When citizens expect higher taxes and inflation they will shift from financial assets to tangible assets. One can enjoy jewelry, real estate, antique cars, new furniture, vacations, boats, art and collectibles without having to pay tax on their enjoyment and can feel wealthier as their tangible assets inflate in value tax free (at least tax deferred if they ever actually sell it).
Higher taxes on investment income will surely drive more money into tangible assets. Expectation of higher inflation will increase the diversion. Inflation and taxes are two sides of the same coin; one monetary and one fiscal. Both induce one to work and produce less. Inflation pressures quick consumption and the acquisition of tangible assets to avoid the loss of monetary value.
Financial assets are an investment in the future; tangible assets are an investment in today. Driving money out of investments for future growth into tangible assets hurts economic growth and retards long term thinking, a hallmark of both a civilized society and economic growth.
Not only is the enjoyment from tangible assets not taxed, it is not considered when we measure the equality of income distribution in America. This is why there was a growth in income inequality after the Reagan economic revolution, and this is also why it was not a bad thing.
As a result of lower taxes on financial assets and the lowering of inflation under Reagan vast amounts of money flowed out of the tangible assets where they were not counted and into financial assets where they were counted. The financial assets created economic growth and jobs which drove unemployment down from their stagflation highs under Carter.
If Obama and the Congress succeed in raising taxes and igniting inflation we will see a shift back to tangible assets at the expense of a growing economy. He will have succeeded in reducing income inequality and we will all be worse off for it.