Ordinary income is usually guaranteed. If you work a certain amount of time, you are legally entitled to the pay that you were offered when you took the job. Capital gains involve risk. They are not guaranteed. You can invest your money and lose it all.
Am I the same as someone who has a salary of $100,000 that year? Or am I earning $10,000 a year for ten years' work? It so happens that the government will tax me the same as someone who earns $100,000 that year because my decade of work on the book cannot be documented.
Nothing says what this article is about better than this cartoon
Very similar principles apply to businesses. We pay attention to businesses after they have succeeded. But most new businesses do not succeed.
At one time, you could have bought half interest in McDonald's for $25,000 -- and there were no takers. Anyone who would have risked $25,000 at that time would be a billionaire today.
The Ideas That Currently Run This Nation
There are whole industries where no one can expect to make a profit the first year -- publishing a newspaper for example. Virtually every major American airline has cost money in some years, and some of the biggest and most famous airlines have ended up going bankrupt. If a country wants investors to invest, it cannot tax their resulting capital gains the same as the incomes of people whose incomes were guaranteed in advance when they took the job.
The biggest losers from politicians who jack up tax rates are likely to be people who are looking for jobs that will not be there, because investments will not be there to create the jobs.