Because encouraging investment is something that helps the entire economy. If you tax it more, you get less of it. Why would you want less investment?
Why would you want somebody who makes a million in capital gains to be taxed at a lower rate than somebody working a job making $50k? If higher tax brackets discourage somebody to do something, then using your logic nobody would go to work. Why would someone pay 30% in taxes at a $50k job when they can just invest and pay 20%? Yet they do. Just like investments would still be made if they were taxed at the same rate that income is. Do you think that if you went to Bill Gates 30 years ago and said to him he's going to get rich off of Microsoft but his $100B is going to be taxed at 39% instead of 20% that he would not have still worked just as hard to build his company? Yours is the exact same argument that Mitt Romney made during his campaign. Last time I checked, it didn't work out to well for him. He's still fine though. He's got his $200 million tax free in his IRA that he used to buy class B shares of the company's he invested in.
First of all, someone in high tax states such as New York and California, making $50,000 will take home after all income and payroll taxes over 76%, not 70% as you said. Secondly, work and investing are two totally separate issues. Regardless if my taxes are 15% or 45%, I'm going to work to feed and cloth my family. There is virtually no risk to working, but there is huge risk in not working. However, there are big disincentives to taking risks in capital investments if most or much of your upside reward is taken away. You have unlimited risk on the downside (lose everything), so you also need a lot of upside potential. Talking about Bill Gates or Mitt Romney, is a total exaggeration of what capital gains are to the vast majority of people that have them. When Bill Gates started MSFT, he probably didn't plan on being a billionaire. For the business guy that risks everything and works 70+ hours/week so that he can sell his business in 15-20 years in order to make a couple of million dollars so that he can retire, tax brackets are very meaningful. I think it's good to encourage capital investments, because capital investments ALWAYS equate to job formation.