Economy Change the Tax Code: Claim Cash Depreciation

[Rob Battisti]

Is the point here supposed to be that only inflation is bad, or that money is bad? I agree that a hypothetical case of endless free money with no inflation would be great, just like I agree that gravity is a bummer because it makes it hard to fly by just flapping my arms.

The point is that inflation and debasement deprecate the value of cash. If people are holding cash, it should follow that they would be able to write off the losses on their taxes.

It’s not a political matter.

 

[Jack V Savage]

The point is that inflation and debasement deprecate the value of cash. If people are holding cash, it should follow that they would be able to write off the losses on their taxes.

It’s not a political matter.

You're talking about upward redistribution of wealth, though, which is *the* primary political matter.

 

[CantCucktheTuck]

You're talking about upward redistribution of wealth, though, which is *the* primary political matter.

only rich people have savings accounts.

 

[Rob Battisti]

You're talking about upward redistribution of wealth, though, which is *the* primary political matter.

It’s an upward distribution of wealth to claim the loss of your cash depreciation?

 

[brothir]

The point is that inflation and debasement deprecate the value of cash. If people are holding cash, it should follow that they would be able to write off the losses on their taxes.

It’s not a political matter.

Let's ask our computer overlord ChatGPT about whether what should be available for tax write-offs is a political discussion or not:

Spoiler

Yes, the topic of what should be eligible for tax write-offs is a political matter. The eligibility criteria for tax write-offs are determined through legislation, which is a political process involving various stakeholders including lawmakers, political parties, interest groups, and the public. Several factors illustrate why this is inherently political:

1. Legislative Process: Tax laws, including those that specify allowable deductions and write-offs, are created, modified, and repealed through legislation passed by elected officials. This process involves debate, negotiation, and compromise among politicians with differing views and priorities.
2. Economic Impact: Decisions on tax write-offs can significantly impact the economy. For instance, write-offs for certain business expenses can encourage investment and growth in specific industries, while disallowing others can have the opposite effect. Political parties often have different economic philosophies that guide their approach to tax policy.
3. Social Policy: Tax write-offs can be used to promote social policies. For example, write-offs for charitable donations encourage philanthropy, while deductions for education expenses support higher education. These reflect broader political goals and values regarding social welfare and investment in human capital.
4. Interest Groups and Lobbying: Various interest groups lobby for tax write-offs that benefit their constituencies. This includes businesses, professional associations, and non-profits. The influence of these groups on politicians can shape tax legislation in ways that reflect political alliances and power dynamics.
5. Public Opinion and Voter Impact: Politicians are often influenced by public opinion and voter preferences. Tax write-offs that are popular with voters can become key issues in political campaigns and influence election outcomes. For example, mortgage interest deductions are popular with homeowners and can be a contentious political issue.
6. Equity and Fairness: Discussions about tax write-offs often involve debates about equity and fairness. Different political ideologies prioritize different notions of fairness, such as whether tax benefits should favor higher-income individuals or provide more support to low- and middle-income earners.

In summary, tax write-offs are a political matter because they involve legislative decisions, reflect economic and social policies, are influenced by lobbying and interest groups, affect public opinion, and involve considerations of equity and fairness. The political nature of these decisions makes them subject to ongoing debate and change as political power shifts.

I don't get why you say that it's not a political matter, when taxation is usually a central point in politics. Moreover it's strange why you'd tie inflation to write-offs. It's not a universal mechanism that losses of any kind should result in additionally reduced tax via a contrived mechanism. The solution to cash losing value is to invest in stocks and the like.

 

[Rob Battisti]

Let's ask our computer overlord ChatGPT about whether what should be available for tax write-offs is a political discussion or not:

Spoiler

Yes, the topic of what should be eligible for tax write-offs is a political matter. The eligibility criteria for tax write-offs are determined through legislation, which is a political process involving various stakeholders including lawmakers, political parties, interest groups, and the public. Several factors illustrate why this is inherently political:

1. Legislative Process: Tax laws, including those that specify allowable deductions and write-offs, are created, modified, and repealed through legislation passed by elected officials. This process involves debate, negotiation, and compromise among politicians with differing views and priorities.
2. Economic Impact: Decisions on tax write-offs can significantly impact the economy. For instance, write-offs for certain business expenses can encourage investment and growth in specific industries, while disallowing others can have the opposite effect. Political parties often have different economic philosophies that guide their approach to tax policy.
3. Social Policy: Tax write-offs can be used to promote social policies. For example, write-offs for charitable donations encourage philanthropy, while deductions for education expenses support higher education. These reflect broader political goals and values regarding social welfare and investment in human capital.
4. Interest Groups and Lobbying: Various interest groups lobby for tax write-offs that benefit their constituencies. This includes businesses, professional associations, and non-profits. The influence of these groups on politicians can shape tax legislation in ways that reflect political alliances and power dynamics.
5. Public Opinion and Voter Impact: Politicians are often influenced by public opinion and voter preferences. Tax write-offs that are popular with voters can become key issues in political campaigns and influence election outcomes. For example, mortgage interest deductions are popular with homeowners and can be a contentious political issue.
6. Equity and Fairness: Discussions about tax write-offs often involve debates about equity and fairness. Different political ideologies prioritize different notions of fairness, such as whether tax benefits should favor higher-income individuals or provide more support to low- and middle-income earners.

In summary, tax write-offs are a political matter because they involve legislative decisions, reflect economic and social policies, are influenced by lobbying and interest groups, affect public opinion, and involve considerations of equity and fairness. The political nature of these decisions makes them subject to ongoing debate and change as political power shifts.

