Agree! IMO the solution isn't a wealth tax, it's to just tie the capital gains tax to the income tax bracket.

That, or adding a top marginal capital gains bracket for any gain above (say) $100 million.

This also has the built-in advantage of not requiring a Constitutional amendment.

The combined long-term capital gains rate in places like California is >37%. The 20% is just the base federal rate, it can almost double when other investment taxes are accounted for.

You missed a major reason long-term capital gains rates are lower than income tax rates: they are not indexed for inflation in the US and inflation on income is negligible. As a matter of tax policy, it is much simpler to reduce the rate than to compute a very large inflation deduction, but you can find countries that go both ways.

I will give you the point about a lack of inflation indexing.

I stuck entirely with federal numbers when comparing capital-gains to income taxes to make it a more apples-to-apples comparison. It looks like you took that in order to compare california-specific state+federal capital gains tax, and compared it to federal-only income tax?

The other issue of high-cost states being more often included in high-rate brackets (due to federal tax brackets not being adjusted for cost-of-living) is a different, and also complex, issue.

> You missed a major reason long-term capital gains rates are lower than income tax rates: they are not indexed for inflation in the US and inflation on income is negligible. As a matter of tax policy, it is much simpler to reduce the rate than to compute a very large inflation deduction, but you can find countries that go both ways.

Very interesting point.

To encourage investment. In order to incur capital gains, you have to invest, which is entirely voluntary.