>>>I think you are too hooked up on the pure #$ of capital gain. This # has to be corrected for inflation to arrive at an increase in buying power, which is comparable to an income to be taxed. So a rate definatly lower than the tax rate for income is necessary IMHO.
>
>It's not so difficult to correct for inflation- if you need to. In the US, interest income is taxed at the marginal rate (except for some government bonds) despite erosion of the principal by inflation. People still seem to manage.

"Seem to manage" is not really a debatable criterion ;-)
Taxing the substance is wrong from a systematic POV and if the gov fails to keep the buying power of the $,
it should detract that loss from interest earnings before calculating taxes.

Maybe those people see no alternative - so they still buy gov bonds,
pay taxes and still take a minor loss in buying power...