Because Capital gains is not income, and should not be treated as income...
There are alot of problems with Capital Gains taxation in the first place (like for example the fact it does not factor in inflation at all which is a problem for assets held for a long time)
I get capital gains from dividends and stock sales. How do you figure that that is not income? I literally do no work for that money, but am charged less in taxes for it than that on my salary. But it is new money adding to my wealth. How is taxing that at a lower rate anything but privileging those who are better off (I don't think of myself as rich, but others may dispute that).
I understand your point about inflation, but then you would have to count that in in interest earnings, and a lot of other places. The Federal Reserve essentially uses inflation as a club to force people to keep their money moving, thus simulating the economy. Why would we kill that club for capital gains?
Treating capital gains as regular income absolutely is a solution to even out the playing field. I would even take taxing them at more (even though it hits my pocket book). But an even playing field where business owners don't get to play around with their income to have it rated better than their employees sounds like a good start.
One of the arguments against raising the capital gains rate is that the people enjoying that rate don't need to realize gains, they can simply borrow cash against their assets, so raising the capital gains rate could theoretically reduce tax revenue.
Not sure how true that is in practice, but I thought it was at least worth considering.
>>The Federal Reserve essentially uses inflation as a club to force people to keep their money moving, thus simulating the economy
Sounds like you think this is acceptable, to manipulate the currency to force people do things they would not normally do..
We have fought wars over other nations doing things like that...
I do not find that practice to be acceptable. So we are starting very different economic worldviews chances are we will not agree on much when it comes to taxation
There are alot of problems with Capital Gains taxation in the first place (like for example the fact it does not factor in inflation at all which is a problem for assets held for a long time)
Treating it pure income is not the solution