Realized capital gains were historically high in 2021 and increased income inequality that year. In general, capital gains are more unequally distributed and more variable over time than other major sources of income.
To demonstrate the sensitivity of the distribution of household income to capital gains, CBO examined several measures of income with and without realized capital gains. The comparisons highlight the significance of capital gains in different segments of the income distribution and how those gains have contributed to income inequality over time.
This document supplements two of CBO’s publications: The Distribution of Household Income in 2021 and Trends in the Distribution of Household Income From 1979 to 2021.