So you're saying people don't work because they are taxed at a higher rate than capital gains?
Higher capital gains tax discourages investment. If income tax is higher, it indeed does stop people from working (as much). But we are talking about raising capital gains tax, not raising income tax.
The person risking "billions" in capital is taking "billions" in monetary risk (the weighting depending on what the investment is - bonds are less risky than shares, for example).
Over the last 50 years the values of investments have far far outpaced growth in earnings. If a millionaire doesn't invest and make captial gains, what does he do with his money? Keep it in a box under the bed?
And a lawyer gets paid $200/hr. What are you comparing? I'm not talking about whether it's "fair" that someone can be earning so little when there exists billionairs. That's for the philosophers and social commentators to endless debate.
But someone working for $20/hr earns that money, with zero risk of not receiving it after services rendered. Someone investing money is not guaranteed a return.
> If a millionaire doesn't invest and make captial gains, what does he do with his money?
So you're saying that because said millionaire has "no choice", he would be forced to invest and thus, society could leech more off him?
Same principle with a lawyer being paid $200 an hour, or an actor on $2000 an hour.
Morally I'd say that the millionaire who is rent seeking should be taxed more than those working, but parity would be a start
You make investing seem like gambling. Seems that the IRS treat gambling as earned income, not unearned income.
But often these arguments don't present a full picture - because it only discusses the end result of the dollar received and compare the tax rates.
What about the risk? A job-income is 100% guaranteed to be received if one worked. Even if the business paying the said wage doesn't make a profit, they still have to pay the wage. The owner cops the loss.
Therefore, to encourage investments, the taxes are lowered on the profits of such type of investment (which is what capital gains are). The person trying to make capital gains income has to take on a risk that a wage earner doesn't, because the capital gains aren't guaranteed.
If capital gains are taxed the same, you will find that there will be less investments, which leads to less jobs and less wealth overall.