Question of the day: should we have an investment income surcharge
Theory – optimal tax theory says that income from investment shouldn’t be taxed at all. Consumption financed from investment income, go for it, but not income from investment itself. Which is why hte progressive consumption tax is the desired structure.
Empirical – social security taxation pays for social security. There is no social security benefit that covers any income from investment. Therefore taxing the investment income to provide no benefit – well, tad unfair, no?