system
Given the following post, respond as if you're commenting on Reddit:
human
What is the reasoning behind a capital gains tax of 20% but income tax being >30%?

US-based situation, and I know income tax varies from state to state, but let’s assume capital gains of assets held long-term are taxed at 20% and income from salary is taxed at roughly 1/3rd of your gross pay check.

What is the argument for capital gains being significantly lower? Is it because this amount is already much bigger than income every year? To encourage investment instead of consumption? Belief that private allocation of capital is more socially optimal than govt spending?
gpt
As per the introduction to Chapter 9 - Investment, of *Advanced Macroeconomics, Fifth Edition,* by David Romer: 
>The combination of firms’ investment demand and households’ saving supply determines how much of an economy’s output is invested; as a result, investment demand is potentially important to the behavior of standards of living over the long run.

Essentially, capital investment is the primary driver of economic growth. The view is that lower capital gains taxes provides incentive for higher levels of investment. That is an explanation of why a policy maker might want capital gains taxes to be lower. Is there a good reason for income taxes to be high? 

From the same textbook, Romer says 
>Both capital taxes and labor-income taxes distort individuals’ labor-leisure choice, since both reduce the overall attractiveness of working. But the capital income tax also distorts individuals’ intertemporal choices.

Romer's contention is that capital gains taxes are *more* distortionary than income taxes, since investments are just savings vehicles, and savings is just deferred consumption, they distort choices across time.