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Meet The Millionaire Class That Really Runs America
Owen Zidar and Eric Zwick argue that private-business owners—not just billionaires—shape U.S. wealth, tax policy and local competition.
Prof G Markets · Ed Elson
- Owen Zidar · Professor of Economics and Public Affairs, Princeton University
- Eric Zwick · Joel F. Gemunder Professor of Economics and Finance, University of Chicago Booth School of Business
The best minutes
- 9:01Some pass-through tax breaks do little to boost investment5 min
- 36:23Business income can face lower taxes than wages4 min
Also worth watching
- 14:20Local rules shield incumbents from competition4 min
- 2:58Private business owners explain half of the top 1%'s income-share rise4 min
- 50:58Boomer retirements create succession openings for new owners2 min
Skip the sponsor reads, the opening show setup, and the closing American Dream reflections.
Full analysis · 6 min read
Real Alpha · Nov 7
Owen Zidar says owners account for about half the top 1% rise
- More than three million Americans have at least $5 million in net worth, with average wealth of $25 million.
- Owners account for about half the top 1% income-share rise, but the interview does not show the underlying estimates.
- Operators should test tax treatment, entry barriers and succession instead of trusting small-business labels.
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7 sections, the 3 other voices it tests Zidar against, and what it means for you. Every episode we cut gets one.
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Private owners explain about half the top income-share rise
Zidar says more than three million Americans have at least $5 million in net worth, with average wealth of $25 million. He says owners account for about half the top 1% income-share rise over recent decades.
Together, their wealth is an order of magnitude greater than the wealth of America’s richest 400 people, Zidar said. That shifts attention from celebrity billionaires to owners of ordinary private businesses.
Zidar and Zwick are promoting The Everywhere Millionaire, built on anonymized links among businesses, owners and workers. But the interview does not show the estimates or separate business growth from tax advantages and local protections.
“about half of the rise in the top one percent”
Our read
The scale makes private owners central to any account of top incomes. But the headline figure does not explain why their share rose, or how broadly the ownership path is open.
Business ownership rewards patience, not a quick start
Eric Zwick describes a route beginning with trade skills and customer problems. People may later start a business or buy one. Zidar later emphasizes experience and the chance to take over when an owner retires.
Zidar says most of these owners are in their 60s by the time researchers see them as millionaires. For example, the episode recounts Dick Portillo starting with $1,000 in a trailer, then eventually selling his business for $1 billion.
That shows possibility, not a success rate. The interview gives no denominator for failures. Nick Kokonas told My First Million in October 2026 that Alinea investors received about 27 or 28 times their investment. That is an investor return at another restaurant, not an expected owner outcome.
“But it takes decades.”
Our read
The route is patient operating experience, not a quick wealth formula. The cases are vivid, but neither their rarity nor the capital required is measured here.
Tax rules helped pass-throughs become the default
Zwick explains the tax mechanism. Pass-through businesses avoid firm-level tax, with income taxed on owners’ individual returns.
He says 1980s reform lowered personal rates below combined corporate and dividend taxes. Firms switched, and new businesses chose pass-through status, he said.
Later tax cuts, including changes in 2017 and 2025, reinforced that advantage, according to Zwick. He says more than half of business income and almost half of workers now sit in pass-through businesses.
That reach matters for policy, but does not show which firm sizes benefit most or whether every shift added productive investment. The category includes local operators and very large private businesses.
“This triggered a rapid growth in the number of pass-through businesses”
Our read
The tax form is not a niche choice. But rising prevalence alone cannot establish that each preference created new investment or jobs.
Some tax breaks buy little measurable investment
Zidar distinguishes tax provisions that stimulate investment from others he says mostly accelerate owners’ gains. His example is a pass-through deduction he described as about $1 trillion in 2025.
He said qualifying owners could pay less than 30% instead of the 37% top rate. He called it hugely expensive and said it did little for employment and investment.
That is his assessment, not an estimate the interview lets readers inspect. Still, Zidar says some other tax provisions do stimulate investment, so treating all relief alike would miss his distinction.
“very little impact on employment and investment”
Our read
The useful budget test is additional investment and employment per dollar of tax relief. The conversation supports provision-by-provision scrutiny, but does not supply the underlying evaluation.
Local protections can shield incumbents from entrants
Zwick describes local market rules as another way established owners can keep pole position. Take car dealerships. Franchise laws in many states block manufacturers from selling directly, and restrict rival dealers from entering territories.
Beer distributors and licensed professions provide other examples, he says. Such rules can limit consumer choices and raise prices, though some began as protection against powerful manufacturers.
