American Capitalism Isn’t Just Billionaires

When one thinks of the rich in the United States, the first people who come to mind are the megabillionaires whose extravagant consumption, eye-popping wealth, and notorious political interventions have transformed them into household names. Perched atop the Forbes 400 list of America’s richest individuals are Silicon Valley moguls and Wall Street executives who command some of the most prominent corporations in America.

Beneath this elite stratum of capitalists lies a vastly less conspicuous group of still-wealthy but lesser-known business owners. Far more numerous and more geographically dispersed across the country than their billionaire brethren, this “American Gentry” exercises great influence on local, state, and even national politics. The relatively scant attention they receive compared to their headline-grabbing compatriots means that their collective effect on the American wealth distribution has been hitherto mostly unexamined.

A new book by Princeton economist Owen Zidar and University of Chicago economist Eric Zwick attempts to correct this relative neglect by quantifying the place of “The Everywhere Millionaire” in the American wealth distribution. The book is a popular exposition of previous academic work that celebrated scholars of inequality Emmanuel Saez and Gabriel Zucman deemed (despite some critiques) an “important contribution” to the estimation of wealth inequality in the United States.

What emerges from Zidar and Zwick’s investigations is the fundamental role of “pass-through” businesses in securing their owners a place near the top of the American wealth distribution. Changes to the tax code in the past half century, some lobbied for by the very business owners receiving their benefits, have made the pass-through business structure even more profitable than it would have been otherwise. The result is an astounding amount of wealth collected by the American Gentry, who often employ it toward corrosive, self-serving political ends.

Do Not Pass Through, Do Not Collect $200

Zidar and Zwick coin the term “Main Street Millionaires” (MSMs) to signify households with at least $5 million in wealth (meaning they are in the top 4 percent of the US wealth distribution) and private business ownership. This group, around three million in number, collectively owns an impressive thirteen times the combined wealth of the Forbes 400.

The collective wealth of the MSMs has more than doubled over the course of the twenty-first century, to the point where it presently stands at around $55 trillion. MSMs are also more geographically dispersed than their Forbes 400 colleagues. Half of the latter live in New York City, San Francisco, Los Angeles, or Miami, whereas less than a quarter of the MSMs do.

The businesses that MSMs run are often classified as pass-through entities in the tax code, which include sole proprietorships, partnerships, limited liability companies, and S corporations. Unlike a C corporation, which treats the company as a separate taxpaying entity from its owners, pass-throughs do not pay corporate or dividend taxes, and instead their profits pass through to the owners’ individual income taxes.

The Tax Reform Act of 1986, which pushed the top individual tax rate below the corporate tax rate for several years, triggered a major shift in the legal structure of American business. The result is that today 95 percent of all US businesses are pass-throughs, accounting for the employment of half of all American workers and more than half of American business income. Indeed, Zidar and Zwick and other coauthors have calculated that 41 percent of the rise in the income share of the top 1 percent of Americans since 1980 is due to pass-through income.

With almost all US businesses now classified as pass-throughs of one sort or another, the businesses the MSMs own run the gamut of American commerce. Zidar and Zwick profile businesses that manufacture everything from seamless gutters to tanning beds to laboratory chemicals to quiche and provide services that span from ambulance billing to trade show planning. It should be stressed, however, that private business is not necessarily small business. Major corporations such as Fidelity and Hobby Lobby are registered as pass-throughs, while large firms like Koch and Mars are private C corporations. But even more modest MSMs can generate serious profits, as the authors demonstrate with some revealing figures. For instance, “there are 25 autodealers [in the top 0.1 percent of the US income distribution] for every member of the Forbes 400.”

Previous attempts to more comprehensively map the upper reaches of the wealth distribution used one of three methodologies, all of which generated results but had various shortcomings: surveys, investigative reporting, and nonlinked databases. Surveys have limited coverage, face difficulty cajoling the rich to disclose information about their financial situation, and are sometimes subject to anonymization procedures precisely to prevent users from linking the data to identifiable persons. Investigative reporting’s reach is inherently limited; even the people behind cataloging the Forbes 400 can’t be certain that they are not overlooking less ostentatious billionaires. Finally, nonlinked databases are not as useful as those that can match their data to others.

Zidar and Zwick instead follow the lead of Thomas Piketty and his collaborators in using tax data as their fundamental data source. The core methodological innovation informing the book’s findings is the linkage of tax databases within the US Department of the Treasury to match businesses to their owners and employees (all anonymized). The authors then combed through auxiliary sources, such as registries of private jet and yacht owners, to attempt to deanonymize these millionaires. Resulting interviews with various capitalists the authors identified comprise a significant portion of the book.

