An activity that the government STILL taxes (as long as its not in a Roth account.) If you receive dividends from investments they are taxed at marginal income tax rates and capital gains taxes (created from buying low and selling high) are taxed at between 18% and your marginal tax rate depending on whether its short-term (<1 year holding period) or long term (1 year or more.)

Trading securities to generate income is a form of rent seeking. Actual economic rent isn't created but merely obtained by the trader. When Starbucks IPO'd, the CEO took the proceeds from investors, invested it in stores, inventory and generated economic profits. The hedge fund manager might not have been in the IPO and simply makes income by trading the now public stock of Starbucks.

Most economists agree that rent seeking behavior should be minimized so we tax it. If you really wish to invest in a company, perhaps buy the IPO and never sell, that transaction is not taxed. Quick trading is taxed. So perhaps the argument is how much this rent seeking activity should be taxed.

Lets take an example. Assume you start with $1M you earned while working. Over the next twenty years you trade and build up the wealth to $10M before taxes. Along the way however, you must pay capital gains and income taxes on gains and dividends. So of that $10M, roughly $9M is gains which might hypothetically be taxed at 25% so you'd pay $2.25M in cap gains and income taxes. Of the remaining $7.75M, should you pass it to your children you pay the 40% estate tax, good for $3.1M dollars. Net, you'd pay the government $5.3M of the total $10M you end up with and only vs the $9M in pretax gains. Government in this case takes 53.5% of your ending pretax assets. There is an exception for up to ~$5MM of assets in the US but for larger amounts that exception becomes meaningless.

So some people might think the government taking half of your pretax profits over your lifetime and through death is excessive (I am one of those people) and some may think its not.