Zwick thinks about a quarter of Congress’s tax-writing committee was made up of business owners. He put the share among mayors outside major cities at more like 30 to 40%.
That is evidence of representation, not proof each rule is captured. The interview offers examples but no systematic count of what consumers pay or how often entrants are blocked.
Our read
The central risk is incumbents using policy to make market position durable. Operators should separate genuine quality rules from barriers that mainly limit supply.
Tax labels can recast owner labor as profit
The host said he thought the top 1% paid around 40% of taxes. He then asked what that figure misses. Zwick answered that active owners may still work hard but can receive profits instead of wages.
He says that income can avoid payroll taxes and the ACA surcharge, subject to rules. Accountants and lawyers can help owners navigate and defend the classification, he said.
On a sale, he points to lower capital-gains rates. He also describes trusts, valuation methods and step-up basis as ways to reduce taxes passed to heirs.
But the interview gives no effective-rate comparison for owners and employees doing comparable work. That matters because labor can remain central while its income gets classified as profit.
Vlad Tenev told Sources in October 2026 that broader individual stakes in AI firms could reduce backlash. That is a public-legitimacy argument, not evidence on owner tax burdens.
Our read
Income labels can shift tax burdens even when labor drives a business. The unresolved test is whether preferences reward new investment or merely a different legal form.
Retirement may open succession paths, not guarantee them
Zidar says many young people imagine making an app or getting rich quickly, unlike the businesses in his book. His practical route is to gain operating experience and become ready when an owner wants to retire.
He says private equity can provide an exit, but some owners prefer a successor who will keep the business running. That makes retiring baby boomers a possible source of openings, not a quantified pipeline.
On Founders in October 2026, Kurt MacAlpine relayed Mubadala’s view that buying Corient’s remaining shares could take about nine years. That was a shareholder buyout, not a retiring-owner sale, so it cannot measure the succession opening Zidar describes.
Our read
Succession could open ownership, but access depends on experience and a willing seller. The episode does not count prospective transfers or compare sellers’ choices, and leaves financing needs unmeasured.
What it means for you
- Compare owner compensation. Ask tax counsel to model wages and profit distributions for comparable work within applicable rules. Track payroll charges and total tax exposure separately.
- Measure tax relief. For each tax incentive you use or assess, record its expected cost and actual investment and hiring over time. The episode’s test is results, not labels.
- Map entry gates. For each market you operate in, inventory licensing limits, protected territories, entrant counts, customer choices and prices. Ask whether rules protect quality or restrict entry.
- Start succession early. Identify businesses dependent on a retiring owner and potential successors, then map the transition time and financing needs. Do not assume the seller will choose a successor or private equity.
What to watch
- Whether the 2025 pass-through deduction shows measurable investment and employment effects distinct from higher owner returns.
- Whether state and local regulations cited for dealers, distributors and licensed professions change or continue limiting entry.
- Whether retiring owners transfer operating control to successors or choose private equity exits.
Send this to finance leaders, operators and founders weighing tax design or succession.
Watch the minute where Zidar gives the income-share figure
Written by Real Alpha from the episode's transcript and the other moments it links, then checked against the transcript. Quotes are the speaker's exact words.
Minute by minute
- 1:29Private owners hold substantial wealth
Eric Zwick says he and Owen Zidar began their tax-policy research at the U.S. Treasury, linking anonymized business records to owners and workers. Zidar says more than three million Americans have at least $5 million in net worth, average wealth of $25 million, and account for about half the rise in the top 1% over recent decades.
- 5:11Business ownership offers another path
Zwick says the route to wealth can involve learning a trade, finding customer needs and building a business over time, rather than following a credentialed corporate career. The guests point to Dick Portillo, who started with a $1,000 hot dog stand and later sold his business for $1 billion, as well as owners in everyday service industries.
- 9:01Pass-throughs receive tax advantages
Zwick explains that pass-through businesses pay no tax at the firm level; their income flows to owners and is taxed on individual returns. He says tax changes beginning in the 1980s encouraged businesses to use this structure, and that later cuts favored it further. Zidar says a large pass-through deduction lets eligible owners pay less than the 37% top rate, with little effect on investment or employment.
- 14:20Local rules can shield incumbents
Zwick says local regulations can protect established businesses by limiting new entrants. He points to state franchise laws that restrict direct car sales, as well as barriers affecting beer distributors, realtors, doctors and dentists. In their view, these rules can limit consumer choice and competition.
