What's Wrong With 2% Inflation?

A little thought experiment

You have a million dollars
You invest it all in a nice stock that pays no dividend.
The stock goes up exactly 2% a year. Inflation is also exactly 2% a year.
10 years later you sell for $1,220,000 (compound return)
A nice gain of $220,000
You pay tax on the gain at 15% for a tax of $33,000

That $33,000 was really just a confiscation of your wealth.
The gain was no real gain
After inflation you just broke even.
And then you paid a tax on a gain that was no gain.

I suggest indexing capital gains. That would be fair. In this situation there would be no gain to report if the gain were indexed.