As far as I can tell he equates making money from the sale of stock rather than from salary with being part of the finance industry. I stopped reading when I realized that.
Yeah, craziness. If he'd be open about his agenda but consistent with the terms reality uses, I'd be fine with it.
I actually think carry should be taxed as regular income (except that the people who get carry are the kind of people who could structure to get around this).
I'd also be ok with capital gains and regular income being taxed at the same rate IFF that top rate were low (say, 25%) without deductions/credits, AMT, etc. A flat ~25-30% tax for everyone, plus a decent personal exemption (possibly even refundable, so if it's "$20-30k in free money from the government per person per year, paid in cash or paid as a credit against taxes owed", some people can live 100% on the credit and not work.
Allowing capital gains to offset capital losses, with carryover, probably is enough privilege to capital gains vs. regular income. It may create some disinvestment at the margin, but there's plenty of capital out there. For a startup founder making $100mm at exit, there isn't really an argument that he'd take the $200k/yr job instead of the $100k/yr job with the shot at the big exit due to being taxed 25% vs. 15% at exit; the uncertainty remains in the "will my company sell (and will it be for big money)", not the tax rate at that time.
That said, I'm totally happy taking every capital gain benefit available to me; waiting 5 years for a $10mm tax-free capital gain (Small Business Jobs Act of 2010, good for investments including founder shares purchased until 12-31-2011) is pretty damn nice.
But in a way this rings true - after an exit event if the former CEO/founder gets mostly stocks/paper his financial well-being is deeply connected with the general well-being of Wall Street, as a system.
The more bullish is the market - the better for him, and for the whole ecosystem of financial institutions that serve him. In this sense he is a part of the financial industry and shares the general systemic risk (though, of course, this varies in individual cases and portfolios)
His position is no different than hers - the enriched with stocks ex-wife of an investment banker after the divorce (also a kind of exit strategy, btw).
