Capital Gains Fuel Record-High Inequality

Fact Sheet

Capital gains income is a key driver of income inequality, which stands at record levels.[1] Capital gains refers to income generated from the profitable sale of assets such as stocks, bonds, real estate, a business, or even a work of art. Because such assets are highly concentrated in the hands of the rich, the income produced by the sale of those assets flow to the top.

In 2016, the most recent year with available data, the richest one-tenth of 1 percent of Oregonians captured 39 percent of all capital gains income. That nearly equaled the amount received by the entire bottom 99 percent.[2]

Stated differently, if there were exactly 1,000 Oregonians, then one person alone would take about the same capital gains income as would a group of 990 people.

The rest of the top 1 percent collected about 20 percent of all capital gains income that year. Together, the entire top 1 percent reaped about 59 percent of all income from capital gains.

The concentration of capital gains income at the top expands income inequality. A 2013 study, for example, compared the impact on inequality levels from changes in wages, capital income, and taxes. “By far, the largest contributor to this increase,” the report concluded “was changes in income from capital gains and dividends.”[3]

To avoid further exacerbating Oregon’s record-high inequality, Oregon lawmakers should reject any proposal to cut taxes on capital gains income and close tax breaks that benefit capital gains income.

[1] Daniel Hauser and Juan Carlos Ordóñez, Oregon’s Ultra-Rich Continue to Pull Away, Oregon Center for Public Policy, March 6, 2019.

[2] Unless otherwise indicated, all data points are based on Oregon Center for Public Policy analysis of Department of Revenue data for the 2016 tax year.

[3] Hungerford, Thomas L., Changes in Income Inequality Among U.S. Tax Filers between 1991 and 2006: The Role of Wages, Capital Income, and Taxes, January 23, 2013.