All income is taxed at its source. Under the current tax system, businesses send out more than one billion Form 1099s reporting payment of dividends and interest. Each taxpayer is supposed to be taxed on these payments at that individual's tax rate. However, less than half of interest income actually is reported on individual tax returns. Since the tax on interest and dividends would be paid at the corporate level, individuals would receive interest and dividend income tax free.
All income is taxed when it is realized.
Nonetheless, the capital gains tax forces people to pay taxes today on income that is expected to be earned many years in the future. For example, the expectation that a company will earn higher revenues will cause its stock price to rise. But if expectations change tomorrow, and the stock price falls, the government doesn't give a refund to the new buyer. Whatever the merits of the argument for capital gains, if capital gains are to be taxed, capital losses should be fully deductible. But if that were the case, government would collect very little net revenue and might even lose revenue on balance.