Despite his smugness, there is merit to the idea that this guy proffered.

Point, Stephen

Steve, I think that you misunderstand Ed's point. I think that he is talking about the special rates for net long term capital gains (lower than the regular income taxes). I do not think he was talking about taxing gains only with no offset for capital losses or taxing all proceeds of sales of stock.

I do not have the entire post, so I may be wrong.

Two questions you could have raised:

1. What about the effects of inflation? If you bought a stock for $1,000 in 1980, that $1,000 bought more then than it does today. Why should you be taxed for the effects of inflation?

2. What about net capital losses that exceed the $3,000? Can such losses offset other income (right now, net capital losses are limited to $3,000 offset to other income, with the excess carryforward to future years). If I have a loss in my proprietorship (business), I can offset any other income with that loss. If capital gains can be taxed like all other income, why can't I deduct capital losses like any other income?

Stephen -- You've gone off your rocker on this one. The guy makes a simple -- conservative, even libertarian -- proposal, to tax all income the same, and your response is "get your greedy little hands out of my wallet" !?

Forget the class-warfare arguments; taxing different kinds of income at different rates is just plain a bad idea for all sorts of (conservative) reasons. It is really a form of industrial policy, saying that the government knows better than individuals how economic activity should be structured.

It creates all sorts of distortions in the economy (such as a preference for debt financing over equity financing), it creates perverse incentives, and it wastes a lot of potentially productive resources by making it more worthwhile for talented people to spend their time figuring out how to get the preference than doing something with real economic value. (One of my investment funds that used to report dividends to me each year recently started reporting capital gains instead. Nothing really changed, but some MBA or tax lawyer for the fund had to spend a lot of time on that, to no real economic gain.)

As to indexing, it's horribly complicated (especially for funds where you contribute regularly), and more importantly, it removes investors as an anti-inflation constituency.

When I said "capitalist" , I meant it as "someone who gets all of their income from capital", as opposed to "earning" it via their labor (and paying Social Security & medicare, AND taxes on it).

The topic in question was:
"cutting taxes on capital gains, and increasing the tax deduction for investment losses" ( emphasis on the CUTTING and INCREASING, i.e. changing the status quo, which IMHO is already stacked very much in favor of the "capitalist", and against the wage earner )

Now, a person who earns their living exculsively from employing their capital instead of their labor ( a "capitalist") , now pays ZERO for Social Security and Medicare and reduced tax rates on those capital gains held over a year.

Not that I want to take money from your pocket (this is purely an academic exercise), but how exactly is this fair to "Joe Sixpack" who pays Social Security and full taxes on 100% of his income, and how is this NOT a huge giveaway to the 1% that holds something like 90% of the capital.

at current tax rates, having cap gains equiv to reg income would be economically disastrous. a decent harmonized rate would be 10%.

speaking from much personal experience, cap gains reductions help ensure efficient markets and proper allocation of assets. Plus it tends to encourage equity financing over debt (rather than debt over equity as was said previously) because lenders get charged higher tax rates on interest...so people get better returns for their higher risk.. encourages risk taking... but yeah we should ave a flat tax, no deductions except for 8k per person/dependent...