But to claim that capital gains are the same as income is incredibly misleading. In the special case where you are a small business owner that works at the business then yes you are taxed as an employee. The money you invested will be recouped just as venture capital would -- when the company is sold or by paying dividends.
Sure, I recoup all the money I put in as well as my 'sweat equity' when I sell, and I pay the low capital gains tax rate on that, but like I said, this encourages short-term thinking. Hell, I could happily run my company for another 10 or 20 years. But the capital gains taxes being so much lower than the income tax I pay on money I take out without selling that it might make sense for me to sell out once I'm not doubling twice a year. It's sad, I think, as I think I'd be happier running the company, and the company would probably be better off with someone with a long-term view running it.
This is true until you sell your company; at that point the proceeds of the sale are taxed as capital gains. Personally, I think this rewards short-term planning over long-term planning. It's also essentially a subsidy on publicly traded companies that us little guys don't get.