29 Jan '15 18:35>1 edit
Originally posted by sh76You asked a question with an implied premise that taxing capital gains as ordinary income would depress stock prices. I'd prefer some actual evidence supporting that claim to a bland assertion that it would. As you properly say there are many variables involved, but my point is that the capital gains rate was raised just two years ago for the top 2% (who receive the majority of capital gains) and the result was the opposite of what a simple model would have predicted.
There are too many variables in the stock market to be able to assert causation out of that correlation. Someone would need to find a convincing way to correct for all other variables to support an assertion that raising the capital gains tax would not depress stock prices as that assertion is counterintuitive. I'd still be in favor of it though, even if it does depress stock prices.
EDIT: As this chart shows, the top one-tenth of 1 percent of taxpayers will receive 47 percent of all capital gains in 2012, according to the Tax Policy Center. (The top 1 percent of taxpayers will receive 71 percent of all capital gains.) http://www.cbpp.org/cms/?fa=view&id=3798
So taxes were raised on the majority of capital gains and stock prices rose anyway.