index capital gains for inflation but the tax rates could be changed at the same time to make this revenue neutral (or revenue-positive).
I'm assuming that a big part of why people support wealth taxes is concerns about generational wealth transfers (it's bad that someone is rich because their ancestor was rich). I think wealth taxes are the wrong way to handle this, since they treat the "new rich" and the "old rich" the same way, plus the concerns above (i.e. taxing an inheritor who spends all of their inheritance less than one who re-invests it). This is strange since only around 30% of billionaires in the US inherited their money. If we want higher estate taxes, we should just raise the estate tax. This targets inherited money without penalizing self-made billionaires who invest instead of spending on themselves.
The estate tax has similar problems to wealth taxes, but I see them as much less bad because you only pay the estate tax once per life and having to sell your parents' company to pay taxes isn't as bad as not being allowed to own your own company long-term. Wealth taxes are also complicated to administer so it's better to only appraise someone's estate once per lifetime vs every year.
My preference is to use sales taxes (as described above) and let inter-generational wealth go away on its own, but if we want to target inter-generational wealth transfers then just tax inter-generational wealth transfers.
It's worth pointing out that estate taxes barely raise any money so this is mostly pointless from a revenue perspective.
Wealth taxes tax people who are smart about their money more than people who waste it. Income taxes are good because they directly tax people with higher incomes more.
The US goverment needs money to operate but we should raise that money in the most efficient and fair way possible. Wealth taxes are not that.