Inflation sometimes causes people to pay ________ capital gains tax than they ought to,________.
A) less; because tax laws do not typically account for inflation
B) less; because inflation creates the opportunity for a tax write-off
C) more; if they neglect to claim the inflation adjustment that tax laws allow
D) more; because the inflation adjustments in tax laws overcompensate for inflation
E) more; if much of their calculated profits from selling assets was due to inflation

Question

Quizplus · Accepted Answer

Inflation can cause the nominal value of assets to rise, leading to higher capital gains taxes even if the real value hasn't increased, resulting in paying more tax on inflationary gains.

Inflation Sometimes Causes People to Pay ________ Capital Gains Tax