It doesn't matter what the return is; if the nominal rate of return is 5% and inflation is 3%, and $10000 increases to $10500, I'm still paying capital gains on

It doesn't matter what the return is; if the nominal rate of return is 5% and inflation is 3%, and $10000 increases to $10500, I'm still paying capital gains on $500, when in fact $300 of that is just inflation and the real gains are only $200. The key issue is that capital gains tax applies to nominal rather than real returns.