The Labour party is more influenced by the Tory press than by economic rationality. That's the inference to draw from Rachel Reeves saying she has no plans to raise capital gains tax.

I say this because there is a widely-accepted economic logic for doing so. It is that income and capital gains are much the same: what should matter on any investment is the total return, not the form in which that return comes. Taxing capital gains at a lower rate than income therefore distorts individual behaviour. For assets held outside of tax shelters, this pushes investment towards shares that don't pay dividends - which are often spivvy Aim stocks - and away from dividend-paying ones. It encourages investors to sell some shares merely to realize a capital loss and to hold others to avoid a capital gains tax bill. It encourages people to take their returns as capital gains rather than as income, which often entails the deadweight costs of keeping armies of lawyers and accountants looking for tax fiddles. And it favours financial capital over human capital.

In all these ways, having a lower CGT than income tax rate is iniquitous and inefficient. This argument is separate from the question of whether or not we should tax the rich more.

Sensible economists have long appreciated this. "Capital gains need to be taxed at the same rate as other components of income" said the Mirrlees Review (pdf) in 2011. And back in 1988, Nigel Lawson said:

In principle, there is little economic difference between income and capital gains, and many people effectively have the option of choosing to a significant extent which to receive. And in so far as there is a difference, it is by no means clear why one should be taxed more heavily than the other. Taxing them at different rates distorts investment decisions and inevitably creates a major tax avoidance industry.

Why, then, is Reeves so loath to raise CGT? Doing so feeds into the impression that Labour lacks not just ideas, but any basis in serious thought.

The answer, I think, is simple. The Labour leadership is terrified of the headlines that would accompany even rational tax reforms: "tax raid on millions", "attack on business" and so on. As I've said, what matters in politics is not intellect, but power. Intellectually, there's a case for equalizing CGT and income tax rates. But intellect loses to power.

A sensible Labour party could however use the media to its own advantage here, at least once it is in office: it is always easier to get forgiveness than permission.

Another media attack upon Labour is that of fiscal profligacy: "where will the money come from?" Labour could answer this question by using CGT simply as a revenue-raiser.

Strictly speaking, of course, this makes little sense, and not just because the rise wouldn't raise very much. What a Labour government will need is not money but real resources: nurses, care-workers, builders, skilled management and so on. Raising CGT would tax cash that would largely be saved rather than spent, and so would do little to release these resources.

But we don't live in a polity in which good arguments prevail, not least because years of intellectual pollution from the media have replaced them with mindless drivel. The media would therefore have no right to complain if Labour were to raise CGT merely to "raise revenue". If you make bombs you don't win any sympathy if one goes off in your face.