A large part of personal income is not considered "taxable" income by the IRS. In the graph personal income (as calculated by the Bureau of Economic Analysis) is around 80% of GDP. This includes all employee compensation + after tax business income + rent + interest + other income but no capital gains. However, the taxable income is around 30-40% of GDP (but it does add back capital gains as well as employee share of payroll taxes). While the taxes paid on income is only around 8% of GDP. Realized capital gains in the graph are from returns with positive net capital gains and you will notice that they peak in years 1966, 1986 as people sell off right before the capital gains tax rate increases and in 2000 when there was a bubble in the stock market. Data from: Personal Income and Income Tax data; Capital Gains Tax Data; GDP from Measuring Worth
Taxable Income and Taxes Paid: 1950-2006