- 40:10Reform tax and entry barriers
Zidar recommends closing loopholes that do little to encourage investment, while keeping incentives for productivity and business formation. He also points to local rules that raise housing, car and health-care costs. Zwick adds that policymakers should review non-competes for low-wage workers and the costs of running for office.
- 43:59Tax labels can distort policy
Zidar says bringing tax rates closer together would make labels like owner, worker or investor matter less, while preserving targeted incentives where they support investment. He points to the 1986 tax overhaul as a precedent. Zwick says telling the stories of these business owners can make the debate more grounded than treating small businesses and large fortunes as separate categories.
- 47:19Building wealth takes years
Zidar says ownership is a more reliable route to substantial wealth than a salaried job, but the cases in their book rarely show quick riches. He advises young people to gain experience, learn how a business works and look for opportunities to take over from owners who want to retire. Many of the millionaires they studied were in their 60s.
- 49:02AI may aid and disrupt businesses
Zwick says AI could help owners with customer lists, licenses, marketing and bookkeeping, freeing them to focus on serving customers. He expects more disruption in skilled services such as law, where AI can do some work at lower cost. He says established businesses may need to adapt or risk losing ground to new entrants.
- 50:58Private equity creates openings
Zidar says private equity can offer an exit for business owners, but cost-cutting that reduces service quality may leave room for competitors. He also sees an opportunity for young people as retiring owners look for successors. Some, he says, would rather train a buyer than sell to a private equity firm.
- 52:59The American dream remains possible
Zidar and Zwick say the stories of business owners who filled everyday market needs make them cautiously optimistic. They point to a tanning-salon founder who expanded into waxing salons and helped managers become owners. They argue that similar opportunities can emerge in new markets, while acknowledging that the system still has gaps.
Published Oct 23, 2026.
Transcript · 43 min read
Prof G Markets, hosted by Ed Elson, with Owen Zidar and Eric Zwick.
Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there. Where the podcast’s audio and the video part ways, some times are a minute or so off.
Listen to me. Markets are bigger than us. What you have here is a structural change in the wealth distribution. Cash is trash. Stocks look pretty attractive. Something's going to break. and forget about it. Welcome to Prof G Markets. We talk a lot about how billionaires have an outsized influence over our society. They help shape elections, they own major media outlets, and they have enormous sway over the stock market. But there is another class of wealthy Americans who rarely get the same attention. And our next guests argue that they may have an even greater influence over the economy and public policy. They call them everywhere millionaires.
They're the owners of businesses you might not think of as the domain of the ultra-wealthy, businesses like dental practices and HVAC companies. These businesses are structured as pass-through entities, where profits and losses flow directly to the owner's personal tax returns, rather than being taxed at the corporate level. And our guests argue that the tax code has been structured in ways that disproportionately benefit this group. But there is a lot for aspiring entrepreneurs to learn from this group. It includes a man who turned a hot dog stand into a gold mine, and a couple who started their business in the back of a station wagon and turned it into the nation's largest food redistributor.
So today, we're going to explore who these millionaires are, how they made fortunes building mundane but necessary businesses, and how the tax system helps them to build and to preserve their wealth. Here is our conversation with Owen Zidar and Eric Zwick, authors of The Everywhere Millionaire. Yeah. Oh, and Eric, thank you so much for joining me. So I want to just start with your guys' story. You actually started your careers at the U.S. Treasury's Office of Tax Analysis. And it sounds like that's sort of where your interest in this topic really began. So one or both of you take us back to the beginning. How did this all start? We have been working for nearly 15 years on tax policy research. So we started out newly minted PhDs on the basement of the Treasury Department, working with career nonpartisan staff economists in the US government trying to assemble data so they could answer basic questions like how much tax do the different types of businesses in the economy pay? And it turns out the data were stored in such a way that I used my background as a software developer to try and help cobble it together so we could answer and scale some of those questions, but we discovered that in putting together this data
Read the whole transcript
where you have the millions of businesses in the economy for the first time linked to their owners and workers, all anonymized, but you could see a lot of the characteristics of those businesses. How big were they? What industries were they in? Where were they located roughly geographically? And it turned out that this was painting a new picture for us of income, wealth, and prosperity in the country that we felt was deeply missing. And so it's a series
“there are over three million of them who have at least five million dollars in net worth”
And that's a story that we don't hear that often in today's conversation about income and opportunity. and we're not saying that all is well and everything is fair and you have an equal shot no matter where you're born that's definitely not borne out in the data but uh it's not all gloom and doom there in the data what are some of these businesses like what what are some examples uh of of businesses run by an everywhere milena one um that i think you mentioned briefly was the story of dick portillo which is one of my favorite stories in the book when we talked to him. He grew up in the Chicago Cabrini-Greens housing project, and he's the son of Mexican and Greek immigrants. He went to the Marines, didn't go to college, tried to figure out what was going on, and finally said, you know, I see a lot of people buying hot dogs in the city of Chicago, but not many in the suburbs. I'm going to invest my $1,000 into this trailer with no running water and start hustling and put little coupons in everybody's windows of the cars around
and try to get people to buy some and i'm going to wash the dishes by hand in my home bathtub and many decades later he sold it for a billion dollars and so when you know you asked a question earlier about billionaires i think it's quite different if you're thinking about people like that. We've spent decades accumulating wealth selling hot dogs in a highly competitive industry that's very different than some of the other images people have of a lot of market power, big tech CEOs. And one of the things that we're trying to do is just paint a true portrait of wealth in America. And there's a lot of different niches in the economy. Not all of them become billionaires, but many of them have hundreds of millions of dollars or tens of millions of dollars.
