Forget gold. If Scrooge McDuck were around today, he'd be diving into a big pile of capital gains. Okay, and maybe some dividends too.
The charts below, courtesy of Bob Williams of the Tax Policy Center, compare where the merely rich and the super-rich get their money from. The first shows the breakdown for households with adjusted gross incomes of $1 million or greater, but who aren't among the top 400 tax filers. The second shows the same for that latter group. The cutoff for membership in this most exclusive club was $108 million in 2000, $111 million in 2005, $144 million in 2007 and $77 million in 2009, in constant 2009 dollars.
Salaries, what are those?
The richer you are, the more you get from capital gains. This shouldn't surprise us. The top 0.1 percent of earners collect roughly half of all capital gains. Of course, these are highly pro-cyclical. In other words, capital gains boom when the economy booms and go bust when the economy goes bust. That's why the rich and super-rich got such a high share of their income from capital gains in 2000 and such a low share in 2009 -- it's not that other income fell or rose in those years, but that capital gains rose and fell.
But the rich have more rentier income. They have dividends. And interest. And rents. That's what makes up the "other" category -- along with business income from S-corporations, partnerships, and the like. The rich and super-rich aren't so different when it comes to this other investment income. It's outsized capital gains that separate the Hamptons from the helicopter-to-the-Hamptons crowd.
The rich aren't just different from you and me -- they've very different from each other too. Welcome to our fractal world.
Matthew O'Brien is a former senior associate editor at The Atlantic.