I don't get why you say that it's not a political matter, when taxation is usually a central point in politics. Moreover it's strange why you'd tie inflation to write-offs. It's not a universal mechanism that losses of any kind should result in additionally reduced tax via a contrived mechanism. The solution to cash losing value is to invest in stocks and the like.

I meant in that it shouldn’t be viewed as a left or right issue.

It’s not a universal that any losses are write offs. I’m arguing that this should be.

That’s the issue with an ever increasing monetary supply when the only solution is to put your cash at risk in investing. Once again, the discouragement of saving happens at every turn.

What negative would you see in the average individual writing off the losses from their cash saving?

 

[CantCucktheTuck]

What negative would you see in the average individual writing off the losses from their cash saving?

The government wouldn't like any policy that might encourage savings.

 

[Rob Battisti]

The government wouldn't like any policy that might encourage savings.

And those who worship the government also oppose it which is what you see ITT.

 

[Jack V Savage]

I meant in that it shouldn’t be viewed as a left or right issue.

Upward redistribution is inherently rightist.

That’s the issue with an ever increasing monetary supply when the only solution is to put your cash at risk in investing. Once again, the discouragement of saving happens at every turn.

What benefit do you think would be provided from discouraging investment?

And those who worship the government also oppose it which is what you see ITT.

And you genuinely believe that there are people who worship the gov't?

 

[brothir]

I meant in that it shouldn’t be viewed as a left or right issue.

It’s not a universal that any losses are write offs. I’m arguing that this should be.

That’s the issue with an ever increasing monetary supply when the only solution is to put your cash at risk in investing. Once again, the discouragement of saving happens at every turn.

What negative would you see in the average individual writing off the losses from their cash saving?

But it is a left/right issue. Depending on how exactly you're intending it to work it could disproportionately benefit the rich. What exactly is the issue with an ever-increasing money supply when the only solution is to invest? Investing is a form of saving. The problem is that if inflation is high then giving people more money will likely drive it higher. The solution to problematically high inflation is to raise interest and cause a minor recession.

What positive would you see in average people being able to deduct their cash-value losses from their taxes?

 

[aerius]

No. What's the point of passing new laws and tax codes when existing ones aren't even enforced? There's already a solution for inflation which is Section 2A of the Federal Reserve Act, which of course has never been followed nor enforced.

 

[plataoplombo]

Yeah, technically cash is considered an asset.

 

[panamaican]

Don't inflation adjusted tax brackets accomplish the same thing. Rather than you depreciating the cash, the tax bracket themselves increase. But the effect is pretty much the same. You pay less taxes on your dollar than you did 50 years ago. For example in 1980, we paid 21% on income between $16k and 21k. Now we don't hit those rates until between $47k-100k.

I guess if you're talking about the cash you hold in a bank account but I have to work out what happens since you're getting interest on that investment. Additionally, it's not really lost value until you spend it. You can depreciate a house...until you sell it for more than you paid for it and then you lose the depreciation and have to pay taxes on the gains. You don't get to take stock losses until you sell the underlying stock.

If you depreciate cash and then buy an iphone, what's your loss when you transform the depreciated cash into the iphone? Are you getting less iphone than your money is currently worth? Or are you getting more asset than the depreciated cash is worth and which point, you have a taxable gain.

 

[panamaican]

Another question:

If you can depreciate cash then it means that the cash is a loss over time. Does that mean that if you don't get a raise, your employer now has additional capital gains equal to the depreciated value of your cash?

 

[Rob Battisti]

Another question:

If you can depreciate cash then it means that the cash is a loss over time. Does that mean that if you don't get a raise, your employer now has additional capital gains equal to the depreciated value of your cash?

Yes.

 

[panamaican]

Yes.

But that doesn't work if you don't depreciate the cash on your side. Because if you don't depreciate then the government is getting 2x the tax on the same asset.

Plus if you do depreciate the cash then use it for value greater than the depreciated value, you've recaptured the depreciation, and you have to give back the tax reduction.

But it also means that your employer didn't get the capital gain that they claimed. They'd be able to take a reduction in that prior reported gain.

The whole thing becomes beyond unwieldy.

 

[Rob Battisti]

But that doesn't work if you don't depreciate the cash on your side. Because if you don't depreciate then the government is getting 2x the tax on the same asset.

Plus if you do depreciate the cash then use it for value greater than the depreciated value, you've recaptured the depreciation, and you have to give back the tax reduction.

But it also means that your employer didn't get the capital gain that they claimed. They'd be able to take a reduction in that prior reported gain.

The whole thing becomes beyond unwieldy.

The point is cash IS a depreciating asset. Perhaps the claims of loss would only be for individuals but I understand how that is Pandora’s box.

 

[Rob Battisti]

I guess if you're talking about the cash you hold in a bank account but I have to work out what happens since you're getting interest on that investment.

It would be CPI - interest. But even then The interest is additional cash not a gain on the value of the asset.

Additionally, it's not really lost value until you spend it.

It is a loss though in purchasing power.

 

[panamaican]

It would be CPI - interest. But even then The interest is additional cash not a gain on the value of the asset.

It is a loss though in purchasing power.

Not until you actually spend it. It's a loss in potential purchasing power.

 

[Rob Battisti]

Not until you actually spend it. It's a loss in potential purchasing power.

I … kind of agree but unlike a stock or other asset, cash never appreciates so you it’s not necessarily the same as unrealized losses or gains. It’s only ever headed in one direction.