Ray Madoff

for inheritances.

But when we recognize that it is an actual exemption for inheritances, then we can come up with a reasonable amount.

Maybe each person should be able to inherit $1 to $2 million tax-free, and after that, they'll pay ordinary income rates.

We can have a more coherent system by bringing it into the income tax system.

We absolutely should be increasing the capital gains tax and equalizing it with the ordinary income rate.

There's a lot of... You'll get 50 reasons about why people who want to keep that reduced rate, all sorts of reasons that they have, but none of those 50 reasons actually stand up on their own.

And so I believe absolutely we should be equalizing the rate.

The one thing that I think that we could do...

is we could provide inflation adjustment for recognizing gain.

So let's say that somebody buys a house a long time ago.

They buy it for $100,000, and now it's worth a million dollars.

But inflation has gone up so much that their actual gain, they're not really better off by $900,000 because—

that money isn't going to buy as much anymore, right?

They can only just buy that same house or buy a less good house.

I'm not explaining this well.

But a lot of that gain will be due to inflation.

And so I think that we could equalize rates but allow for adjustment for inflation of basis so that people are not paying taxes on the inflation gains.

And that would be a way of softening that as it applies to long-held assets.

Well, first of all, right here in the United States, they were taxed at the same rate in 1986.

This was a tax bill.