Yes, I conflated too many ideas in one sentence, there, confusing the point.

The OP was asking why working income is taxed at higher rates than cap gains. The most relevant point in my response was that we have an entire industry (the tech industry) whose entrepreneurial fuel is rich investors (venture capitalists) who are motivated to invest in startups by the promise of capital gain.

Thus, the availability of venture money is inversely proportional to the capital gains tax rate. Increase the cap gains tax rate, decrease innovation and job creation in the tax sector.

Regarding retirees, they tend to gravitate towards high dividend paying stock investments. The point is that they hold some stocks, and when they realize those gains, their incomes are punished by high cap gains tax rates.

Hope that helps.

Written by

Data Driven Econophile. Muslim, USA born. Been “woke” 2x: 1st, when I realized the world isn’t fair; 2nd, when I realized the “woke” people are full of shit.

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store