Great, then let's open the primary market (which does generate value) up to individual investors. Unfortunately, this value generating mechanism has been legislated away.
That said, I do think this is somewhat beside the point of how capital gains should be taxed. I think that stock appreciation profit should be taxed at least as high as personal income.
I don't understand why... if I invest money I worked to earn, the profit from putting that money to use should be taxed three times: once while paying the employee the company hires to carry out business, twice after profit is calculated and corporate income tax taken, and then thrice when they tax me for the dividend. Surely twice is enough?
> That said, it is worth pointing out that public investors do have access to primary market IPOs.
Not quite, the have access to the resellers of the primary market IPO. The original buyers of the equity are the underwriters plus whoever registered during the road show -- and they must be accredited I believe.
My point is that if you are investing in a secondary market, you are not putting that money to use. It goes into the pocket of whoever sold you the stock and the company doesn't see a dime from the transaction.
If we must have taxes, I would rather have them not come from earned income (like a job), which takes labor and creates value. Income from the secondary market require no labor, and create no value.
If you believe rewarding and incentivizing value creation is more moral and socially desirable. Rewarding individuals for simply possessing assets is at best neutral.
This is my exact point. Working (like with a job) creates value. Investing money in a secondary market for stocks generates no value whatsoever. Perhaps it keeps some stock brokers emplayed