I know that in America, income from capital was taxed at a...

I know that in America, income from capital was taxed at a higher rate than income from toil but that was challenged in the courts as it was argued that it was discriminatory to differentiate between income types. Similar here in that we allow income to be capitalised through negative gearing and CGT discounting.

If we want to be truly productive income from toil must be preferentially taxed imo. Doing it the other way just leads to this point where asset inflation is the smart game and why bother being a chump working for a living. People still will but it takes so much human potential out of productive pursuits.