ITs very simple, the rich make their income from Capital Gains! 50% of their income comes from Capital Gains!!!!
So it makes sense as to why the fed would continue to keep zero interest rates and keep markets propped up, the elite in this country make 50% of their income from capital gains, so 99% of the US is lucky to make .025% on their savings thanks to the fed and their zero policy interest rates while the 1% and the rest of top earners make most of their money from stock market gains....so thats why yellen and the fed continue to bow to wall street and remain extremely dovish, they will keep rates at historical lows to keep feeding wall street what it wants, any talk about raising rates is all garbage talk, there are no rate hikes coming. yellen and friends will keep pumping the market with zero rates and keep the bubble growing like they have the last 20 years!
Where the rich make their income
Robert Frank | @robtfrank
54 Mins AgoCNBC.com
What's the secret to making money like the rich? Capital gains.
A study from the non-partisan Tax Policy Center looked at the sources of income for American taxpayers of different income levels. It found that the higher you go up the income ladder, the greater share of income comes from capital gains.
Dimas Ardian | Bloomberg | Getty Images
For the 99 percent of taxpayers making less than $500,000, salaries and wages account for 75 percent of their adjusted gross income for 2012, the latest period available from Internal Revenue Service returns. Of the remaining income, about half came from retirement programs such as pensions, annuities and Individual Retirement Accounts.
For taxpayers making $500,000 to $1 million, salaries and wages account for more than half of earnings.
Read MoreHow much these CEOs earn in an HOUR
But for those making $10 million or more, salaries and wages only account for around 15 percent of their income. Their real money comes from capital gains, with capital gains accounting for about half of their earnings. Another 15 percent to 20 percent came from interest and dividends. About 25 percent of their income came from business income, which means they owned or held a stake in a private company.
It's no surprise that the really rich make their money from, well, money. But Roberton Williams of the Tax Policy Center said the data doesn't mean that all of the wealthy are just sitting around making millions from the stock market every year. Many of the people in that $10 million-or-more group don't repeat their mega-earnings every year. Their income came from a one-time sale of a business or asset, leading to a capital gain.
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"A lot of the people at the very top are there because they sold a major asset or business they've built for years," he said. "It's a one-time big payday."
Williams said one of his previous studies found that among those in the top 1 percent, about half were only in the 1 percent for one year over the course of a decade.
From a policy perspective, Williams said the importance of capital gains to the wealthy could be seen in two ways.
Some have argued for hiking the capital gains tax from its current federal rate of 20 percent (plus 3.8 percent for top earners under the Affordable Care Act's Net Investment Income tax). This includes President Barack Obama, who proposed raising the rate to 24.2 percent in his 2015 budget. The argument is that because the capital gains rate is lower than the income tax on salaries and wages, the very rich sometimes pay lower rates than everyday earners. (Remember Warren Buffett and his secretary.)
Read MoreMore millionaires than ever are living in the US
"It looks like a ripe area to tax," Williams said.
But, capital gains are also voluntary: Owners can choose when to sell their business or asset depending on the optimal tax environment. That's why the incomes of the wealthy can be so volatile. If capital gains were to increase, the rich could simply sell their assets and take the gain before the tax increase, therefore leading to lower revenue from the capital gains tax.
"The higher you make the tax, the more people will resist it," he said. "We know from history that people respond to capital-gains tax rates."
So it makes sense as to why the fed would continue to keep zero interest rates and keep markets propped up, the elite in this country make 50% of their income from capital gains, so 99% of the US is lucky to make .025% on their savings thanks to the fed and their zero policy interest rates while the 1% and the rest of top earners make most of their money from stock market gains....so thats why yellen and the fed continue to bow to wall street and remain extremely dovish, they will keep rates at historical lows to keep feeding wall street what it wants, any talk about raising rates is all garbage talk, there are no rate hikes coming. yellen and friends will keep pumping the market with zero rates and keep the bubble growing like they have the last 20 years!
Where the rich make their income
Robert Frank | @robtfrank
54 Mins AgoCNBC.com
What's the secret to making money like the rich? Capital gains.
A study from the non-partisan Tax Policy Center looked at the sources of income for American taxpayers of different income levels. It found that the higher you go up the income ladder, the greater share of income comes from capital gains.
Dimas Ardian | Bloomberg | Getty Images
For the 99 percent of taxpayers making less than $500,000, salaries and wages account for 75 percent of their adjusted gross income for 2012, the latest period available from Internal Revenue Service returns. Of the remaining income, about half came from retirement programs such as pensions, annuities and Individual Retirement Accounts.
For taxpayers making $500,000 to $1 million, salaries and wages account for more than half of earnings.
Read MoreHow much these CEOs earn in an HOUR
But for those making $10 million or more, salaries and wages only account for around 15 percent of their income. Their real money comes from capital gains, with capital gains accounting for about half of their earnings. Another 15 percent to 20 percent came from interest and dividends. About 25 percent of their income came from business income, which means they owned or held a stake in a private company.
It's no surprise that the really rich make their money from, well, money. But Roberton Williams of the Tax Policy Center said the data doesn't mean that all of the wealthy are just sitting around making millions from the stock market every year. Many of the people in that $10 million-or-more group don't repeat their mega-earnings every year. Their income came from a one-time sale of a business or asset, leading to a capital gain.
Read MoreStates with the most multimillionaires
"A lot of the people at the very top are there because they sold a major asset or business they've built for years," he said. "It's a one-time big payday."
Williams said one of his previous studies found that among those in the top 1 percent, about half were only in the 1 percent for one year over the course of a decade.
From a policy perspective, Williams said the importance of capital gains to the wealthy could be seen in two ways.
Some have argued for hiking the capital gains tax from its current federal rate of 20 percent (plus 3.8 percent for top earners under the Affordable Care Act's Net Investment Income tax). This includes President Barack Obama, who proposed raising the rate to 24.2 percent in his 2015 budget. The argument is that because the capital gains rate is lower than the income tax on salaries and wages, the very rich sometimes pay lower rates than everyday earners. (Remember Warren Buffett and his secretary.)
Read MoreMore millionaires than ever are living in the US
"It looks like a ripe area to tax," Williams said.
But, capital gains are also voluntary: Owners can choose when to sell their business or asset depending on the optimal tax environment. That's why the incomes of the wealthy can be so volatile. If capital gains were to increase, the rich could simply sell their assets and take the gain before the tax increase, therefore leading to lower revenue from the capital gains tax.
"The higher you make the tax, the more people will resist it," he said. "We know from history that people respond to capital-gains tax rates."
