Robbie,
Raising capital gains taxes will NOT decrease investment by even one penny.
If someone is in the 30% income tax bracket and has 20M in wealth... and you raise the capital gains tax from 15% to 29%... what will they do with their 20M in wealth instead? Put it in their mattress? Buy CDs that pay 1%?
Investment will continue because even at a much higher tax rate it is still the best option. People are not suddenly going to pull 10M out of Apple to start a new business instead because the capital gains rate was identical to their income tax rate... and if they did it would actually benefit our economy tremendously. All those new businesses would actually create jobs, all that money dormant in the market doesn't.
Your thinking is based on the flawed belief that the stock market is still used by businesses that need capital. That is how the stock market is supposed to work, but it hasn't worked that way in a VERY long time. The stock market is now an online casino, little more. Most of the 'investment' is made by traders seeking to cash in and cash out, not to hold long term investments that provide security and liquidity.
If you want to allow a lower rate for investments of more than 5 years I would be for it, but short term investments being taxed at 15% to spur investment is ridiculous... it's a tax subsidy for people who can afford to invest... nothing more presently. It gets unwitting people to take on risk they can not comprehend while people with seats on the exchange push or pull the market after hours and pay 1/2 their income tax rate as a bonus.
Mark Cuban is 100% right that there should be a 10 cent tax per share on every share traded. It wouldn't hurt any investors and it would make high frequency momentum trading impossible... which would help make stocks a capital market again rather than a ponzi scheme of bubbles and busts.
