Re:This is Real, That's Not
by AmericanChopper on Saturday December 05, 2020 @03:05AM
(#25312749)
I would presume this is taxable income, which would be different from gross return on investment in any given year (depending on how you plan your taxable events). The other thing to consider is that index funds are essentially the best performing strategy over any significant period of time. For people who derive a significant portion of their income from investment returns, you’d expect some of them would have their income to trending closer towards the risk free rate than average market returns. Index fund returns would be the upper bound for a lot of people in this group.
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For example, I think it contradicts the narrative implied by many complaints about the rules around accredited investors and eligible contract participants and such that "the rich" benefit from important investment opportunities that are denied to less wealthy. It makes a case that joe-everyman can toss money into an index fund and out perform the wealthy.
I wouldn't expect 'given' year effects to be relevant, as it's averaging over a large number of people. Taxable is a better argument, since as you reach the highest marginal tax rates there is a lot of reasons to find ways to indefinitely defer paying taxes (e.g. die with it and pass it with stepped up cost basis).