And it can be super mundane things like shoveling snow at an airport, selling concessions at a hockey stadium. If you have a big contract for selling concessions, you're going to make a lot of money. It could be storing paper. It could be fixing garage doors. You know, recently someone just sold a garage door servicing business for $2 billion. And there's just a lot of these that fly under the radar but are really important for your understanding how you actually get rich and what's the blueprint for doing it in America today.
“And that really has very little impact on employment and investment, and it was hugely expensive.”
It sounds like we had this idea of small businesses and we designed all of these policies with like this story in mind of the guy, the little guy who comes up and builds his business and achieves the American dream. But now we are sort of mischaracterizing certain incumbents as entrants or people who are kind of new to the game.
“You can't, as a manufacturer, sell directly to consumers.”
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That's Upwork.com to connect with top talent ready to help your business grow. That's U-P-W-O-R-K.com, Upwork.com. We're back with Prof G Markets. It sounds like one of the learnings is that, and correct me if I'm wrong, but it sounds like the learning is that it was a great thing to be an entrepreneur. And we're watching an entire generation of Americans who are now reaping those benefits of making that bet on themselves, on building their small business and building it up. but maybe it's not so easy anymore because maybe they have accumulated a level of power, they have sort of entrenched that power, built in these guardrails and maybe you don't get the same upside of pursuing entrepreneurship today as you might have done if you did it in say the 80s and now you're kind of 40 years on and you're living the life that you always dreamed of.
Is that a correct characterization of the findings of your work, Owen? I think it depends on the industry. So if you look at, you know, where we started with hot dogs, for example, and food options, like we have more recent examples of entrepreneurs who've done extraordinarily well. And so it's not just what happened in 1980. So Dave's Hot Chicken, for example, has been enormously successful because they can make fantastic chicken sandwiches. um and there's also raising canes um he couldn't get very much funding he i think he got like a c or something in an lsu as a college student trying to pitch this business idea of just selling chicken fingers and he took really risky jobs i think he went to alaska to raise a bunch of money um for himself you know in dangerous conditions to pay for this chicken finger business that he sold to LSU students, you know, and they came back from the bar.
and now it's this massively successful business so i don't think that it's dead i do think that one thing that we caution people about is in some industries there's a lot of tendency to pull up the bridge the drawbridge and say hey you know we're not going to make it easy for other people to enter so that's not the case for the food but it is more the case for beverage distribution where it was much easier back in the day if you know we tell a story where if you had a pickup truck with some ice, you could be a beverage distributor. And then by the time you got to the 1970s, you had thousands of people applying for one slot to be a beverage distributor. And so I think it really is industry by industry. And you've talked, Ed, you've talked about the inheritocracy and the threat that that poses to like the dynamics of capitalism. And, you know, we have a take on this, which is kind of about sort of this, you know, proverb that sort of the the son founds the the father builds you know the grandson inherits and the great-grandson begs basically where you know you inherit a business but you're not really as hungry or as aggressive to build it to face new competitive threats to evolve that business and that presents
opportunities for entrants to take your lunch and we see that in a lot of the stories where sort of somebody was really productive working within a family business but hit that ceiling where the person wanted the founder wanted the kids to take over and so instead of promoting the person who was most equipped to grow that business that person left and started a competing business and grew into a you know massive empire in some industries there are barriers that prevent that from happening but a lot of cases you can still kind of make it that way and so then the entrance can take over. Yeah, and to be clear, my view is that's okay, so long as we have an ecosystem where you're punished for being sleepy.
