“The complaint heard most often is the extremely disparate treatment of income from actual labor (taxed higher) than from investments (why tax it at all they say).”
I’m assuming you’re talking about capital gains as being an unfair tax rate. For reference, the origin of our tax system goes back to the middle ages. Income from your labors was considered your measure of wealth. Selling land or farming equip or personal items to another was considered incidental and not significant to wealth measurement i.e. not taxable at the same rate as labor. .
Fast forward a few hundred years and the first argument for long term capital gains (held longer than one year) is first and foremost they are subject to double taxation. First you work and earn money, are taxed on that income, invest it and then are taxed again when you liquidate the investment. A reduced rate for long term capital gains (the profit) was considered “fair.”
Now when you are talking about short term capital gains (held for less than one year) it is a different matter. They are taxed at the ordinary income rate, on average 28%.
No matter how you slice it, there is always going to be an argument of “fairness” in taxation. Flat taxes are harder on low income earners. Vat taxes are harder on low income earners. Our progressive tax system actually works well for our culture but is incredibly complex and is always being considered “unfair” to one income level or another. As it is now it definitely favors low income people for lower tax rates and many refundable credits not available to middle and upper class taxpayers. I do have a strong background in this, been an accountant for 30 years. I’m just post this for informational purposes, I have no (stated) position
Last but not least, the “Fair tax” is an interesting concept but has many questions of administration, implementation and whether it is a true improvement on our existing system.Thus endeth the long drawn out dialog.