It's quite possible for a small amount of additional tax to have a big impact on the expected value of investing. When you invest, you don't know you're going t

It's quite possible for a small amount of additional tax to have a big impact on the expected value of investing. When you invest, you don't know you're going to make a specific positive rate of return; you have to make a guess as to whether the net benefit is positive. Depending on your risk profile, it might just be slightly positive net expected value, in which case adding just a bit more tax makes it neutral or negative. BTW, if you're talking risk-free investment, that's around 2% now, not 20%. So the question is whether to invest $1 billion and earn $20 million. which would be $17 million under the existing capital gains tax (15%), but if you raised capital gains to match income tax rates it'd be less than $14 million. Which doesn't seem like much of a return on a billion dollar investment.