That's because it isn't. It is taxed better in nominal terms because it ignores inflation. If you bought a stock for $100 and sold it for $110 in a year, in nom

That's because it isn't. It is taxed better in nominal terms because it ignores inflation. If you bought a stock for $100 and sold it for $110 in a year, in nominal terms you made 10%. But $110 in a year isn't worth as much as last year, and in real terms you probably made 8%. There is a reason that short term capital gains are taxed exactly the same as income. In the 2015 top tax bracket of 39.6%, capital gains is taxed at 23.8%. That's a 40% discount, which (unsurprisingly) is long term equity capital appreciation minus long term CPI trends. This discount should be extended to all forms of savings and investment income too (e.g. interest and bonds), but that's another topic.