How does it make sense to treat investment income the same as labor income? I've already been taxed on the investment amount, and I get no rebate if I lose my investments.
You've already been taxed on the investment principal. Not the returns that you're getting on the investment. By your logic, the capital-gains-tax should be eliminated entirely because its double taxation, which is a ridiculous idea.
Why is that ridiculous? Investment is a good thing -- it should be encouraged.
Is labor not a good thing that should be encouraged?
Yes, but if you think getting rid of capital gains would be ridiculous, you're probably not interested in reducing income taxes.
We're conflating different things here. The point we're discussing is that investment-income should be treated the same as labor-income. From your last comment, you presumably agree that labor is also a good thing that should be encouraged, so I don't see why investment-income should be taxed so much lower than labor-income.