So if we decide, okay, we're just going to hand this business to my kids and they're not going to have the passion or have done their homework to run this properly, and then someone else wins, that's great. That's market competition. I think my concern, and it sounds like this is, as you say, an industry-by-industry problem, is that there are ways in which the winners, the incumbents can use their power, use their influence to influence the system, change the regulatory frameworks such that they can still win despite being lazy, despite not offering better products. not offering more of a communal good for their communities.
So I guess my next question here is, why is it that industries differ on this question? Why is it that in the food industry, for example, it was possible for these scrappy upstarts to go in and become these roaring successes with Raisin Cane's and Dave's Hot Chicken, but in the beer industry, as an example, that wasn't possible? What was the difference maker? I think part of it is the prevalence of these protections. And it's just pretty hard to have strong protections in food. You know, it's a super competitive thing. You have Chipotle and all these healthier options come in, and there's a ton of very wealthy franchise owners who own McDonald's or somebody owns 50 Wendy's.
and for being a beverage distributor it's it's basically a monopoly that you know you can't access in many states and there's just a certain number of of uh paths in and you know even for some restaurants like in i live in princeton there are only a small handful of liquor licenses so you can't enter and serve alcohol and have a a lot of competition on the existing holders because there's a scarcity uh same thing with doctors you know if we're not letting more people in. It's very hard to have real competition unless you have doctors move within the country to make a specific market more competitive, but then that's going to make the place they left less competitive. So I think some of it is just about the ease of entry. And in some industries, it's easier to regulate than others. I think one element of this that we haven't touched on is how over time, you know, who represents us increasingly resembles this class of everywhere millionaires.
So, you know, a lot of the policies that protect these specific industries are not federal policy. their state and local policy. And the folks that are making those policy are part-time elected officials, mayors, state legislators, and so on. They're paid very little. Who ends up representing us in a lot of these positions, they end up being these business owners who are later in their careers, they can afford to run for office, and they have kind of a vested interest in doing so because they're familiar with some of these regulations. They want to, in a lot of cases, shape the regulations to their benefit. Over time, you know, the cost of running for office has increased. And the opportunity cost of being elected official has increased as well, I think.
And so you have a situation where we think a quarter of the tax writing committee of Congress was business owners, private business owners. But if you go to the You know, mayors of the country outside of the major cities, it's like more like 30 to 40 percent. And if you look at state and local officials, these business owners are far more represented than their share of the population. In some cases, it's because they're very popular. They're stalwarts in the community. They sponsored the Little League team. And, you know, that institution of the mom and pop business is very popular. It's easy to run for office on being a successful person who can manage people well.
But in other cases, it means that their worldview is going to be the worldview of the people making the rules. And I think that's created some of these institutions that then prevent entry. And that's where the decay of local media to hold these people accountable also makes it easier for them to pass these kinds of rules in darkness under the radar because there's nobody there to cover those things. They don't make national media in the same way. Yeah, you had a data point that I found really interesting. You point out that deca-millionaires hold 12% of congressional seats. They represent, of course, less than 1% of the U.S. population.
So they are significantly overrepresented, as you say, in local communities, but also in Congress. To what extent do you think that the everywhere millionaire is, one, controlling our politics, but two, specifically creating policies that protect their own interests as opposed to the rest of America? I mean, if you look at tax policy, you know, one of the biggest controversial things in 2025 in the One Big Beautiful Bill Act was getting rid of or making cuts to Medicaid and SNAP. That was about a trillion dollars over 10 years and basically paid for this 20% deduction where these business owners get to pay less than 30% instead of 37.
That's huge. And that's very direct. and you know so some of it is the you know the quarter of congress that owns a business that eric was talking about but some of it is you know when you talk to staffers like who plays golf with the senator who can raise money um for people in the district there's an everywhere millionaire in every congressional district and you know if you look at auto dealers they provide a lot of sales tax revenue, they employ a lot of people, and they're powerful constituents. So it's either like direct representatives or these constituents who really get listened to. And I feel like there's an outsized impact on what actually happens. And you can see there's like email trails in 2025 and 2017 that we point to in the book about how some of this happens, where constituents who run a successful private business will email the senator and the senator will say, hey, like, I'm going to send this to the head of the tax writing committee. And like, this is a really important view. We have to protect pass-throughs. And it's pretty clear, like not every citizen's email gets forwarded to the head of the tax writing committee.
