Interesting op-ed in today’s Wall Street Journal:  Inflation and the Tax Man, by Richard W. Rahn (Chair, Institute for Global Economic Growth, and Adjunct Scholar, Cato Institute):

Rudy Giuliani’s tax-reform proposal includes indexing capital-gains taxes for inflation — that is, putting the original price of the asset in today’s dollars. All of the Republican candidates have called for low or lower taxes on capital gains, while the Democrats favor higher capital-gains taxes. But inflation-indexing of capital gains should be part of every candidate’s "economic stimulus" package, regardless of party affiliation.

Accounting for inflation in this way has the advantages of producing more short-term revenue to the Treasury as long-term gains are "unlocked." Furthermore, lowering the cost of capital would stimulate investment and the stock markets, and would increase the fairness of the tax system by not taxing phantom gains for people at all income levels. It would also square capital-gains taxation with the U.S. Constitution.