Generally, it is assumed that a cut in the capital gains tax (CGT)will cause a decrease in tax revenue, and so in an environment of substantial federal deficits, this tax policy is not an option.

However, this argument is further from the truth, because a cut in the CGT rate will actually increase tax revenue as many investors will be tempted to sell their appreciated assets.

This will result in freeing up substantial cash flows from assets that were previously illiquid....

TaxGuru