In 2014, the economists Owen Zidar and Eric Zwick were asked by the Treasury to conduct a study on the tax burden of private business owners. It was tricky to figure out how much these sorts of business owners — auto dealers, contractors, the like — actually owed in taxes: After Reagan's 1986 tax reforms, pass-through businesses and other accounting tricks became widespread enough to obscure this class of wealthy Americans hiding in plain sight. The research they conducted led to their new book The Everywhere Millionaire: Who Is Really Rich in America and How They Got There, and one of their central findings is that there are about three million private business owners who have an average wealth of around $25 million. They call this group “Main Street Millionaires” and their influence on the economy and politics in the US is considerable. We speak with Zidar and Zwick today about how they measured the actual number of rich people in America by sifting through reams of tax forms, why income inequality started to rise in tandem with the growing number of pass-through businesses, and how it's possible that the collective revenue of the nation's dentists far exceeds that of the NFL.
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Chapters:
00:00:00 - Cold Open: The Entrepreneur Who Could Not Retire
00:00:48 - Who Is Rich in America?
00:05:17 - Guest Introduction: Owen Zidar and Eric Zwick
00:07:26 - Building the Data Set
00:10:23 - The Role of Novel Data Sets in Economics
00:11:43 - What Is a Pass-Through Entity?
00:13:03 - Key Findings: Who Holds the Wealth?
00:15:11 - Case Study: Car Dealerships
00:17:15 - Skill vs. Regulatory Protection
00:22:26 - Case Study: Beer Distribution
00:24:24 - Comparison with Piketty: Active Owners vs. Passive Capital
00:26:16 - Do These Millionaires See Themselves as Wealthy?
00:28:21 - Hands-On Founders vs. Coastal Corporate Elites
00:32:02 - Case Study: Dentists and Doctors
00:34:38 - The S Corp Tax Advantage
00:37:53 - Political Obstacles to Taxing Pass-Through Wealth
00:41:09 - Private Equity and the Boomer Business Transfer
00:45:44 - Geography and Entrepreneurship
00:49:14 - Owner vs. Worker Share of Income Growth
00:52:40 - Founder Mentality and Profit Sharing
00:55:30 - Final Thoughts
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Bloomberg's Joe Weisenthal and Tracy Alloway analyze the weird patterns, the complex issues and the newest market crazes. Join the conversation every Monday and Thursday for interviews with the most interesting minds in finance, economics and markets.
Join the conversation: discord.gg/oddlots
Subscribe to Bloomberg Podcasts:
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Check out more Odd Lots:
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#Investing #Markets #Finance #Bloomberg #Podcast #OddLots
Visit us:
https://www.bloomberg.com/podcasts
For coverage on news, markets and more:
http://www.bloomberg.com/video
Visit our other YouTube channels:
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