A sensible capital gains tax should remove the inflation part. Say you buy a stock for $1000 in year 1. Suppose monthly cost for living in that year is $1000.

A sensible capital gains tax should remove the inflation part. Say you buy a stock for $1000 in year 1. Suppose monthly cost for living in that year is $1000. In year 10, you sell the stock for $2500. Suppose monthly cost for living in year 10 is $2000. Your investment essentially just beat the inflation by $500 at year 10. In other words, real capital gain is not $1500.