[merrillii]

One thing to keep in mind is that capital has already been taxed once when it was first generated. Sure, you can bring up tax loopholes and inequality but generally it's true that the remaining capital is after taxes. So an investor risks losing 100% of their after-tax money. Labor risks their pre-tax money only and it is very likely they ca "re-invest" by moving to another job. Once capital is gone it is gone forever.

[gamblor956]

No, both labor and investors spend their after-tax money. Labor spends it on living expenses and their after-tax money is gone forever, while the investors spend their after-tax money on capital assets. The difference is that only the investor has a chance to make even more money from his spending. This is viewed as desirable behavior, and so the additional income he could earn from his original pile of money is taxed at a lower rate.

[jjoonathan]

Oh really? My understanding was that due to loopholes corporate taxes are practically nothing compared to the numbers that people keep plugging into their "look, capital actually has a higher tax rate than labor!" calculations.

[merrillii]

They are not practically nothing. After loopholes the average corporate tax rate is something like 17% [1]. This is far lower than the often stated 35% but it is not nothing.

This whole blog post seems to neglect the point that Labor generates Capital. Whether that money is invested or spent it has already been taxed once. Now if the capital generates more money as an investment it will get taxed again on the profits. Likewise if Labor continues to work the income will get taxed as well. The Capital investment has the risk of going to absolute zero. The potential Labor investment cannot go to zero unless the person dies.

[1] http://economix.blogs.nytimes.com/2013/11/26/effective-corpo...