Is it capital income or labour income?

That people should become rich - richer - by deploying their capital doesn’t seem all that bad to us. The system is, after all, called capitalism. There are those who disagree of course. With that disagreement though comes the question of, well, are these people actually becoming rich through their deployment of capital, or through their labour?

The answer seeming to be that in many to most cases it’s labour:

Rising capital income has raised the possibility that the financial-capital rich may now dominate the ranks of America’s highest earners instead of the human-capital rich, but testing this has been challenging due to data issues around the classification of top-end business income. This paper analyzes deidentified administrative tax data, and estimates that for the typical top business owner about three-quarters of pass-through profits are returns to owner human capital rather than financial capital. The typical top earner, it seems, is still human-capital rich.

Is Jeff Bezos rich because Amazon always was going to conquer all merely by existing or has Amazon conquered because of Jeff Bezos? Given the number of people who have tried to conquer the retail world we have to assume that Bezos and his labour have at least something to do with it.

This, of course, having substantial impacts upon what tax policy should be. We don’t want to insist, through high tax rates, that these very productive people can’t be bothered to go to work after all. A world in which it is the entrepreneurs who are piling up the pilf and gelt is substantially different from one in which the capitalists are that is.