> Tell that to startup founders whose only income from all the work they put in on their startup is capital gains.

I think there really ought to be more of a distinction made between taxing the upside of sweat equity vs. literal capital gains (as in, the return on invested capital).

Also, startup founders should only be deferring their salary (or a portion of it), not forgoing it entirely.

For that matter, it's insane that VC fund managers only pay capital gains tax rates on carried interest and management fees. The fees are really just ordinary income plain and simple (which they get regardless of how the fund does), and while carried interest is technically a return on invested capital, it's entirely OPM and seems like a dodge that lets the manager participate in the upside of the fund with no actual skin in the game, so what's the point of taxing it at a preferential rate?