Exactly - wages do rise with inflation, but as we know from intro macro, there's always a bit of a delay due to contracts etc. The problem with inflation is it drives people even further up the risk curve to find yield.
The other problem is that while inflation incentivizes moving up the risk curve, capital gains work in the opposite direction, incentivizing idle cash balances. One side of the government wants you find yield, the other punishes you for finding that yield.
At the end of the day, you're just going to make people find that yield (they have to) and you won't increase tax revenue. People can stomach _some_ risk, but not an infinite amount (especially the institutional guys).
The other problem is that while inflation incentivizes moving up the risk curve, capital gains work in the opposite direction, incentivizing idle cash balances. One side of the government wants you find yield, the other punishes you for finding that yield.
At the end of the day, you're just going to make people find that yield (they have to) and you won't increase tax revenue. People can stomach _some_ risk, but not an infinite amount (especially the institutional guys).