Inflation Relief - How to Index Capital Gains to Inflation
Inflation relief is a big topic on the minds of many people, and a lot of political leaders are weighing in on the issue. The state of Maine recently introduced a supplemental budget to help its residents, which will deliver $850 in direct relief payments. The budget also addresses the issue of soaring prices by providing tax relief to working families and free community college for pandemic-affected students. The average household in Maine will receive about $1,700 in relief from this supplemental budget. Some economists believe that indexing capital gains to inflation would increase the economy by 0.11 percent over the long run. In 2018 alone, indexing capital gains to inflation would generate $22 billion in additional GDP. By increasing the value of capital stock, it would reduce the service price of capital and increase the economy's long-term size by 0.11 percent. It would also increase wages by 0.08 percent, creating an additional 21,800 full-time equivalent jobs.