You have an interesting thesis here but I think there are some logical consequences you aren’t considering. Prior to COVID the US personal savings rate was under 10%, lower than that of countries like China and India, both of which are materially poorer than the US on a per-capita basis. Relatedly, Americans also have extremely high levels of consumer debt.

When you consider just how low US individual income tax rates are by global standards, it’s obvious that disparities in net worth have a lot to do with the fact that a large share of Americans, regardless of their income, effectively choose to live from paycheck to paycheck on the brink of personal insolvency.

I often hear arguments about capital gains taxes being an unfair advantage, and that it should be taxed the same as income.

But often these arguments don't present a full picture - because it only discusses the end result of the dollar received and compare the tax rates.

What about the risk? A job-income is 100% guaranteed to be received if one worked. Even if the business paying the said wage doesn't make a profit, they still have to pay the wage. The owner cops the loss.

Therefore, to encourage investments, the taxes are lowered on the profits of such type of investment (which is what capital gains are). The person trying to make capital gains income has to take on a risk that a wage earner doesn't, because the capital gains aren't guaranteed.

If capital gains are taxed the same, you will find that there will be less investments, which leads to less jobs and less wealth overall.

> If capital gains are taxed the same, you will find that there will be less investments, which leads to less jobs and less wealth overall.

So you're saying people don't work because they are taxed at a higher rate than capital gains?

well, you can interpret my words in a wrong way to try to make a point, or you can admit that taxation discourages the thing being taxed.

Higher capital gains tax discourages investment. If income tax is higher, it indeed does stop people from working (as much). But we are talking about raising capital gains tax, not raising income tax.

The person with a job and the person "risking" their billions in capital are not comparable.

from a financial perspective, the job comes with zero (or near zero) monetary risk.

The person risking "billions" in capital is taking "billions" in monetary risk (the weighting depending on what the investment is - bonds are less risky than shares, for example).

And they stand to gain far more than someone working for $20 an hour.

Over the last 50 years the values of investments have far far outpaced growth in earnings. If a millionaire doesn't invest and make captial gains, what does he do with his money? Keep it in a box under the bed?

> And they stand to gain far more than someone working for $20 an hour.

And a lawyer gets paid $200/hr. What are you comparing? I'm not talking about whether it's "fair" that someone can be earning so little when there exists billionairs. That's for the philosophers and social commentators to endless debate.

But someone working for $20/hr earns that money, with zero risk of not receiving it after services rendered. Someone investing money is not guaranteed a return.

> If a millionaire doesn't invest and make captial gains, what does he do with his money?

So you're saying that because said millionaire has "no choice", he would be forced to invest and thus, society could leech more off him?

I'm asking that if the millionaire was taxed at the same rate then what would he do with his money instead of investing it?

Same principle with a lawyer being paid $200 an hour, or an actor on $2000 an hour.

Morally I'd say that the millionaire who is rent seeking should be taxed more than those working, but parity would be a start

You make investing seem like gambling. Seems that the IRS treat gambling as earned income, not unearned income.