I think applying inflation to capital gains makes a lot of sense. We already have our tax brackets indexed to inflation, because we recognize that the number of dollars representing a certain amount of wealth changes over time, so the number of dollars at which you start owing extra tax should change with it.
If you bought an asset for $1,000 in 2000 and sold it for $1,200 in 2018, you have gained dollars but lost wealth. If you had exactly kept up with inflation, you would have instead had more like $1,500. I think it's fairer to tax changes in wealth rather than changes in dollars.
That said, I'm very skeptical that such a significant change can be enacted by executive fiat rather than through an act of Congress, and I also think the rationale for having a lower tax rate for capital gains becomes much weaker if you're taxing changes in wealth rather than changes in dollars.
