The U.S. tax code strongly favors capital income over labor income. Passive capital gains and dividends are taxed at a far lower rate than is the income earned by hard work. This asymmetry is intended to encourage investment, but results in more economic harm than good. Recent research produced by nonpartisan government agencies (and quickly quashed by antagonists) reveals that preferential treatment of passive income does not lead to greater investment, but rather only results in increasing inequality--now greater than any time since the pre-Depression 1920's. Restoring the equal taxation of active and passive income will not only restore needed progressivity at the top income tiers, but also potentially help reduce government deficits, or allow greater simplification elsewhere.
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