I've always had a problem understand why so many people complain about paying capital gains taxes on the distributions they receive from their mutual funds.  First of all, there is no free lunch: if you join a country club, you pay dues; similarly, taxes are the dues we all pay for the privilege of enjoying the services that the nation provides for each of us.

 But I just ran across an article by Ric Edelman who goes even further in explaining why paying capital gains taxes on mutual funds isn't so bad.  Excerpt:

"...mutual fund shareholders pay a little bit of their capital gains taxes each year, whereas stock investors pay all their taxes at one time. Some people argue that stock investors have the advantage because, by delaying the tax, their money can grow faster. But I’m not sure this is true, because most fund investors reinvest their capital gains distributions into more shares, and this enables them to compound their growth more effectively than stock investors can." 

Full text here:
http://www.ricedelman.com/cs/education/article?articleId=248 

 Jagor