There have been a lot of discussion here recently about extending the Bush tax cuts.
Here’s an article explaining the benefits of taxing consumption rather than investment.

Why should capital income be treated differently than wages and salaries? The economic reason is very different from the political rhetoric. It is not to favor the rich at the expense of the working man. Nor is the principal reason to eliminate the double taxation of profits, first at the corporate level and again at the individual level as dividends or capital gains. Proponents of a consumption tax argue that it is superior to an income tax because it achieves what tax economists call “temporal neutrality.” A tax is neutral (or “efficient”) if it does not alter spending habits or behavior patterns from what they would be in a tax-free world, and thus does not distort the allocation of resources. No tax is completely neutral, because taxing any activity will cause people to do less of it and more of other things. For instance, the income tax creates a “tax wedge” between the value of a person’s labor (the pretax wages employers are willing to pay) and what the person receives (after-tax income). As a consequence, people work less—and choose more leisure—than they would in a world with no taxes.

The case for a consumption tax is that the tax wedge created by taxing capital income does enormous long-term damage to the economy. Taxing interest, dividends, and capital gains penalizes thrift by taxing away part of the return to saving. The unavoidable result is less saving than society would choose in the absence of any taxes. The social value of saving is the market interest rate that borrowers are willing to pay for the use of resources now. Economists are confident that this is the value to society because it is a market price that reflects the desires of the various savers and borrowers. If each potential saver could collect the market interest rate, the result would be an optimal amount of saving—that is, an optimal division of resources between current consumption and future consumption. “Optimal” in this sense refers to the amount of saving that individuals, deciding freely on the basis of market prices, would choose to do on their own, rather than the amount of saving that a politician, social planner, or economist thinks they ought to do.

Market interest rates effectively pay people to defer consumption into the future (i.e., to save). Because the tax wedge reduces those payments, people inevitably will choose less future consumption (saving) and more current consumption. This harms the economy because less saving results in less investment, less innovation, slower growth, and lower future living standards than would be enjoyed without a tax on saving. Future consumption is reduced by both the extra current consumption and the forgone returns that greater saving would otherwise have produced. Some of this loss is a deadweight loss to society, that is, a loss to some that is a benefit to no one. Eliminating taxes on capital income would eliminate the tax wedge on saving, and total saving would be much closer to the optimal amount. The tax system would be “temporally” neutral in the sense that it would not affect the choice between current consumption and future consumption (saving).