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Economist Eric Zwick joins the hosts to explore the "middlegarchy" or "stealthy wealthy," a group of 3 million multimillionaires in the United States who collectively hold more than 13 times the wealth of the Forbes 400 billionaires. Unlike flashy tech or finance billionaires concentrated in superstar cities, these Main Street millionaires own mundane private businesses like car dealerships, restaurants, and dental practices. Drawing on a massive Treasury Department tax data project led by Zwick and fellow economists known as the tax ninjas, the episode reveals that pass-through businesses—where profits pass directly to owners who pay individual income tax rates—account for more than half of the growth in the top 1% share of income over the last half century.
The hosts and Zwick examine how these business owners benefited from preferential tax policies, such as the 1986 tax reform that lowered individual rates below corporate rates, and a 2017 tax deduction that Congress passed despite warnings from the tax ninjas. Furthermore, the episode details how the stealthy wealthy exert political influence not just through lobbying, but through direct representation in government, being vastly overrepresented in Congress and on tax-writing committees like the House Ways and Means Committee. While many of these millionaires are self-made entrepreneurs who built successful businesses from scratch, Zwick argues that their political power and state-level protectionist rules—such as laws preventing direct-to-consumer car sales by companies like Tesla—can distort markets, inflate consumer prices, and drive economic inequality.
The episode opens with the Planet Money hosts introducing the show and a brief sponsor message from HubSpot.
The hosts explain the term "stealthy wealthy" and how it refers to the middle garks—millions of multimillionaires who shape the economy.
The episode explores how middle garks use their wealth and political clout to shape tax policy, regulation, and public opinion.
Personal stories of entrepreneurs like Nancy Mueller and Karen Bentley illustrate how diverse industries contribute to the stealthy wealthy class.
Eric Zwick and colleagues describe pass-through businesses, their tax advantages, and why they dominate the 1% wealth concentration.
The story of how Treasury economists, dubbed the tax ninjas, built a dataset linking private businesses to owners and uncovered the rise of pass-throughs.
Discussion of recent tax cuts, the 2017 legislation, and the ongoing debate over whether pass-through businesses should receive further tax relief.
Final thoughts on the power of the middle garks, the need to watch their influence, and a reminder to follow Planet Money for more insights.
The Rise of the Middlegarchyinsight
Economist Eric Zwick explains that public discourse focuses too much on flashy oligarchs and ignores the "middlegarchy"—a group of 3 million multimillionaires controlling vastly more wealth.
Uncovering the Top 1 Percentdata
Researchers Thomas Piketty and Emmanuel Saez showed that the top 1% share of US income more than doubled over a half century, but private business data remained a massive blind spot.
Surprising Top Wealth Generatorsdata
Tax data revealed that car dealers, lawyers, investors, and even dentists—who earn more than all professional sports leagues combined—drive a huge portion of the top 1%.
Pass-Through Tax Rate Advantageinsight
Pass-through businesses pass profits directly to owners who pay individual income taxes, and historically paid a much lower effective tax rate than traditional C corporations.
Business Owners in Congressdata
While only about 3% of Americans are business owners, roughly 25% of the members on the House Ways and Means Committee owned private businesses around 2017.
Decamillionaires Serving in Governmentdata
Decamillionaires are more than 10 times as likely to serve in Congress as their general population share suggests, while centimillionaires are 62 times as likely.
Tesla Versus State Car Dealersstory
State laws restricting direct-to-consumer sales force buyers through local dealerships, leading to direct legislative clashes between Tesla and car dealer associations.
“The stealthy wealthy are not just in Silicon Valley and on Wall Street.”
“Pass-through businesses generated about 1/5 of all US business income in 1980, by 2011 they generated more than half.”
“They found that when these business owners die or retire, their profits tend to plummet by 75%.”
“Today, 95% of all businesses in the United States are pass throughs.”
Wanna know who is really in the top 1%? And how they use their influence? It may not be who you think. Look beyond Silicon Valley. Look beyond Wall Street. Look beyond the “oligarchs”. There's a much larger class of wealthy Americans hiding in plain sight. And, often, they got rich in mundane ways. They own car dealerships. They sell hot dogs and frozen mini-quiches. They run waxing salons. They supply fabricated metal and urinal cakes. They are dentists. Collectively, these "Main Street millionaires" control much more wealth than the billionaire lightning rods who launch rockets into space, appear on manosphere podcasts, and have Hollywood movies made about them. Many of these millionaires have also grown rich enough to afford superyachts, 10,000-square-foot homes, and pet tigers. At the center of their story is a quiet revolution in the American economy: the rise of a particular kind of private business. On today’s show, how did the power of the “stealthy wealthy” millionaires come to rival that of the billionaire oligarchs? And, how are they shaping policies that lower their taxes and raise your prices? Read: Our book: Planet Money: A Guide to the Economic Forces That Shape Your Life https://lnk.to/i3AukBdD Our weekly longform Planet Money newsletter https://n.pr/3zrFvUB Our weekly Indicator round-up newsletter https://www.npr.org/newsletter/indicator Follow: Instagram https://n.pr/3FqLuws TikTok https://n.pr/3sGZdrq YouTube https://lnk.to/iCVDaW3C Facebook https://n.pr/3h92GwS Support public media with NPR+ and enjoy perks for over 25 podcasts like this one. This show’s perks include bonus episodes and sponsor-free listening. Learn more atplus.npr.org http://plus.npr.org/. This episode was hosted by Greg Rosalsky and Sarah Gonzalez. It was produced by Emma Peaslee. It was edited by Marianne McCune with fact checking help from Sierra Juarez. It was engineered by Kwesi Lee. Alex Goldmark is Planet Money’s executive producer. Music: NPR Source Audio - "Collectible Kicks," "Blazed and Emboldened," and "Arturo’s Revenge See pcm.adswizz.com https://pcm.adswizz.com for information about our collection and use of personal data for sponsorship and to manage your podcast sponsorship preferences. NPR Privacy Policy https://www.npr.org/about-npr/179878450/privacy-policy
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