[broiler]

The Baxter case is a bad example to try to prove your point. Baxter's case was related to the treatment of his income pre-1981. The tax rate in his situation would have been 70% for unearned income and 50% for earned income. He was obviously willing to fight for the 20% difference in income tax rates. Baxter wanted to file as a professional.

In 1981, the US had a major tax code revision which removed the difference in income tax rates for earned and unearned income. As a result of this change, the income tax rate is exactly the same for these types of income. If you include SE tax as a part of the consideration, the earned income could be considered to have a higher tax rate now. I would give you that the increase in deductions available to a professional might make the tax rate lower on the earned income.