Who Earns Capital Gains? Mostly, the Top 0.1%

The top 0.1% [of the nation's earners]-- about 315,000 individuals out of 315 million-- are making about half of all capital gains on the sale of shares or property after 1 year; and these capital gains make up 60% of the income made by the Forbes 400. . . . according to the Congressional Budget Office more than 80% of the increase in income inequality was the result of an increase in the share of household income from capital gains.

From Forbes via the Tax Profs Blog.

The number of top earners is more like 80,000-100,000 because typically only one member of a household of three or four is an earner in the top 0.1% and the others are economically dependents not involved greatly in the generation of that income.

This quote also actually understates the disparity, because a large share of all capital gains are unrealized and never show up as taxable income on a tax return before the taxes on the gains are forgiven at death. About $30 billion per year of capital gains that would have been taxable if realized, are converted to tax free basis at the owner's death, and often not subject to estate taxes either under the very generous estate tax regime in place right now. Tools like tax free 1031 exchanges of real estate make it possible to defer capital gains taxation for very long periods of time.