The wealthiest Americans are not only tech founders, celebrities or Wall Street executives. Roughly 3 million people have built fortunes averaging about $25 million each by owning private businesses, from car dealerships to garage-door manufacturers, according to a decade-long analysis of anonymized tax data by two university economists.
Owen Zidar, a professor of economics and public affairs at Princeton University, and Eric Zwick, a professor of finance and economics at the University of Chicago Booth School of Business, call this group the «Everywhere Millionaires» in their new book, «The Everywhere Millionaire: Who Is Really Rich in America and How They Got There.» Collectively, the authors say, these business owners hold more than 13 times the wealth of the Forbes 400.
The findings challenge a common portrait of American affluence shaped by public company executives, celebrities and headline-grabbing entrepreneurs. For every public company chief executive in the public eye, the authors estimate there are about 1,000 business owners worth at least $25 million operating in near-total obscurity. They live not only on the coasts but in places such as Dothan, Alabama, and Fort Wayne, Indiana.
The research attributes the rise of this group in part to a shift in the tax code that began in the 1980s, when President Ronald Reagan cut individual tax rates and raised them for traditional corporations. That change set off an expansion of pass-through businesses — S corporations and partnerships whose profits and losses flow directly to their owners. Such entities now account for 95% of all businesses in America and for the majority of the rise of the top 1% since the 1980s, according to the authors.
Because profits from these businesses can be traced through tax filings to individual owners, the researchers were able to map wealth that had previously been largely invisible. The authors note that wealthy people generally do not answer surveys, so earlier views of American wealth relied heavily on reported executive pay, celebrity earnings and news coverage.
Many of the businesses behind these fortunes are unglamorous by design. The authors point to gutter manufacturing, garage-door construction, auto dealerships and beverage distribution as examples of Main Street enterprises that can generate enormous wealth. Success in these fields, they argue, does not require elite schooling, coastal connections or exceptional genius.
The book also presents entrepreneurship as a more accessible path to upward mobility than many Americans assume. The authors cite Dick Portillo, who grew up in a Chicago housing project, never attended college and had never cooked a hot dog before he began selling them, yet became a billionaire. Among children raised in the bottom 20% of the income distribution who reached the top 20%, about 10% did so by owning a business, compared with 1.3% who did so by attending an elite college, according to the research.
The authors further argue that these business owners carry political influence that often goes unnoticed. Business owners hold congressional seats at roughly 10 times their share of the population and are heavily represented in state and local government, the book says. Because they are less visible than tech billionaires or Wall Street executives, their influence over tax and regulatory policy tends to fly under the radar, a factor the authors say matters for understanding how the tax code and regulatory environment have evolved.