Capital gains taxes greatly discourage older Americans from selling their homes – even when they’re empty nesters and ready to downsize and retire to a golf community or a beach town.

That’s because the 23.8% tax on the gains from a home sale (or any other financial asset) is not adjusted for inflation. It’s not uncommon for a house owned for 40 years to have quadrupled in value but most of that “gain” is due to the tripling in prices over that period. How is taxing inflationary gains fair?

It isn’t, and Jeff Yass and UP Co-Founder Steve Moore have penned a piece in the WSJ showing that this capital gains tax – which can reach or even exceed 100% of the real increase in the value of the property – strongly discourages home sales due to the “lock in effect” of capital gains taxes. Seniors can and do avoid the tax by holding on until they die, when the basis is adjusted.

Milton Friedman used to call inflation: “taxation without legislation,” and nowhere is that more evident than in housing.