Zidar and Zwick frame their findings as a contrarian exercise highlighting how much relatively unassuming professions contribute to the upper layers of the American wealth distribution. However, some of the evidence they present in the book qualifies this narrative. A table showing the industries generating the most pass-through income is heavily populated by the highly paid professions one might expect: lawyers, doctors, financiers, accountants, dentists, realtors, architects, and consultants. To be sure, plenty of more plebeian businesses are represented as well: lumberyards, motorcycle dealers, and paper product distributors, for instance, and these less glamorous trades are often the focus of the book’s anecdotes.

The Everywhere Bilker

Part of the story of the MSMs’ affluence is the squeezing of their workers. Smaller businesses are legally exempt from many of the labor protections that larger corporations must enforce. For instance, the Family and Medical Leave Act only applies to firms with fifty or more employees, portions of the Civil Rights Act and the Americans with Disabilities Act only fully apply at a fifteen-employee threshold, the Worker Adjustment and Retraining Notification Act only regulates employers with at least one hundred workers, and the Affordable Care Act’s requirement that businesses provide their employees health insurance only kicks in at a minimum of fifty employees. On top of these difficulties, smaller shops are notoriously harder to unionize.

Zidar and Zwick briefly weigh in on the controversy regarding why labor faces an ongoing decline in its share of national income. One factor they highlight as driving this trend is the increasing use of noncompete agreements to discourage workers — now even low-paid and entry-level ones — from switching employers. In previous work, Zidar and Zwick and coauthors suggested that a third of the declining labor share was a statistical artifact created by the classification of many American businesses as pass-through entities.

When assessing the effect of MSMs on politics, it’s noteworthy that MSMs themselves make up a significant share of American politicians. Nearly a quarter of congressional representatives own a business, as do over 40 percent of legislators at the state level and a third of all mayoral candidates. This means that a large share of legislators have a personal incentive to support the interests of business owners generally and individually will be tempted to promote their own business interests.

MSMs have secured anticompetitive legal protection of their businesses in a variety of industries, pushing up costs for consumers. Beer distributors, for example, benefit from laws that prevent brewers from also owning distribution and make it difficult to terminate a distribution contract. Franchise laws give auto dealers similar protection from rivals. Realtors guarantee their positions as middlemen by restricting access to information about real estate sales. Doctors inflate their profits through restricting access to medical care, which they do by putting a ceiling on the number of residency positions and limiting the ability of nonphysicians to deliver care. Powerful sectional lobbies ensure the maintenance of their members’ privileges through organizations like the National Association of Realtors, American Medical Association, and National Automobile Dealers Association.

MSMs skew politically conservative, and some of them have unsurprisingly used their fortunes to advance right-wing causes. In 2022, the largest federal campaign donors for Republicans were Dick and Liz Uihlein, whose income derives from the shipping supplies company Uline. The late Republican senator and presidential nominee John McCain’s political career was largely funded by his wife’s inherited riches from a beer distribution company.

The MSMs’ political influence has been most nefarious, perhaps, in the domain of taxes. The Internal Revenue Service estimates that around $600 billion dollars of taxes are owed but not paid every year; pass-through owners are responsible for almost half of this “tax gap.” “More than at any recent time,” Zidar and Zwick write, “the tax code for pass-throughs runs on the honor system, with predictable results.”

And MSMs are progressively seeing more tax loopholes enacted to their benefit. Estate taxes have been whittled down to the point where only 0.1 percent of households face an estate tax of any sort. The 2017 Trump tax cuts allowed pass-through owners to deduct 20 percent of business income from their taxes, and the 2025 One Big Beautiful Bill Act made these temporary provisions permanent.

Dream On

Even though Zidar and Zwick recognize that upward social mobility is becoming more difficult in the United States, a major theme of the book is that the “American Dream” of upward mobility remains attainable, primarily through private business ownership. The authors plainly have admiration for the MSMs who have achieved entrepreneurial success, and much of the text is content drawn from interviews with MSMs about their achievements. Clearly the authors intended these profiles both as ways to de-anonymize the “stealthy wealthy” and to give their account some narrative color, but the stream of self-reported business heroics of various MSMs becomes tedious.

Despite large chunks of the book reading as inspirational literature for aspiring business owners (the largest of three segments is entitled “How To Get Rich”) or a celebration of the everyman capitalist, Zidar and Zwick recognize the negative effects of MSMs in exacerbating social inequality. They end the book with some policy reform proposals, such as raising the minimum wage and reforming the tax code to harmonize tax rates. Useful steps, of course, but these proposals fall far short of a comprehensive program to rein in the economic and political power of the MSMs.

The main value in Zidar and Zwick’s book, however, is not in its politics but in its empirical research. The authors have gone some distance toward unmasking a stratum of the capitalist class that too often escapes recognition, not to mention criticism. A serious left-wing political project needs to grapple with this overlooked but powerful section of the American elite.

This article originally appeared in Jacobin, a democratic socialist magazine publishing long-form essays and analysis on politics, economics, and culture. Subscribe to the print edition for $20 a year.