A low rate on capital gains is justified because we want people to inject capital. Absent an extreme situation, your regular wage check isn't subject to being completely wiped out. Yet if I invest in a company that sells ice over the internet, my entire investment could vanish. So collectively we put our thumb on the scale that more investment is better than less investment. That's also why we have the (imperfect) short-term/long-term capital gains setup.
As I keep saying, we don't need to "inject capital". At this point, it's actually counterproductive. The problem isn't that there isn't enough capital to invest, but rather that there's too much capital. Supply-side economics only works when the system is starved for liquidity to start new business. Instead, we have companies and investors sitting on billions, trillions in liquidity, and no good place to put it. Adding more capital will not create growth or jobs. The cup runneth over already.
Moreover, you need to consider the risk/return/liquidity triangle. This is sort of Investing 101, but it's often lost on people making pronouncements about how we need to cut taxes - mostly people who don't have substantial real capital investment, who rely on wage-driven cash flow. There are three elements to any investment - risk, return, and liquidity. Risk is the likelihood that the investment might lose rather than gain. Return is the amount of growth over time. Liquidity - the forgotten factor - is how easily the investment can be divested and turned into something else. If you can give up substantial liquidity, you can get into much more lucrative investment.
Real estate is the classic low-liquidity example. Buying and selling real estate is slow and painful, and it ties up a lot of capital. But it should return well over time. But liquifying real estate against needs other than profit can be very, very costly.
Angel investing and venture capital are extreme examples. You wind up with capital completely locked, almost totally illiquid (hence "liquidity event"), at very high risk. But the rewards can be stupendous. And they should be.
At any rate, cutting taxes to pour more capital into a system that already has too much capital is dumb. It made sense 35 years, when the economy was cash-starved and at risk of runaway inflation. But decades later, all the growth concentrates at the top, the poor and middle class have stagnated for people's entire adult lives, and we're facing borderline revolutionary attitudes on both the right and the left. "Cutting taxes to stimulate investment" is putting us on the brink of both economic collapse and political radicalism, and given how it's worked, deservedly so.
>buying Real Estate... But it should return well over time...
Lol. You do realize that the avg real estate price is up ~6x since 1975, while the S&P is up ~21x, right...? And before you talk about capital gains tax advantages, look into the absurd subsidies we provide to mortgages. Interest is a write-off, and if you're at all smart about it the appreciation in the property is close to tax-free (except at the extreme high end, but that's not where the gains are).
Now, on to your main point. There's a ton of liquidity (aside: just because there's a lot, is that inherently too much?) in a very specific sector of the market: fintech esp, and the tech sector in general. There is remarkably tight control on other areas of the market (go look at biotech, for instance). The actual problem is that tech startups are the lottery of investment. The ability to hit on one unicorn and make the GDP of a third world country in one year is pretty enticing. Because of this fact, investment in less-sexy sectors of the market is being depressed in favor of lottery tickets. Your proposal addresses this not at all.
