"The broad consensus among economists is that efficient, nondistorting tax rules would tax all types of income—properly measured—at the same rate." Really?

I can think of Glenn Hubbard (Columbia), Greg Mankiw (Harvard), Gene Fama (Chicago), Jude Wanniski (Polyconomics) and several other major economists who support preferential tax treatment for capital gains. At a minimum, it seems unfair to tax people for any inflation-based asset appreciation. As Mankiw noted in an article in the NY Times: "Throughout almost the entire history of the United States income tax, the tax rate on capital gains has been lower than that on ordinary income."

There's a good, economic reason for this. If we encourage capital investment, we are more likely to enjoy capital-based productivity gains which will lead to greater real income growth. At least, that's the supply-side argument (as outlined in Gwartney and Stroup, a CFA-curriculum text).

For a critique based on the economics of fiscal policy, it seems the reviewer dismissed a major school of economic thought. Even so, I liked the review--it gives me a good sense of what the book offers, and where its policy recommendations are likely to tend towards.