Say you buy $10,000 worth of XYZ in 1970.
According to this in 2007's dollars it would be worth $89871.98
From that you take away 40%, it's then worth $35948, which is more like equivalent to an initial investment of 1970 dollars of $40,000.
So it seems like a gain of 79,000 would be alot, but really it's a loss of $54,000 of today's dollars, a years salary paid directly to the government.
There is clearly something wrong with the rule that you pay x amount, sell for x amount + y amount, and pay 40% tax on y amount.
..Or is capital gains tax usually worked out after compensating for inflation.