[quote=swave]Obviously, there would be other rates between these extremes. Perhaps 1% at 40 years, 2% at 30 years, 5% at 10 years, 10% at 5 years, 20% at 1 year, 30% at 6 months, 50% at 1 month and 70% at 1 week.[/quote]
Isn’t the current tax rate doing something similar? Currently if you hold a stock for at least a year, your cap gain tax is 15% (if your ordinary income tax rate is 25% or higher) and 0% (if your ordinary income tax rate is <25%). If you sell before 1 year, then it's being taxed at ordinary income rate. So, although currently, it doesn't punish those selling before 6 months as much as your plan. However, your plan punish those who sell between 1-5 years more than the current tax rate. This is also if you're in the 25% tax rate or higher. If you're in 10% or 15% tax bracket, your long term cap gain is already 0%. So, under your plan, those in the 10% and 15% tax bracket would be punished much more than the current tax rate.