When most people think of American wealth, they envision rocket launches and Silicon Valley. However, Greg Rosalsky, in a Planet Money piece for NPR, argues that this picture is an incomplete representation. The true story of American wealth is closer to home, involving car dealers, dentists, lawyers, and restaurant franchise owners.
The book, titled “The Everywhere Millionaire,” is authored by economists Owen Zidar of Princeton University and Eric Zwick of the University of Chicago. Rosalsky traces the origins of the book back to 2014 when Zidar, Zwick, and Danny Yagan were junior researchers working in the basement of the Treasury Department. Their colleagues affectionately referred to them as the Three Amigos, while they privately called themselves the Tax Ninjas. Below are the key highlights extracted from the article.
The dataset that changed the picture
Their project aimed to connect business tax records with individual owners.
- Before this, the evidence was limited. The Federal Reserve conducts surveys of approximately 5,000 families every three years, and only about one in ten wealthy individuals who are contacted agree to participate. The Forbes 400 list comprises the wealthiest individuals and relies on publicly available information.
- Thomas Piketty and Emmanuel Saez demonstrated that the income share of the top one percent has more than doubled since the 1970s. However, their tax-return data was not linked to the businesses that generated that income.
- The Ninjas eventually managed to connect over 11 million businesses to over 22 million owners.
What they found: pass-throughs
The key category is the pass-through business, where profits are distributed to the owner and taxed on an individual return instead of at the corporate rate.
- In 1980, pass-throughs contributed approximately a fifth of US business income. By 2011, this figure had risen to over half.
- Zwick’s analysis reveals that since the 1980s, pass-throughs have accounted for more than half the increase in the income share of the top one percent. This trend is also evident for the top 0.1 percent.
- Surprisingly, the industries that have seen the most significant impact are not the ones Zwick had anticipated. He expected tech, finance, and energy sectors to be the most affected. However, the ranked list includes legal services, financial services, auto dealers, consultants, followed by restaurants at nine, accountants at ten, and dentists at twenty-one.
- Zwick emphasizes that the ownership structure plays a more crucial role than capital. When an owner retires or passes away, profits tend to decline by approximately three-quarters.
- The Tax Reform Act of 1986 played a pivotal role in this shift. It lowered individual tax rates below those for corporations, making it financially advantageous for businesses to structure as pass-throughs. By 2011, pass-through income faced an average federal tax rate of around 20%, compared to almost 32% for traditional corporations.
The scale, and the politics
Zidar and Zwick refer to this group as Main Street millionaires, while Rosalsky highlights their other moniker, the stealthy wealthy.
- Roughly three million private business owners, each worth an average of about $25 million, collectively possess more than thirteen times the wealth of the Forbes 400.
- For every Forbes 400 member, there are over four thousand private business owners who have accumulated at least $10 million.
- These business owners reside in various locations. Notably, half of the Forbes 400 reside in just four cities, while Main Street millionaires are spread across hundreds of communities.
- Some individuals embody the quintessential American Dream. For instance, Dick Portillo transformed a humble Chicago hot dog stand into a thriving restaurant empire. Similarly, Karen Bentlage made a bold decision to invest in a $3,000 tanning booth instead of purchasing a car, ultimately establishing the country’s second-largest tanning bed distributor.
- On the other hand, some individuals profit from regulations that restrict competition. The authors highlight alcohol distributors, real estate brokers, and car dealers who are shielded by state franchise laws that prevent manufacturers from selling directly to consumers.
- Zwick humorously refers to this group as “middle-garchs,” rather than oligarchs.
They are also the politicians
Rosalsky considers this aspect to be the most underrated.
- Business owners, comprising only 3% of the population, are disproportionately represented in office. Notably, individuals with a net worth of at least $10 million are over ten times more likely to serve in Congress compared to their population share. Those with a net worth of $100 million or more are 62 times more likely.
- The disparity is even more pronounced at the state level. In the 2023-24 legislative sessions, 40% of legislators had business backgrounds. Among them, 21 were auto dealers.
- The book delves into conflict-of-interest cases from both political parties. For instance, Senator Bob Corker supported the 2017 tax law after a provision was added that would benefit his real estate LLCs. Corker denied any wrongdoing. On the other hand, Illinois Democrat Michael Madigan was convicted in 2025 on corruption charges related to his efforts to steer business to his own law firm.
- Rosalsky and the authors approach this topic with caution. They emphasize that owning a business and holding office are not inherently corrupt. Moreover, many wealthy politicians bring valuable expertise to their roles.
Zwick’s framing effectively encapsulates the book’s perspective. He portrays these owners as protagonists, but he also acknowledges that some of them are protagonists in a similar manner to Tony Soprano. This deliberate refusal to categorize them as heroes or villains is what makes the argument resonate. While the billionaires receive the attention and the movies, the larger and collectively wealthier group owns the dealership on the outskirts of town and is more likely to hold positions in the state legislature.
Acknowledgement: This summary was generated using AI writing tools as part of my AI exploration process. For more information, check out the original article listed below.