On: Billionaires Have Sidestepped a Tax Aimed at the R...

[mikestew]

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?

[alaxhn → mikestew]

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).

[nwellinghoff → alaxhn]

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

[Arnt → nwellinghoff]

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.

[xyzzy123 → nwellinghoff]

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