Every rationale for the low capital gains rate fails on historical and comparative evidence.

Evidence

None of the arguments, however, are persuasive. First, for most of the twentieth century our tax rates on capital gains were higher than they are now, and the markets functioned effectively, with minimal lock-in effect. Second, the potential effects of inflation may also be overstated, since you only have to hold stock one year and a day to get the preferential rate—and there is no inflation exception for any other type of income that accrues over a period of time. — Dorothy A. Brown, The Whiteness of Wealth, 446

Categorization

• ADDENDUM: The royalty-income counterargument parallels how ‘On Sacrifice’ dissects self-justifying rationales for entrenched practices.