I'll let economists debate the effects of increasing the capital gains rate, and let them not come to a conclusion.
Instead, I want to consider the generational loophole -- the fact that, at death, the basis for the heirs becomes the death date, NOT when the asset was originally purchased.
Of the three ways of which capital gains are given favored tax status, this one is the least defensible.
The others are (1) the lower rate for capital gains, which has some defense on economic grounds, (2) the fact that taxes aren't paid until the asset is sold, and so the taxes are deferred -- which avoids the need to inventory the value of your assets each year before you do your 1040, which would be a nightmare for hard to value assets and exaggerate the effect of the business cycle on tax collections.
A simple example. When my father died in 2011, the five of us kids each inherited 20% of his Chevron stock. The basis for the capital gains wasn't when the stock was purchased, but when he died. The tax on any capital gains just disappeared.
Now, there are some practical reasons for this, which would demand a phase in. My father didn't actually buy that Chevron stock. My grandparents owned it at least as far back as the 1950s, because I remember them mentioning the dividend (because, as a kid, I had to ask what a dividend was). My father inherited 20% of that stock, along with his four siblings.
But did my grandparents buy it, or did they also inherit it? That's quite likely, since they were truck farmers, not financial wizards.
Truth is, it would be difficult if not impossible to find out who originally purchased how much Standard Oil of Kentucky stock (which was acquired by Standard Oil of California, which eventually became Chevron). But that doesn't mean that in this modern era of record keeping we couldn't require records to start being kept, and set some arbitrary current start date for older assets, and phase out this loophole.
On a pure fairness basis (always a tough argument with the tax code) it's hard to defend this disappearance of capital gains the living have to pay, and this should go.
By the way, it would be lovely to report this Chevron stock had made me fabulously wealthy, but if you did the math above you can see that this was 1/25th of the amount of stock my grandparents owned. They weren't dirt poor, but they didn't get indoor plumbing until 1953.