By Owen Zidar and Eric Zwick
“When we talk about wealth, mainly we talk about billionaires,” said John Lanchester in The New Yorker. “But what if there were another group that, without drawing much attention, had grown collectively 13 times richer than the Forbes 400?” In their “brilliant” new study, economists Owen Zidar and Eric Zwick call attention to America’s Main Street millionaires, in particular the roughly 3 million owners of private businesses whose household net worth is at least $5 million. These are often stealth magnates—car dealers, beverage distributors, partners in law firms or medical practices—and they tend to have amassed their wealth through sustained hard work. “Unfortunately, there is a shadow side,” because they’ve also been so effective at wielding political clout that they’ve helped make life harder for many Americans. For now, “the best we can probably do about this concentration of wealth and power is to see it and name it, and that’s what Zidar and Zwick have done.”
The authors’ “eyeopening” account traces the rise of everywhere millionaires to the Tax Reform Act of 1986, said Greg Rosalsky in NPR.org. The bipartisan congressional bill cut tax rates, setting the top individual tax rate lower than the corporate tax rate. This triggered an explosion of so-called pass-through businesses, which pass profits directly to owners, who in turn pay taxes on that income at the lower rate. In 1980, pass-through businesses were small potatoes. “By 2011, they were generating more income than all traditional U.S. corporations combined—and accounting for most of the rise in the share of income flowing to the top 1%.” Zidar and Zwick, who identified this new millionaire class by diving deep into IRS records, have now attached their findings to “a colorful cast of characters,” including Chicago hot dog king Dick Portillo and other gogetters who started with nothing and made fortunes on surprising long-term bets.
“Zidar and Zwick tell this story with admirable clarity and precision,” said Nico Taylor in The Baffler. Though their “quasi-scholarly” language “can be bland at times,” it’s “a testament to the authors’ expository finesse that they manage to make fiscal history occasionally gripping.” Their book will be “of great interest” to readers who believe the rich now have the system rigged, said The Economist. As the authors point out, many everywhere millionaires enjoy the same luxuries as billionaires without attracting negative attention, and meanwhile they win new tax breaks and push through regulations that limit competition in their fields, including real estate sales, medicine, and law. But as critical as the book can be of millionaires, it “will appeal even more to those who hope to join their ranks.” Clearly, “much of the spoils of capitalism are still won by those who roll their sleeves up,” and “that is a great thing.”
|