Capital gains are generally included in taxable income, but in most cases are taxed at a lower rate. While it is a commonly held that capital gains are a direct tax like income taxes, they are in fact indirect by nature of the taxation occurring due to a taxable event - the use of private credit. Realized gains are simply the taxable income determined by the base supply of private credit minus the final amount of private credit. Use of public credit avoids these taxable events.