Really there just shouldn't be any privileged category for capital gains and it should be taxed like regular income, progressively.
A better way to restore progressively to capital gains is to index them for inflation, and then you can tax them at ordinary income rates.
It makes sense that it's an attempt to index for inflation, although strange that there is only one cutoff (securities held for 1 year taxed the same as the ones held for 10 years); you would imagine some sort of step-down function would make more sense / track inflation more accurately (or indexing directly which is much harder).
So maybe different tax rates for 1/5/10/20 years held?
Lets have a single fair set of rates with progressivity. A rich man in the 35% tax bracket should pay 35% on their capital gains, just as a poor retiree in the 15% tax bracket should only pay 15% on capital gains.
Capital gains get a favorable treatment because we want to encourage investment that creates economic growth, but comes with risk of loss.