*Loan,banking and credit>>>income tax

Why are short-term capital gains taxed as ordinary income (at higher rates than long-term capital gains)?

First off, capital gains are already taxed at the corporate level. Stock is a share of a taxable firm. A firm鈥檚 shares trade at a multiple of forward earnings. If the Street thinks XYZ will earn $1/share before taxes in the next 12 months, and its P/E is 10, and it is taxed at 35%, then a share of XYZ will trade at $6.50, not $10. If XYZ announces a new contract and now the Street thinks it will earn $1.20 before taxes, the stock doesn鈥檛 go up $2/share 鈥?it goes up $1.30/share. The gain is already reduced by virtue of the corporate level taxed.

So there shouldn鈥檛 be any tax 鈥?but there is one, albeit a lower one.

But that lower rate applies only if you鈥檝e held the asset for a year or more. Why?

Governmental avarice.

The taxes paid by the corporation are factored in by people who buy their stock. So, there is no double dip. The government wants to encourage long term investment so it gave long term capital gains a tax break.
Are you in B school?
It is simple. The government can get more tax money from it.
They do it because they can.
If the money comes in during one year, it's income.

If it's split over several years, it's different.

You're right -- it's a stupid distinction. But so are most tax laws.
politics?
I don't understand most of what you wrote. So what I think- the tax policy for stocks and capital gains should encourage quality investment. Does it do that now?

Truth- does the US policy on investment taxes reflect a depression era mindset? or have the laws substantially evolved since then?

I see, I was just wondering if a lot of laws from the panic back then (to decrease volitility) were still on the books.