I think we could all agree that's probably not a good thing. Maybe the everywhere millionaires themselves will say, no, it's great for them. But I think we'd all agree that it's probably not a good thing. Has this gotten worse over time? Like, I mean, we're rewinding the clock 50 years ago, did American policy look the same? Or has this specific group acquired significantly more power over time, Eric? So if you think about income inequality and trying to understand the trends in that, more than half of the rise in the top 1% income share comes from pass-through business income. So not only have these folks always been there at the top, They've gotten richer as a share of sort of total activity and total income over the last 30 or 40 years. And I think we can see that rise then parallel in terms of rising political power, influencing the cost of running for office, influencing who wins office, influencing the tax cuts, such that we're at a place where neither party really wants to touch the taxes for most people except a small number of billionaires.
they're essentially off limits it was not the case that they were off limits in the late 1990s even you know you had bill clinton george bush raised taxes on this group of people um to you know help balance the budget and we're just so far from that being you know close to a touching touchable talking point it's a third rail and if everything's a third rail then you know we end up with six or seven percent structural deficit so i do think it looks a little different it's true that there have always been sort of private businesses and business owners in the 50s and 60s they weren't pass-throughs because the tax code didn't want them to be and so They were traditional corporations consuming through the firm with the company car and spousal travel and insurance and so on.
But as the economy evolved away from heavy manufacturing that tended to favor the large public companies towards sort of smaller service companies, these distribution companies like we're talking about, skilled services and other category of everywhere millionaires that are quite influential in the law, consulting, accounting, doctors, dentists that have become very rich over time. They've become more powerful than they were 30, 40 years ago. When you think about what to do about this from a policy perspective, I think you both would agree that a lot of the recent policy proposals have been very billionaire centric. I mean, literally a billionaire wealth tax that targets billionaires. What do you make of the billionaire wealth tax?
What do you make of the overall tax conversation in America? Do you believe that we're focusing on the wrong thing. No, I don't think we're necessarily focusing on the wrong thing. It's just we need to have a much broader conversation if we want to raise some real revenue. So I think that it's fundamentally unfair that billionaires pay a lower effective tax rate than many of their employees. And that I think is a reasonable thing to try to fix. The issue is that we have an order of magnitude more money among everywhere millionaires than billionaires. And we can't present an idea that just because sometimes they act like clowns and are easy to vilify that these are the only people that we need to tax and everything's going to be fine. You know, we have serious fiscal needs and, you know, we've had massive cuts. Even if you just do basic things like roll back the tax code to 1997, you can raise trillions of dollars over a 10-year period, and it's largely from this group that we're talking about. And that was a period when we still had a lot of economic growth. We still had a much healthier environment for the fiscal picture. And, you know, I think it's important to not vilify everyone when you're thinking about
tax policy like you know taxes are not just about punishment uh it's about saying we have some things that we want to pay for collectively as a country we care about the future and growth we want to pay for science we want to pay for education we want to pay for infrastructure we want to pay to protect the elderly and the sick and you can't do that if you just tax a small handful of people. We'll be right back. And for even more markets content, sign up for our newsletter at profgmarkets.com. We're back with Prof G Markets. One of the things that a lot of people push back on when we talk about raising taxes or increasing taxes is they point out that the top 1% pays the largest share of taxes by far.
And then the pushback to that pushback is, well, you're talking specifically about income owners right there. I think the statistic is that the top 1% pays around 40% of the taxes, but that's based on income. And the problem is that there is a lot of wealth that is being created not through income, but through the appreciation of assets.
“But most of the income that you receive from that business is going to come out not in the form of wages, but in the form of profits.”
fix this, Owen? You know, one of the things we do in the book is try not to make it a policy book.
We try to describe the world as it is. But, you know, we end the book with a little bit on a couple of policies. But I think, you know, addressing some of these loopholes that we talked about in a way that, you know, keeps an eye on incentives to invest and productivity and making sure that we, you know, want to have an economy that has more millionaires and has more people to have a shot at being a millionaire, I think is an important thing to keep in mind. And I think there's a lot of low hanging fruit for loopholes that don't really help that much in that direction, but also can raise material amounts of money. So I think that's one bucket.
