XAML doesn't reinvent SVG. It also doesn't reinvent XUL. People regularly accuse it of doing both, but if you're familiar with both SVG and XUL, you'll know that at least one of those accusations has to be false. (Most people wouldn't accuse XUL of competing with SVG.) :-)
As it happens, it doesn't really reinvent either.
This has been hashed through many times already elsewhere, so instead of rehearsing the arguments yet again here, I'll just point you at a few existing discussions:
I already addressed this very point in an earlier article in this series here: http://www.ondotnet.com/pub/a/dotnet/2004/01/19/longhorn.html
One of the architects who designed XAML writes a little about the history here. Although he doesn't mention SVG, once you've read the design goals, it becomes clear why SVG would never have worked:
Some more from the same guy on why not they're not using CSS either:
Another guy from Microsoft on why they didn't use SVG: http://www.eightypercent.net/Archive/2003/11/04.html#a153
Don Box blogged several times about XAML in November 2003, all of it showing how to use XAML without using Avalon, demonstrating again one of the fundamental features of XAML that means they couldn't have used SVG (it really has nothing to do with graphics - XAML is just a way of hooking up .NET object models; it's only the XAML+Avalon combination that does graphics): http://www.gotdotnet.com/team/dbox/default.aspx?month=2003-11
(I'd recommend starting from the bottom of that page and working up.)
More can be found easily via Google...