One thing the author overlooks, though, is that there is a hidden incentive in a low capital gains tax rate that can have some very serious adverse impacts on the economy -- namely, unhealthy speculation in capital assets. I believe the stock market and real estate "bubbles" in the U.S. economy over the last 15-20 years can be partly attributed to rampant speculation in two asset classes that became attractive to investors because of the preferential treatment in the U.S. tax code for capital gains.