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Article:

Why the Gap Between Rich & Poor Is Widening

An Inside Look at Why the Rich Get Richer & the Poor Stay Put

Capital Gains

The Bush tax cuts also lowered taxes on capital gains -- the profits realized when assets, such as stocks or real estate, are sold. At least until the end of 2012, the top capital gains rate is 15 percent, down from 20 percent in the 1990s (the rate was 28 percent before that).

At the same time, those at the very top of the scale are making a higher percentage of their income from capital gains; in 2006, the top 1 percent made 38 percent if their money from capital gains, up from 31 percent 10 years earlier. 

And when higher capital gains incomes combine with lower tax rates on that money, it makes mathematical sense that the richest household would increase their earnings faster than those lower down the scale. 

 

  • Sarah Shemkus

    Sarah Shemkus is an award-winning freelance journalist, marketing enthusiast, accomplished baker, occasional globetrotter and total nerd (with a particular fondness for spreadsheets). Most recently, she reported on business and real estate … Read more...