

Source: IRS

This is what oligarchy looks like.

In 2010, the IRS reports that the top 400 households — or the top 0.0003 percent, for those of you keeping score at home — took home 16 percent of all capital gains. That's right: one out of every six dollars that Americans made selling stocks, bonds, and real estate (worth more than $500,000) went to the top-third of the top-thousandth percent of households.

It wasn't always thus. Between 1992 and 2005, the top 400 households "only" received an average of 7.8 percent of all capital gains. And, as you might expect, they got more of their money from wages back then — albeit, a still-paltry 13.8 percent — than the 6.4 percent they do today.

What's changed? Well, the housing bust happened, the middle class got scared off stocks at the worst possible time, and the top 1 percent (and really the top 0.1, no the top 0.01, no the ...) have more money to invest than at any time since 1939. Add it all up, and you can see why capital gains have become the ultimate luxury good.

Here's what all that means. In 2005, the housing bubble was in full, heady swing, and there plenty of Miami condos, let alone actual houses, selling for more than the half-a-million-dollar capital gains exclusion on real estate (the first half-a-million in profit is exempt from taxes).

So, in other words, so many McMansions were being sold that the ultra-rich's share of capital gains fell a bit. But then the word "subprime" entered the vernacular, and both housing prices and sales fell off a cliff—with no real recovery since. Even worse, as Josh Zumbrun points out, everyone but the top 10 percent either couldn't afford to or couldn't stomach hanging on to their stocks as markets tanked in 2008.

That's why the subsequent bull market—and it's been a historic one—has been even more of a black tie affair than usual. And it doesn't hurt that, after 30 years of skyrocketing income inequality, the top 1 percent now control a bigger share of wealth than they have since FDR was railing against the "malefactors of great wealth" of his time. The more money you have, after all, the more money you have to invest.

Not only are the rich getting richer, though, but because they're getting more of their money from capital gains, they're getting taxed less, too. Remember, the top tax rate is 39.6 percent on ordinary income, but it's just 23.8 percent on capital gains—and was 15 percent in 2010. That's why the top 400 households only paid an effective rate of 18 percent then.

It's gotten so good for the Masters of the Universe that all they can complain about now is the "hyperinflation" in the Hamptons. Talk about problems.