Who are the wealthy in America and how did they achieve their status? This is the focus of The Everywhere Millionaire, a book by economists Eric Zwick and Owen Zidar who spent over a decade investigating America’s richest individuals. While many believe the country is dominated by a few billionaires from Silicon Valley and Wall Street, there exists a larger group of affluent Americans across the nation. These individuals have gained wealth through ordinary means—running car dealerships, selling hot dogs, or owning waxing salons.
These ‘Main Street millionaires’ contrast starkly with billionaire figures often in the spotlight. Collectively, they possess considerable wealth, enabling lavish lifestyles including owning superyachts and expansive homes. Their economic influence occasionally rivals that of billionaire oligarchs. The authors argue that the economic revolution in private business ownership has contributed significantly to their rise.
A few decades ago, private businesses were less lucrative than corporate America. By 2011, private enterprises generated more income than traditional corporations, influencing the distribution of wealth predominantly to the top one percent of earners. The book estimates nearly three million private business owners exist in the U.S., each averaging a net worth of $25 million. Some embody the American Dream through self-made success, while others leverage their influence for favorable public policies, lowering taxes and enforcing industry regulations that bolster profits.
“Main Street millionaires have more economic power than often recognized,” Zwick states.
The narrative begins with the Tax Ninjas—economists Danny Yagan, Owen Zidar, and Eric Zwick—who in 2014 worked at the U.S. Treasury Department. Tasked with understanding private business taxation, they encountered obsolete data systems at the IRS. By effectively linking business tax records to individual taxpayers, they uncovered substantial insights about wealthy Americans’ income sources.
The dataset revealed the prominence of ‘pass-through’ businesses, where profits directly transfer to owners and are taxed through personal income tax, differing from traditional corporate taxation. By 2011, pass-throughs surpassed corporate America in generating business income, contributing to rising inequality.
Surprising discoveries emerged regarding wealthy owners—doctors, car dealers, and accountants dominated the income landscape over expected tech or finance moguls. Rich owners often derive substantial income personally, highlighting their ‘human capital’ alongside ‘financial capital.’ This trend links back to the Tax Reform Act of 1986, which lowered individual tax rates below corporate tax rates and inadvertently boosted pass-through profitability.
The book discusses ‘Main Street millionaires’—wealthy owners of private businesses, holding greater collective wealth than the Forbes 400, and residing nationwide beyond big cities. Eminent examples like Dick Portillo, who built a billion-dollar restaurant empire from a hot dog stand, and Karen Bentlage, who transitioned from tanning to waxing businesses, showcase diverse paths to affluence.
Many achieved success through industries protected by regulations limiting competition and bolstering profits—such as healthcare, alcohol distribution, and real estate. Car dealerships are particularly lucrative due to state laws restricting direct sales from manufacturers.
The influence of Main Street millionaires extends into politics, where they wield significant clout and often become politicians themselves. Despite comprising only 3% of the population, they are disproportionately represented in elected positions and frequently introduce legislation benefiting private business owners.
While billionaires are often labeled as oligarchs due to their wealth and influence, Zwick humorously coins the term ‘middle-garchs’ for rich private business owners who also impact economic and political spheres.
Main Street millionaires may lack the fame of billionaires or innovative ventures such as those in tech or space, yet their combined influence warrants recognition and understanding.