[gok]

The claim is that the thing you invested in doesn't magically double in value. It goes up in value because of other post-tax economic activity.

If you went to a roulette table at a casino, put $5K on black and it hit, you'd owe tax on that $5K because it's just income.

If you bought a company for $5K and then sold it a year later for $10K, its value typically increased because it was doing more business and therefore paying more taxes along the way.

Now, there are of course problems with this. Companies aren't purely valued on post-tax activities. In the event of real estate, it's even less convincing. If a vacation house doubles in value, it's unlikely this was due to the house's post-tax economic activity. So whether or not it's a double taxation is debatable but kind of irrelevant; it's remains a relatively fair way to raise revenue.