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Comment by Kluny | Hacker News Reader

As it stands, income gets higher tax than capital gains. Capital gains are taxed at half the income tax rate. So people who make most of their money on capital gains are 1) very wealthy 2) paying less tax than poorer people who rely on working for a living 3) incentivized to keep their money in investment vehicles and out of circulation.

I'd suggest reversing it and taxing capital gains at the full rate and income tax at half. This is how it's done in Switzerland I believe, if you want a case study. They seem like they're doing okay.

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Cap gains are taxed lower because it's already taxed money being invested. In addition, it's a reward for risking your money by investing it into the economy (no, this money is not "out of circulation")

I've never understood the 'already taxed' argument. Money circulates; governments decide that certain transactions are taxable. The money left over in a given transaction after the tax is paid doesn't magically become exempt from taxation in future transactions, morally, legally or factually. Arguments against inheritance or capital gains taxes on the basis that they tax money that has already been taxed just privilege the idea that taxing earned income is axiomatically legitimate - the one transaction that it's okay to tax. But why is that special? Why not pick sale of goods as the legitimate taxable transaction, then paying tax on wages is paying taxes on money that has already been taxed.

Paying someone for their labor is a taxable transaction. Selling an asset at an appreciated value is a taxable transaction. Transferring wealth to descendants after death is a taxable transaction. 'Already taxed' money is not a thing.

It just that there's a surplus of capital right now - you can tell by the way bond and savings interest rates are close to zero. The reward for risking your money isn't needed right now. People can't find enough places to leave their money.

The money in my paycheck has already been taxed a bunch of times by that logic, so my taxes should go down, right?

Your country is not the only one on the globe. You can only tax so much before the thing being taxed starts to move elsewhere. Capital is more mobile than labor.

Capital is often less mobile than labor, homes and salt mines generally don't move. Also there is no reason not to tax foreign investors as shockingly they don't vote and capital is not in short supply.

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