[123testaccount]

With regard to the mechanics of the "Snowball Effect", my understanding is that the flat tax on capital gains vs the progressive tax on income is one cause in the US.

I would speculate that one other mechanic has to do with time. For the vast majority of people there is a hard cap on wage income based on the hours they can possibly work in a day. People who have money to invest can put that to work for them offline, so to speak.

And at a certain threshhold a person can put their money to use to pay for specialized labor (tax attorneys, finance managers etc) to receive an even greater return.

[netcan]

r = return on capital. g = overall economic growth. If capital returns 6% this year and the economy grows b 4%, it means that capital + this year's return grew by more than the economy did overall. This leaves a smaller share for labour.

But I'd like to have a better understanding of the year over year mechanics. Anyone have a good explanation. I'm willing to put in some effort.