Gains on an IRA are effectively tax free.
Consider a simple example. Suppose you put $1000 into a traditional IRA, By the time you withdraw it, the value of the account has doubled. You are in a 15% marginal tax bracket. For the purposes of this example, assume you are in the same tax bracket when you put the money in as when you take it out.
Scenario 1: You deposit $1000 to your IRA. It's tax deferred so you pay no tax at the time you deposit. When you withdraw the money it has doubled to $2000. You now pay 15%, or $300, leaving you $1700.
Scenario 2: Instead of depositing the money in an IRA, suppose there was some alternative account you could deposit money to where you pay taxes normally when you earn the money, but you pay no taxes on capital gains. I'm not saying there's any such tax law, just creating a hypothetical for comparison. So when you earn the $1000, you have to pay $150 in taxes, leaving $850. By the time you withdraw, it has doubled to $1700. You pay no taxes on the capital gain, so you are left with $1700. Note this is the same amount you had in scenario 1.
Instead of using sample numbers you could do a little algebra and you'd see that this is true regardless of the amount and the tax rate. So one way of looking at an IRA is to say that the net effect is that capital gains are tax free.
(Let P be the initial principle, r be the growth factor over the life of the investment, and t be the tax rate. Then in scenario 1, the amount of money you have at the end is P(100%-t)r. In scenario 2 it's Pr(100%-t). As multiplication is associative, these two will expressions are equal.)
Oh, and note that my scenario 2 is basically how a Roth IRA works, so there really is such an account. They just don't describe it that way.
BTW, a crucial assumption in this example is that your tax rate when you put the money in is the same as your tax rate when you take it out. For most people, that assumption is NOT valid. Most of us are in a higher tax bracket when we're working than when we retire. So by deferring taxes until you retire, even if you did pay taxes on the increase, you'd still be better off because you'd be paying taxes at a lower rate.