Is inflation tax deductible?

Discussion in 'Economics' started by thesharpone, Nov 20, 2007.

  1. I know it isn't, I'm just asking cause it seems that's the logical way to do it.

    Say I put $3M into a savings account if I get 4% annually, IRS calculates that I made $120,000 that year, and they want 35% of that, which gives me only a 2.6% annual return, That does not even cover inflation in it's lowest possible rate?!!

    What do you think?

    Also what is the percent that a company has to earn on it's investment, so that after calculating taxes and then inflation, it comes up with an equal amount it started with?

    I believe it is 30%.

    30% (return on investment) - 35% (taxes on return) = 19.5% (return on investment after taxes) - ~20% (inflation rate on investment) = 0% (return)

    that's not even funny!
  2. Heh, the website his excerpt comes from has the word "mortgage" in it. Just sounds like the benefits of doing rental property to me. Leveraged, tax deductible, and the more inflation you have, the better off the landlord is.

  3. That's what I thought too.

    "Why the popular strategy of sending extra cash in with mortgage payments can be a fine budgeting tool for those otherwise unable to save – but is usually a serious financial mistake for astute and self-disciplined investors when taxes and inflation are considered (exclusive)."