"When Mr. Savvy decides to sell some stock and buy an even bigger boat than the one he sold years ago, then there will realized gains that will be taxed at that time as it should be."

BHM, intercst on TMF talks about this a lot, his sarcastic comment about "Only suckers work for a living" rings true in a lot of ways. Long term Capital Gains are treated much more favorably than W2 income. Qualified Dividends are treated more favorably than W2 income. I'm not very savvy with the TMF search function, so I couldn't find his post, but he gives an example of how a married couple living off of long term capital gains can pay little or no Fed tax, while a married couple making the same in W2 income will be in the 20% + tax bracket ( not an exact percentage number, going off of memory ). This sure sounds like a rigged tax system to me, lol.

Probably like you, I learned enough to gain wealth by taking advantage of how the tax code favors investors over wage earners. And I don't really agree with the premise that investors are treated better tax-wise because they are powering the growth of innovation ( not saying that is your premise, but rather it's what I always hear as a reason for why Capital is treated more favorably than W2 ). Most W2 earners wages are being spent, this money is powering the economy and growth every bit as much as people who invest in stock market.