You invest $1,000 in Big-Multinational-Corporation (BMC). Five years later you sell your stock for $101,000, which is a gain of $100,000. Assuming a long-term capital gains tax rate of 20 percent, you will owe $20,000 in tax on the sale.
However, if you purchase $1,000 worth of shares in Mom-n-Pop, Inc. (a very small business), and you sell the stock for $101,000 in five years, you will not owe any tax on the gain from the sale of the shares. You can pocket the $20,000 instead of paying it to Uncle Sam.