Taxing capital gains

Asks Paul Krugman:

[S]hould we even be giving preferential tax treatment to true capital gains? I’d say no, because there’s very little evidence that taxing capital gains as ordinary income would actually hurt the economy. Meanwhile, the low tax rate on capital gains is one main reason the truly rich often pay lower tax rates than the middle class.

A couple of weeks ago, Warren Buffett pointed out that he pays an average federal income tax rate of 17.7 percent, while his receptionist pays about 30 percent.

A long time ago, the Carter Royal Commission argued that “a buck is a buck”: i.e. income from capital gains should be treated equally for tax purposes as income from labour effort.