Indexing capital gains for inflation sounds great until you remember the government can't figure out how to make a working website. Now they want retail traders to calculate basis adjustments across decades of purchases while the IRS itself still uses fax machines.
The execution is burdensome. That's the polite way of saying your tax return will require a CPA, an archaeologist, and a therapist. Every stock you bought in 2008 needs a new cost basis. Every dividend reinvestment. Every spinoff. Every merger where you got half a share of something that no longer exists.
Technical analysis doesn't care about your inflation adjustment. The chart doesn't know you paid $50 in 2015 dollars or $50 in 2025 dollars. Support is support. Resistance is resistance. But sure, add seventeen pages of worksheets to your 1040 so you can save $43 on a trade you made during the Obama administration.
Individual investors will spend forty hours reconstructing their cost basis to save money they'll immediately lose on their next earnings play. They'll hire accountants who charge more than the tax savings. They'll file extensions. They'll get audited because they used the wrong inflation index for a stock they inherited from their grandmother who bought it in 1987.
The people pushing this idea never filed their own taxes. They have wealth managers. They have family offices. They think burdensome means having to sign the return themselves instead of having someone forge their signature.
Meanwhile the IRS will issue conflicting guidance, update the rules mid-year, and audit anyone who actually tries to comply. The smart money will ignore the whole thing and pay the lawyers later.
Retail traders can't even remember what they bought last month. Now they need to track inflation-adjusted basis for thirty years across four brokers and a Robinhood account they forgot existed.
At least the tax preparation software companies will finally have a product worth buying.
Photo by Markus Winkler on Unsplash
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