Some local government officials and school districts this year, along with labor unions, are urging lawmakers and Gov. Andrew Cuomo to remove the rate of
inflation component of the cap and simply limit levy increases to 2 percent.
In contrast, core inflation, which strips out the most
volatile inflation components, is facing upward pressure because recent declines in the exchange rate are boosting the prices of imported goods.
Every economics student, at some point early in his or her education, has seen the Fisher equation, where the nominal interest rate is broken down into an
expected inflation component and an expected real interest rate:
Some local government officials and school districts this year, along with labor unions, are urging lawmakers and Gov. Andrew Cuomo to remove the rate of
inflation component of the cap and limit levy increases to a true 2 percent.
In contrast, core inflation, which strips out the most
volatile inflation components, is facing upward pressure because recent declines in the exchange rate are boosting the prices of imported goods.
The red dotted line is the level of interest rate suggested by the Fisher Equation, which suggests that interest rates consist of a real component and an
expected inflation component.
a type of Treasury note that adjusts for inflation by providing inflation compensation in addition to the stated coupon
the inflation component affecting the bond's principal is calculated based on the Consumer Price Index (CPI), adjusting it upwards for inflation or downwards for deflation
Measures of real interest rates typically deduct
an inflation component from some «nominal» interest rate.
Legislation that would abolish
the inflation component of the tax cap was introduced last month by Sen. Kathy Marchione (R - Saratoga) and Assemblywoman Ellen Jaffee, (D - Rockland).
This inflation component is necessary to ensure that the cost of government doesn't rise faster than the cost of everything else, and has been of particular importance in recent years when inflation has been negligible.
If
the inflation component had been pegged at 2 percent in 2011 instead of the consumer price index, and assuming just half of school districts continued hiking taxes up to the limit, New Yorkers would have paid
If
the inflation component had been pegged at 2 percent in 2011 instead of the consumer price index, and assuming just half of school districts continued hiking taxes up to the limit, New Yorkers would have paid at least $ 450 million more in school taxes alone between 2014 and 2016, and would face an extra $ 400 million on their school taxes in 2017 - 18.
Ellen Jaffee (D - Rockland)-- Eliminates
the inflation component in the tax cap formula
Efforts to weaken the cap by making it a «straight» 2 percent limit and discarding the rate of
inflation component have fallen flat at the Capitol and is opposed by Cuomo.
Also there is
an inflation component to capital gains.
In an RRSP or taxable portfolio the taxman is like a hedge fund maager, he takes a cut of your profits (even
the inflation component).
If you sell an I Bond in less than 5 years after purchase, you lose 3 months of interest, but with a fixed rate of 0 %, you'll only be losing
the inflation component of the interest.
Our results highlight the significant impacts of real GDP growth, interest rates,
inflation components, money supply and stock market returns in explaining non-listed fund returns.