Capital gains and dividends
Investment earnings get preferential tax treatment and historically low tax rates for capital gains and dividends -- 20 percent for higher earners, 15 percent for most taxpayers, zero percent for some. The argument for the favorable tax treatment is that it encourages people to save money and invest in stocks, which keeps capital flowing into the economy and provides retirement cushions (that is, if the market doesn't totally tank).
But the cost of low investment taxes to the U.S. Treasury comes in two forms.
Investor savings, thanks to the lower tax rates on profits when they sell, are projected to be almost $633 billion by 2018. That gain for investors is Uncle Sam's loss.
Then there are assets left when their owners die. The increase in value of those holdings isn't taxed when the owner dies. That's because any heirs who get the property can step up the asset's basis, reducing any profit on subsequent sales. That produces a smaller tax bill for them. The cost to Uncle Sam, however, is estimated at almost $175 billion.
And capital gains taxes that aren't collected on some home-sale profits are estimated at more than $149 billion.