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1. That's not a "loophole", it's a deliberate feature of tax law.

2. Changing that would not do anything to solve this problem (even if you think it should be solved through more government spending, it wouldn't raise much money)

It's less of a loophole than one might think, because much of long term capital gains is illusory due to inflation.

Just to make sure I understand you, you are advocating counting long-term capital gains as ordinary income?

I'm explaining what it is likely the upthread poster was referring to when talking about closing the capital gains tax loophole, not advocating anything.

(I have advocated better aligning the treatment of capital, labor, and generic other income, but the details involve more than just counting long-term capital gains as ordinary income.)

I missed that you were filling in for someone else, thank you for the explanation.