[flat-pluto]

The system is designed to favour wealth over income. Income tax vs capital gains tax is a good way to demonstrate that.

Another example of this is how homeowners are treated vs renters. Specifically, in terms of tax breaks for mortgage interest payments, expenses incurred during major home improvements, etc. Also you can withdraw a decent chunk of money from your IRA early without the hefty penalty if the withdrawal goes toward buying a home. On the other hand, renters are not eligible for any such benefits.

[voisin]

I agree with your thinking but it just occurred to me that I have never seen anyone show the math (if it is even available information) as to what the total benefit is to capital gains being taxed at 1/2 the rate vs the total downside is to capital losses being written off at only 1/2 the rate.

The other thing about capital gains is that they aren’t adjusted for inflation, so someone could hold an asset for two decades and sell it for a big nominal gain and pay taxes but have the same or less purchasing power with the outcome.