I believe the reasoning behind it is to incentivize long-term investing. Though, it should really be a tiered system in that case - different tax rates for hol

I believe the reasoning behind it is to incentivize long-term investing. Though, it should really be a tiered system in that case - different tax rates for holding periods of <1 yr, 1-2 yr, 2-3 and so on, instead of just <1 yr & >1yr