The capital gains tax discount is unjustified

The capital gains tax discount is unjustified;
income tax averaging is an economically superior tax method.

Long term capital gains are not economically more or less beneficial than incomes derived from entrepreneurs’ steadily nurturing and reinvesting into their enterprises.

I am not opposed to speculators but I’m opposed to using tax policy to favor any business model over others. Unlike the proponents of the long term capital gains tax loopholes, I prefer our government promote transparent open markets that we all may be able to trust.

There was an “income averaging” provision within our income tax regulations that mitigated progressive tax rate’s excesses when applied to a tax payer that enjoyed an unusual income boon within the current any single taxable years.

The IRS did not differentiate between the deserving and undeserving taxpayers. It just enabled a taxpayer who earned a great percentage of income increase in any single year to average out their income over their prior leaner years and they were taxed at that decreased rate.

This tax reduction was not limited to investors or those that sold their homes. It benefitted lottery or quiz program winners, sport or entertainment figures, inventors or anyone else that hit ANY KIND of financial jackpot within the taxable year for which they’re filing an income tax return. This tax consideration was not limited only to wealthy investors or home sellers but it was of no use to taxpayers with comparatively steady levels of incomes.

The income averaging tax form treated the current and a number of prior years as one total amount of income divided equally among all of those prior years. This mitigated the otherwise higher tax rate due to progressive income tax rates. The current year’s taxable income was required to exceed a minimal proportion of the prior year’s taxable income.

For example if I wanted to average down my 1965 income and the law provided for 5 years averaging and the proportion of required income increase were 40%, I could not average down my 1965 income unless my 1965 income was 40% greater than my 1964 income. If that qualification were satisfied, I could follow the instructions of the 5 year income tax averaging form and pay taxes owed if my annual earnings were equal for each of the 1961 to 1965 years. We did it then without computers.

I don't remember the exact regulations but I do remember that I availed myself of income averaging after graduating and finally began earning a living wage. I did it again after receiving my first really big salary increase after I left school.

Respectfully, Supposn