> Why should the fact that you've got 800k making money for you mean that you should be taxed less than someone that earned their 50k through wages and tips? t

> Why should the fact that you've got 800k making money for you mean that you should be taxed less than someone that earned their 50k through wages and tips? the lower rate of taxation incentivizes one to invest that money in legit investments, rather than spend it on discretionary consumption or invest it in an illicit vehicle that provides an untaxed return. > Why should one of these market actors be taxed lower than the other? I personally don't think they should but another way of looking at it is that people usually have to work (the enormous pile of cash came from someone somewhere, even if it wasn't the person who has it now). so theres no incentive for the government to cut the worker a tax break. but when you have money in the bank you can do many things with it. a lower capital gains tax allows the government to earn some revenue on the money and helps keep that person from spending it all on fun stuff and driving up the cost of resources with 800k worth of bids.