Capital gains tax shouldn't exist. It should all be one income tax. You can carve out discounts or exemptions for things like sale of PPOR, sale of family business up to a certain point, if you want.
https://en.wikipedia.org/wiki/Land_value_tax
We need to implement a land-value tax, if simply because taxing land does nothing to change the supply of land. Unless America decides to invade Mexico anytime soon, the value of land will not change.
I responded to another post in this thread with a link on Georgism as well (https://en.wikipedia.org/wiki/Land_value_tax).
I see Georgism occasionally advocated for on Hacker News but I really wish I would see more discussion on it. IMHO, it is the only sensible tax and the most fair tax that economists have thought up.
Personally, I don't think taxes should be based on risk assessment.
The justification also breaks down when you recognise that capital gains taxes are the same for investments in any sector: If it's supposed to reward risk-taking, why tax investments in retail or insurance stocks the same as early-stage venture capital?
So... you take a loss on your taxes, probably spreading it out in some way so you don't pay taxes for a few years, if it's a serious enough loss. Right? Why does the rate need to be different?
Furthermore, I think you are misunderstanding the double taxation argument. The double taxation arises because the company has already payed tax on their profits.
I don't believe capitalists take more risk or should get preferential tax treatment.
You don't seem to want to understand my point: Low taxes for investment benefits wealthy people disproportionately. Yes, lower income also get some benefit but the vast majority goes to the wealthy. Same for all the Republic "tax reform" proposals: A little tax cut for small incomes, large tax cut for high incomes.
Yes, I understand Saez disagrees. But he is hardly the final word on this. Hardly.
In some cases. Investing in the stock market doesn't. It's just a somewhat randomized wealth redistribution system. If I invest $1M in IBM, IBM doesn't see any of that money. Nor do the investors in IBM. It might move the price of a fraction of a penny, but the money just goes to whatever person sold their stock.
So, some investment (private companies, municipal bonds, etc) leads to more economic activity, but not all investment. I'd be interested to see the breakdown.
most 65 year olds who are wealthy at 65, weren't at 30. Just pointing out that if you support a policy because you don't think it will affect you, it very well might later on. But that's an aside point, not the main point.
Also, we have ways to encourage and provide benefits for people who are lucky enough to save for retirement. 401Ks, IRAs, etc... You don't need a lower capital gains tax, instead, provide more benefits for investments specifically set aside for retirement if you think not enough is being done.
You might argue that they'll just "waste" it on goods and services, but that's what keeps the economy moving so it's not really a waste.
Your life would be negatively impacted if everyone paying capital gains decided it was advantageous to avoid paying them, so you can't talk about adjusting that tax structure as if all of the same money would stay on the table. If it were less enticing to invest it, fewer would, and that changes the environment in complex ways. It's a big assumption that if you raise taxes, everything else remains pinned down and we can analyze that variable in isolation.
Maybe a better argument would be that successful investors use of money is better for everyone in society in the long run and that having lower taxes on earned income would just let more money be spent on "useless" things: longer vacations or fancy lattes.