A second bucket is addressing some of these regulatory barriers to competition at the state and local level to increase competitiveness and try to do it. number of things to make life more affordable for Americans. So that means, you know, trying to address the 6% that only in America do realtors get. When you try to buy a house in other countries, you don't really get as much of that money going to realtors. If you were to do that, it's not going to be as expensive to buy a house. And that's going to help more people move forward. Same thing with cars. You know, it's very expensive to buy a new car. Some of that is because of the auto dealer protections we were talking about. And then for healthcare, you know, I think we need more supply of doctors and medical professionals. That means having nurses do more potentially with AI. That means having immigrant doctors who are qualified to come here, training more doctors domestically. And I think that would help with some of the cost pressures.
And so that's a number of things on the tax front and regulatory front and affordability front that I think we could do to make life better in America. Eric, do you co-sign? And just a quick follow-up, how do we address loopholes? Because to me, that is one of those things that I feel like everyone agrees on conceptually. Loopholes are bad. But how do we fix that? I definitely co-sign Owen's suggestions. And we have also some ideas in the book where we talk about, you know, workers getting more, you know, as a share of the growth in this category and sort of like understanding what policies have not kept up with the growth of this group.
Thinking about the minimum wage, thinking about the proliferation of non-competes and low-skilled workers in some of these restaurant businesses, for instance, doesn't really make a lot of sense. And so that's another place where regulation and labor market seems to be sort of benefiting the everywhere millionaires at the expense of low-skilled work. but uh i think we need to take a hard look at the political system the path to getting into elected office requires more money than is probably necessary we need to understand why that is and whether all of the reasons that has become so expensive are really worth it like should we have unregulated pricing for political ads as an example i have like in my mind the idea to look at the everywhere millionaires who own those local TV stations that jack up rates around elections because it's sort of like a really interesting microcom.
of how the everywhere millionaires are kind of taking advantage of a strong position to maybe affect the political system in a way that we don't really realize. And then, you know, if we have more, you know, better representation of those kinds of other interests in society, the consumers and the workers and the political system, then we might see some of those loopholes close or at least some compromises occur. Immediately, Citizens United comes to mind. Seems like one of the greatest mistakes we have made. Um, but it does seem also that a lot of the problem that you're addressing is this idea of our system and our policy sort of misidentifying people. Like it all started from this idea of there are these small business owners in America and we need to protect them.
And I agree with that. I think that that's a good thing. Like, I think we should promote entrepreneurship. I think we should promote small business ownership. But at what point does a small business become a medium business and then a large business and then a gigantic business? I mean, we can probably agree that giant corporations are no longer small businesses, but I'm sure there are a lot of people who would argue differently. I'm sure that the founders of OpenAI and Anthropic would say, we're the scrappy startups who are trying to compete and trying to get our feet in the door. But meanwhile, they're worth $2 trillion. I'm sure that the same thing is a problem when it comes to earning an income versus seeing your assets appreciate.
That's another example of labeling in the system, creating different rules for what is essentially the same thing, which is money. How do we fix this labeling problem? And I guess, do you agree with me that that seems to be the source of our troubles, that we try to put different people and different businesses in different boxes. We create different rules for different people. And ultimately, that creates misalignment down the road. I mean, one natural step is to harmonize rates to be closer together so that these labels won't move your taxes as much. And, you know, the pushback on that, there are some things that you do want to make more attractive, Like investing is an attractive thing that has broader spillovers and helps economic growth. And so there are some things that we do want to pay for and have a loophole for. But I think it's really being much more judicious.
about what's involved. And so I feel like that's more feasible if you do a large-scale overhaul to say, look, you know, a lot of people have different loopholes, but if we're going to collectively make this a lot better, you can end up with everybody or close to everybody thinking that what comes out is better than what we had before. And we've done that before. And so I think there is some hope if you look at history. 1986 was the last time we did this, and, you know, we cleaned up a lot of stuff you need to do it again yeah i think even just a more basic level just you know seeing you know these people for who who they are and trying to understand the diversity and meet a lot of them that's kind of why with the book we spend so much time talking to them and having them tell their stories so people can see them you know you can claim you're a small business and get that preferential tax rate or you can spend 60 million dollars on your daughter's wedding but i'm not really sure you should be allowed to do both you could probably spend that money on the wedding and get pay the same tax rate that everybody else pays.
