The problem with this strategy is it makes it even harder for the middle class to one day become wealthy. I am not wealthy. I have a small stock portfolio and I try to sock away money into my and my wife’s Roth IRAs. If you start taxing my investment gains at the same rate you tax my income then what’s the point in investing? I’ll just work and save because at least in that scenario my little amount of capital is not not at risk of evaporating.
Right now in the market I can sell my losers within the year, hold my winners for over a year and grow my egg. Take these types of benefits away and it makes it much harder for me to ever become wealthy.