[carver]

I don't buy that the reversion to income tax should happen on high percentage gains if the absolute gains are low. I think the tax could be made even more progressive. Something like:

The first $500k of capital gains get current cap gains treatment. After that, all gains are taxed as regular additional income.

[lightgreen]

This is gross double taxation: they already paid taxes when they earned the money you are investing, and you are suggested taxing them again at high rate.