And, you know, that's sort of like by sort of telling that true story, maybe we can like move the conversation away from the fictional world of succession and Jane Austen and the sort of insane moon man world of Elon towards sort of like this broader class of people that we think are quite important. And just like it's a big story that hasn't been told at all. So as we start to wrap up here, it sounds like both of you learned a lot about entrepreneurship in America and how these people achieve success. We talk a lot about policy on this show, but we also talk a lot about business and careers and how to become everywhere millionaires ourselves. What did you learn about how these people achieved success? And to what extent do you think young people can still do that today? There are several things. The first headline is it's better to own rather than earn you know it's pretty hard to get really rich getting a w-2 second thing is that you know most people many young people especially have this sense that you can create an app or get rich really quickly but when you look at the stories that we tell in the book that's not the model the the main model is to kind of roll up your sleeves get some real
experience learn how a business works and then be in a position maybe the owner is going to retire and they need somebody else to run it and they're not going to give it to their kids and find yourself in a position to be an owner. But it takes decades. And it takes a lot of, it's a slow process where most of these people are in their 60s by the time we see them as everywhere millionaires. And so it's not a get rich quick scheme, I think is the second takeaway. It seems like probably a lot of young people today are like, okay, how do I use AI to immediately become an everywhere millionaire? I think AI is probably a big part of that get rich quick conversation.
It was certainly true of crypto, but we'll just put that to the side for a moment. Eric, AI, to what extent is that actually impacting entrepreneurship in America right now? So two takes on AI. I mean, our book is like a lot of these tactile, unglamorous businesses that are out in the world, people interacting with people, doing things with their hands in a lot of cases. AI is going to take a while to fully disrupt and replace that work if it ever does. I think there's a lot of debate about it. Like it's very good at writing code. It's very good at find and replace. And it's increasingly good at like more sophisticated, but not tactile things. So, you know, some of these industries, I could see AI being a really useful complement to doing some of the accidental work that needs to be done in starting a business like managing customer lists, filing licenses, sending marketing messages, being organized with, you know, your spreadsheet stuff and your bookkeeping and so on.
So the business owner can focus on the essential problems of the business, which is finding a solution to the problem in the world and delivering it to customers face-to-face in a lot of cases. There are certain industries like these skilled services where I see more disruption because a lot of the day-to-day job is the kind of thing that AI is really good. And I'm very intrigued to follow, say, how the legal profession adapts to the proliferation of AI tools that do some of that stuff at a fraction of the cost. I see law firms changing quite dramatically in how they allocate talent, what they do with the young people that come to work for those law firms.
And so I think in those industries where there's tons of profits, there's more room for AI disruptors, and I'm pretty intrigued to see them. But those are everywhere millionaires that are either going to adopt AI and stay ahead or the sleepy incumbents like the Inheritocracy we talked about who are going to get wiped out. And it'll be very interesting to see how they get wiped out, what the new model is. I think one of the new phenomena in the Everywhere Millionaire story is the entry
“And so they would much rather have somebody follow in their footsteps for a few years, learn the business and sell it to them”
I think this book is a lot about the American dream. i think it tells stories about people who did achieve it um with a lot of asterisks and a lot of caveats did this book did your work make you feel more or less optimistic in the american dream and what is the future of the american dream we are in a unique time in history where it seems like it's both provoke it's provocative to be optimistic about the future because there's so much pessimism and And so the thing that we think has really been resonant with audiences has been this view that, oh, well, maybe it's not all hope is lost, but maybe there is room for the American dream.
And I do find in these stories, Portillo's story or Karen Bentlich's story who started the tanning salon and then pivoted to waxing salons and built this franchise operation business, not only making herself and her husband rich, but also bringing on a lot of those general managers to be owners themselves and get rich that she mentored. very inspiring and also what they're doing is more incremental less innovative but solving a real market need that maybe was missing that is kind of replicable for somebody who wants to roll up their sleeves and do that today it'll be in a different market because there are different consumer needs today than there were 20 years or 30 years ago when those founders started their businesses elon's story is kind of insane it's sort of hard to read that story you know and imagine, oh, I could do what he's doing or want to do that because of the personality and the other things that come along with him. But some of these stories look a little bit more achievable in terms of their nature. They're a little bit less esoteric. They don't require some insane technology. And so that makes me optimistic that there will be a lot of opportunities for folks going forward in these mundane corners of the economy. And so we just want to make sure that
people do have a chance and we want to pay attention to some of the gaps that we've identified and try and figure out how to close those gaps so that there are good opportunities because it's not perfect, the system, and there are risks if we don't move on them. But I'm still kind of optimistic, and I think we're sort of natural optimists about the American dream at this point. Owen Zidar is a professor of economics and public affairs at Princeton University. Eric Zwick is the Joel F. Gemminder Professor of Economics and Finance at the University of Chicago Booth School of Business. Their book, The Everywhere Millionaire, Who is Really Rich in America and How They Got There, is available now.
Eric and Owen, thank you so much for your time. Thanks for having us. Thank you so much.
