Capital Gains Can Be Labor Income

Short summary

Economists Zwick and Zidar argue that labor's declining income share partly reflects how tax policy treats compensation structures—stock-based pay and pass-throughs are counted as capital gains rather than labor income. The research suggests policy design, not just market forces, determines how we classify work's economic contribution. For founders and high-earners, this distinction carries significant tax implications.

• •Zwick and Zidar: tax law classifies equity pay as capital gains, not labor income
• •Policy choices shape how we measure labor's share of economic output
• •Relevant to founder compensation strategy and tax planning

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