Because of incentives, because the actions that created the capitals gains in the first place were already taxed, to be able to correct for the self-employed wh

Because of incentives, because the actions that created the capitals gains in the first place were already taxed, to be able to correct for the self-employed who incorporate vs those who don't (situation of getting dividend on 5 stocks Coca Cola is very different from being a sole proprietor and paying yourself effectively through dividend), to keep the administration sane (how can you smooth a windfall like selling a house? You'd have to do it over 10 years or so, how are you going to keep track of that? What if the person moves, across the country or abroad? etc...) None of it is as simple as it looks - there is a reason we ended up in the situation we are now. Nobody likes it, the IRS itself the least. It's not a matter of saying 'oh let's just start from scratch'. (See also: 'second system syndrome', which applies to law just as much as to software)