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BTW, lower capital gains taxes don't encourage people to sell bad investments and move the money to good investments.
A bad investment would be one that lost money (or made very little), a good investment is one that makes alot of money...since the tax is only paid on the profit, selling a bad investment is not a taxable event, or in the case of a barely profitable investment, the tax is miniscule in relation to the amount of capital that will be freed by selling.
If anything, the low tax rate would encourage me to sell an asset (say a good stock) and then immediately reinvest all of the after tax proceeds into the same asset, thereby raising my cost basis for future taxes. (i.e. paying tax now at the lower rate on profits I've made so that if taxes go up later and I sell, the tax bill will be lower)
All this really does in the long run is cost the treasury money that it will have to make up for in another part of the economy.
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