Inflation, indexation and interest income taxation. A comment
Keywords:Inflation, income tax system, wealth transfer mechanism, V. Tanzi
The article comments on V. Tanzi’s “Inflation, Indexation and interest income taxation”. The author agrees with the proposition that, for equity reasons, it would be desirable to find some offset to the transfer of wealth which takes place under inflation between borrowers and lenders. However, he seeks to show that the income tax system may not be the most appropriate practical mechanism to obtain the desired offset. In addition, certain conceptual issues are raised. A qualified alternative suggestion is then made.
JEL: E31, E64, H24