I'd advise staying away from taxing capital gains. Since that comes very, very close to taxing "unrealized gains". Sure investors may take home a large block of profits in capital gains, but to get those wins, investors must run a gauntlet of disastrous traps and failed investments. To encourage investors to accept the risks the economy needs to appreciate, investors need to know that, if and when they do happen to win, they don't come out only to fall into a bottomless pit. Believe me, losses are taxing enough on investors and they do dampen the urge to accept risk, enough that further burdensome loading the wins (which are few and far enough between already) is not either needed or advisable.
To make it clearer, let's say there's a 50% tax on capital gains. Then a proposed investment says you can double your money here. Well, if you look and say I put 100 dollars in here and the 200 dollar win gets taxed at 50% you wind up back where you started with 100 dollars, then why bother investing at all? After all, best case is you break even if you double your money. The hurdle to invest becomes too high and investment is stifled.
Every percent of the tax on capital gains reduces the number of investments or investment types that make sense or are worthy of mounting. That, in turn, means fewer businesses and fewer jobs. Because a capital gains tax assumes that every investment is a winner.
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