I agree that capital gains should be taxed like income except for the fact of inflation. If you hold, say a house for 10 years, and inflation averages 8% a year (remember the 1970's), and then you sell it at the same inflation adjusted value, you will pay a bunch of tax on no real gain. Maybe we could adjust capital gain tax to inflation. This would have added benefit of having a constituency that wants a higher CPI against those who would like to keep it low (for example to keep Social Security payments or other retirement payments from increasing).