in Introduction to Taxation can lead to societal benefits.
Debt interest refers to the fee earned by lenders (Rice, 3/4 3/5, 3/19 3/20). In the context of the inflationary distortion on taxes, the contention is that re
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