I'm just saying that during the era of 90% 'income tax' for high earners, they would simply declare their income as capital gains. It's just what they did. And what people do.
No, you do not get to simply recategorize earned income as unearned. And also at the time of these high rates there was no seperate capital gains tax. The income tax rate applied. What would not have applied is FICA tax, i.e. Social Security and Medicare, which is only assessed on earned income ( i.e. wages from a job).
"There's no reason why capital gains couldn't be taxed at the same rates as income."
Sure there is -> risk.
It's why everywhere in the world cap gains are taxed lower than income.
Cap gains + income tax at 90% and economy would collapse instantly as risk premium goes up, most equities and probably most bonds would drop quite a lot and people moved into real-estate, cash, commodities, gold. etc..
I'm just saying that during the era of 90% 'income tax' for high earners, they would simply declare their income as capital gains. It's just what they did. And what people do.