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How Inflation Makes Income Tax Tougher On Savers

Tuesday, July 13, 2010 - 5:11 AM
Which is worse?
  • 2% CD when inflation is 0%
  • 8% CD when inflation is 6%
If you assume both cases will be hit with a 25% income tax, you'll have no real return on the 8% CD due to the 6% inflation. For the 2% CD, you'll at least have a 1.50% real return after taxes and inflation.

MyMoneyBlog has a good review of this issue.
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Ken TuminKen Tumin5,471 posts since
Nov 29, 2009
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