Capital gains for the rich outpace the national wages bill by whopping $300 billion

New figures from the Australian Bureau of Statistics show that, between June and September 2025, household wealth grew by 3.1% ($500 billion) to $18.4 trillion.

This is further evidence that the share of Australia’s wealth held by the very rich is increasing. In his book Capital in the Twenty First Century, Piketty says this is a feature of advanced economies. What this means is that a handful of the rich loom increasingly larger in the total economy.

This new data allows us to examine that argument and its relevance to Australia with data going back to 1988. This graph shows household wealth (net worth) as percentage of GDP, which is the standard measure of the size of the economy.

The graph is very clear: the bold line shows the steady upward trend in wealth compared to the size of the economy. The dotted line shows what the trend looks like without the inevitable fluctuations in the data. Either way, the trend is clearly upward.

The Australian Financial Review’s latest rich list shows that the top 200 richest Australians have a combined wealth of $667.8 billion. This means the wealth of the top 200 is now 24.0% of GDP. This is up from just 8.4% in 2004. Gina Rinehart topped the list as usual, with $38.11 billion in wealth. Piketty pointed to the connection between concentrated wealth and concentrated political power. Remember how Tony Abbott and other senior Coalition politicians have been invited to Gina’s birthday parties? You can bet they talked about what Gina thinks is wrong with the country. And Gina has attended one of Trump’s parties. Ms Rinehart has complained about high wages in Australia and said they should be comparable to those in Africa — $2 a day.

Just try to invite a politician to your next birthday party!

The new data allow us to look at another important aspect of household wealth. It is commonly argued – including in the Henry Tax Review – that a tax on capital amounts to taxing income twice: first when the money is earned, and then again after it generates returns on an investment. On this view, capital accumulation is just the savings out of your income, which is your provision for a rainy day in the future.

But that cannot explain why, in the latest 12 months, household savings were $98 billion, but wealth increased by $1.5 trillion, as the latest data shows. Savings from hard-earned income are next to nothing compared to the total increase in household wealth. Almost all (93%) of the increase in household wealth was capital gains in the value of land and dwellings (housing), financial assets (the stock market) and other property. And for these types of capital gains you don’t even need to get out of bed.

Most of this kind of wealth is never taxed, with the exception of capital gains if they are realised with the sale of property. Total capital gains tax in 2024-25 was $30.9 billion, or just 2% of the total household capital gains. This includes capital gains tax paid by corporations.

Interestingly, the $1.5 trillion in capital gains is $300 billion more than the $1.2 trillion in total wages and salaries paid to workers. Lazy capital gains – from housing and the stock market – now account for a bigger share of the Australian economy than the national wages bill.

Those people who receive income without needing to get out of bed now make more than workers who have to work for a living. Given all this you would not be surprised to learn that there are calls to tax wealth in Australia. This is getting urgent.