In practice, many capital gains arise from transactions of negligible or dubious social merit.

Gains derived from speculation in land add nothing to the supply of land, and much of the gains
from securities trading based on advance information, whether or not characterizeable as insider
trading, do no more to enhance productivity or investment than winnings from betting on
basketball games. Attempts to exclude gains from speculation by limiting concessions to assets
held for longer periods not only introduce new complexities in determining the holding period in
cases of rollovers, reinvested dividends, and other trades, but aggravate the lock-in effect as
realization is deferred to obtain the concession, an effect especially severe in the case of the total
exemption from income taxation of gains on property transferred by gift or bequest