I would say very little of this thread has to do with capital gains. Despite the title.
What planet do you live on?
What do you think capital gains are? As I understand it, capital gains are just the difference in value between what one purchases an asset (land, collectible, or stock) for and what one sells it for. Aside from land developers, the actions of the purchaser mean nothing to that gain, and building a viable commercial district isn’t something that requires a lot of “innovation.”
An individual or company develops new technology, invest in commercializing that technology, proves its viability and then sells the company or the technology for profit - - i.e. capital gains!
Oh. I see.
So, as we see in internet companies, what happens is that the innovator sells off his company to a megacorp that then destroys everything special and innovative about their new propriety technology and runs it into the ground. Yes, that’s clearly worth rewarding with lots of cash. 
The capital gains will come from a deep-coffered conservative firm that seeks stability over innovation, so they have a motivation to actually incentivize the destruction of technological progress. I’m not saying this happens all the time; some companies really do pursue new engineering to increase their productivity or the like; but it does seem like an inherent risk.
Anyway, I assumed we were talking about stock and land speculators. You know, most capital gains.
Well, putting your personal bias around business and large companies, I can see your skepticism. But in reality, a multitude of start-up companies and their founders develop all kinds of new ideas, what is called innovation, then eventually sell them off to other investors as they may not have the right distribution, marketing networks, and as such may be more valuable to other parties than the founders themselves. Happens all day everyday.
I guess.
That’s one way to get capital gains. But far from the only one. If I were to sell my house, I’d realize a large amount of capital gains. Not from any innovation, but simply because house prices have soared here over the last few decades.
Wow! Genius! I’m fully aware how capital gains are sourced. And are not just limited to real estate and stock investments.
I thought you were saying all capital gains comes from innovation. If I was wrong, I apologize.
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You offer the advantages that derive from new technology as the justification for a low capital gains tax rate. But you are aware that capital gains are sometimes acquired in ways that are not the result of new technology being developed.
So how about a compromise? We will maintain the current low tax rate for capital gains derived from the development of new technology. And we will declare capital gains that aren’t derived from the development of new technology as regular income and tax it at the same rate as other forms of income.
Note that I’m not suggesting we set a special high rate on capital gains. I’m just suggesting we should eliminate the special low rate on capital gains (but only some of the time) and make that tax rate equal to what other people are paying.
Sure, if you are allowed to deduct capital losses derived from non-technology sources (real estate investment and stock investment losses) against ordinary income, that would be awesome.
My answer is, “None.” Stereotypes, even those of billionaires, are inherently unfair because very little in this world is black and white.
The average person does things that benefit society, and pays income taxes on what they earn while doing so. I think when innovators do things to benefit society, and make money while doing so, they can also pay the same taxes as the other people.
The average person isn’t raising capital, to further develop their ideas, investing in R&D resources, generating a plan to market strategy, conducting trials required by our government, etc. etc. These activities are frought with risk that writing a novel doesn’t present. As a society, we should want to encourage these types of advancements so lowering the taxes on these types of capital gains should have a lower tax rate.
But if your goal is simplification, I’d fully support a flat tax strategy.
It seems like your goal is wealthy people paying less taxes. Regardless of what tax plan is used to achieve that purpose, you’ll retroactively come up with a reason why it was a good idea and non-wealthy people should support it (and pay more taxes to make up the difference).
Well, that’s not exactly my goal. My goal is more conceptual. I would like the tax code to treat these two people differently:
A - The person who trades away 8 hours of their life for $200.
B - The person who trades $200 for $400.
With person A getting favorable treatment, because they are giving up something they can never ever get back in order to earn that $200, while person B is, by definition, getting everything back that they put up to earn their $200.
I appreciate that B may not actually get their money back, but they plan to, and A is definitely not getting their day back.
That’s because the average person doesn’t have the resources to do so, because of these “innovators” suppressing their wages. Why not let more people participate in the innovation process?
You state a circular reference as the cause of lack of more people innovating. I disagree. There are tons of investors with more cash than they can find opportunities to invest in. If you have a decent idea and show that it is feasible to bring to market, anyone can find/obtain start-up funding. Venture capital funding in 2022 was approx. $240 billion (just in the USA), with the average per deal funding was about $2 million. That’s about 120,000 deals. Lack of resources is not a problem. It’s lack of good ideas.