> It would distort the free market and no one would take the risk...
Risk? What risk? The DOW did hit ~7k briefly, but last year it broke record highs on a daily basis. If you happened to be the idiot who sold at 7K, you lost. If you just kept your money where it was, you're doing pretty well. And why is that? Because congress plunged us deeper into debt and the federal reserve printed money like it was going out of style. And in the long run, those things will disproportionately hurt the lower and middle class in the form of higher taxes* that stifle job creation and inflation that erodes wages and savings.
So why would our government do this when there's obviously a lot more poor and middle-class voters than rich ones?
> ...and who is the shareholder? Your elderly mom, YOU, etc
Ah yes, that's it. Because the system forces all of us to take the same risk, independent of our financial means.
Between FDIC and NCUA, each adult can have $500k of government-insured bank and credit union deposits, far more than most of us have in liquid assets. Why would we possibly put our money at risk in the stock market? Because they pay almost no interest, yet government policies almost ensure inflation and profits in the stock market. So while we won't loose our deposits to bank fraud or runs on the bank, they'll slowly decrease in purchasing power. So instead we have to put it at the same risk that the very wealthy take in the stock market. Which means that when those systemic risks actually happen, the government HAS to bail out the markets or everyone, rich or poor, looses. This means the tax payer is actually on the hook to make sure the rich stay rich.
* Why do taxes and inflation hurt the poor and middle-class more? Because wage increases always trail inflation. And because the rich make most of their money through capital gains, paying 15% federal income tax while the rest of us pay more. We also pay a higher percentage of our salary in social security and medicare (there's a cap on how much of your salary is taxed for those). And since we have to spend more of our salary to survive, we pay a higher percentage of our earnings in sales tax. So I'm all for a flat income tax, but it has to take the place of all other taxes.