Capital Gains

The Legitimate Skeptic is an equal opportunity contrarian. Having criticized a left-learner yesterday, it is time to criticize some right-wing views.

Suppose I save up some money, buy a second house, and rent it out to make extra money. That rental income is taxed at up to 35%. If, instead, I lend my money out directly, then the money I make is capital gains and is taxed at 15%. Does this make any sense?

Conservatives will say that capital gains should be taxed differently because the money has been taxed already. However, only the principal has been taxed, and it is not taxed a second time. It is just the interest, which has not been taxed before, that is taxed in scenarios I described.

It seems to me that income is income, no matter from whence it comes. The fact that we tax capital gains at a lower rate than other income enables the rich to get richer more easily than the poor. This is clearly out of line with a principles of a country that prides itself on economic mobility.