One such potential complication arises if the tax rates applicable to the marginal TIPS investor and to the marginal holder of nominal government securities are not the same, in which case the equilibrium breakeven inflation level will be affected. Roll (2004) discusses the effects of taxation on the breakeven inflation rate.
2  BIS Review 21/2004  As you can see in Figure 1, breakeven inflation rates have proven surprisingly volatile over their short history.