The economists Owen Zidar and Eric Zwick would disagree. In The Everywhere Millionaire: Who Is Really Rich in America and How They Got There, the authors contend that the more important story is actually diffuse and harder to see.
On average, they’re worth about $25 million, and most of them live not in New York City but in places like Topeka, Omaha, Baton Rouge, Mackinac Island, and Lake Minnetonka. They are the “stealthy wealthy” and they are hiding in plain sight:
They’re coaching your child’s soccer team, sitting next to you at community fundraisers, or chatting with you at neighborhood barbecues. They might be the dentist who expanded his office to a regional network of practices, the commercial HVAC contractor whose trucks you see around town, or the owner of that local restaurant chain that keeps opening new locations.These are the “real rich” in America, Zidar and Zwick argue, and they matter much more than “a few high-profile billionaires on the coasts.” It’s an audacious claim, but one that’s hard to shoot down. The four hundred richest Americans—think of Bezos, Buffett, etc.—held about $4 trillion in wealth in 2022. The roughly three million Main Street Millionaires hold more than thirteen times as much. By investigating how these people made their fortunes, and how they wield them, Zidar and Zwick upend the consensus on wealth inequality in America. Yet their sobering conclusions aren’t enough to exorcise the authors of their Mammonism.
Only recently have we been able to make sense of the data that showed how rich Main Street Millionaires have become. For decades, the IRS collected detailed information from businesses and individuals, but they stored this data in siloed systems. Zidar and Zwick’s innovation, in 2014, was to connect those systems, building the first database that linked the tax data of businesses to that of their workers and owners. This allowed them to follow the money in ways that had once been impossible.
What they found surprised them. In 2022, America’s nine thousand C-suite public executives earned $38 billion. Not bad. But the top one percent of private business owners—the car dealers, poultry distributors, trash bag producers, franchisees—earned $570 billion, fifteen times more, despite comprising only ten times as many people.
According to Zidar and Zwick, the overlooked factor that explains this disparity is the homely entity provisioned in Title 26, Subtitle A, of the Internal Revenue Code, known as the pass-through. A pass-through is a business tax structure that includes “sole proprietorships, partnerships, limited liability companies, and S corporations,” and it is the structure preferred by Main Street Millionaires. A pass-through, unlike a C Corporation, which is the structure of most publicly traded companies in the United States, does not pay corporate or dividend taxes. Instead, the firm’s profits or losses “pass through” to the owners’ individual income taxes, where they are taxed at individual rates. And because the top individual rate has fallen below the corporate rate over the last four decades, it has become more beneficial to pay taxes as an individual. This shift has radically altered the composition of the economy: Before 1986, most business income in America was generated by C Corporations. Today, most business income is generated by pass-throughs.
Pass-through owners enjoy what one accountant calls “the best tax deal in America.” Indeed, to hear Zidar and Zwick tell it, it’s as if lawmakers forty years ago decided to make it their mission to make these people as much money as possible. They created loopholes for pass-through owners to avoid paying Medicare payroll taxes. They designed provisions to help them avoid the usual cap on state and local tax deductions. And, of course, they passed the Section 199A deduction, perhaps the Trump administration’s crowning fiscal achievement. Introduced in the 2017 Tax Cuts and Jobs Act (TCJA) and made permanent in 2025’s One Big Beautiful Bill Act, Section 199A basically allows pass-through owners not to pay taxes on a fifth of their business income. In 2017, the government estimated that this deduction alone would cost the federal government about $415 billion in revenue over a decade. In part due to this falling revenue, tax enforcement has also shifted toward an “honor system.” Whereas pass-through owners simply tell the IRS how much money their employees make, they retain some “flexibility” in reporting. Evidently they’ve opted to exercise this prerogative. Pass-through owners’ unpaid income and self-employment taxes made up about $264 billion of the estimated $600 billion gap in what taxpayers owe but haven’t paid.
by Nico Taylor, The Baffler | Read more:
Image:The Baffler/Public Domain Pictures
[ed. See also: Americans Don’t Understand Who’s Rich (Atlantic); and, The Wealthiest—and Stealthiest—Class in America (New Yorker).]
