David Crowley, the Democratic nominee for governor of Wisconsin, vowed in a debate last week to make sure “that those who are making enough money pay their fair share.” How much is “enough money”? How does he define “fair share”? He didn’t specify. He probably has a different assessment than many voters.
Wealth and fairness are in the eye of the tax assessor. That is worth remembering as Democrats campaign to make the “rich” pay their “fair share.” They may rail against billionaires, but Joe the HVAC repairman, not Elon the trillionaire, is their real target.
Economists Owen Zidar and Eric Zwick make the scale of America’s private wealth clear in their book, The Everywhere Millionaire. They note that most of the nation’s wealth is concentrated among owners of private businesses. In their view, auto dealers, fast-food franchise owners and plumbers are the primary cause of inequality in America and aren’t paying anywhere near their fair share in tax.
By the authors’ calculation, there are three million “Main Street millionaires” who own private businesses and have a net worth of at least $5 million. “Collectively, Main Street Millionaires have more than thirteen times the wealth of the Forbes 400. For every member of the Forbes 400, more than four thousand private business owners each have at least $10 million in net worth.”
“For every large public company CEO, more than one thousand private business owners have at least $25 million in wealth,” they write. “Far more than a few high-profile billionaires on the coasts, these are the real rich in America.”
The famous billionaires are just the featured merchandise. Main Street is the inventory.
That is exactly why billionaires cannot define the entire rich. The Forbes 400 are the wrong place for politicians to stop. If Democrats want the rich to pay their fair share, the tax code must reach concentrated fortunes at the top rather than use Main Street millionaires as substitutes for billionaires. The millions who built businesses with their own money are not stand-ins for Elon. And the billions held by the few are not stand-ins for Joe.
If you built a successful small business by the sweat of your brow, congratulations: You’re rich. Now fork it over. Democrats shouldn’t. They should be grateful that you built something.
As Zidar and Zwick tell it, owning a small business “is the best tax deal in America.” The authors argue that Main Street millionaires use their political clout to promote lower taxes that help expand businesses and accumulate more wealth. They complain that this accumulation is treated as an outrage.
In my judgment, the resulting pattern taxes visible success more readily than concentrated power. The authors’ case is narrower and better sourced: Main Street millionaires have accumulated enough political influence to preserve favorable estate-tax treatment, while Democrats hunt for a broader constituency for “fair-share” taxation.
“No battle better illustrates Main Street millionaires’ political influence,” Zidar and Zwick write, “than their long and successful campaign to eviscerate the estate tax.” In fairness to them, they have opposed turning the estate tax into a punitive weapon aimed at wealth people spent a lifetime creating.
The Tax Cuts and Jobs Act of 2017 doubled the federal estate-tax exemption to $11.2 million per decedent and adjusted the amount annually for inflation. Republicans last year made the larger exemption permanent. It is now $15 million, or $30 million for married couples. Assets exceeding the exemption are taxed at 40% before the estate is distributed to heirs.
The larger exemption is an acknowledgment that the estate tax punishes investment and saving. If you listen to Democrats—or, for that matter, United Airlines CEO Scott Kirby—punishment is the point.
Kirby last week said he favored “inheritance taxes that get close to 100% at some level.” “If you’re wealthy enough, you can have passive income, you can just make an investment, and the laws are set up that you literally never pay taxes on all that growth that can happen,” he told Bloomberg News. “And that just feels unfair to me.”
He has identified the unfairness correctly. It is easy for high-flying CEOs and billionaires to say that. They have the resources to hire accountants and lawyers who can help them dodge death and income taxes—and potential wealth taxes. Small-business owners have considerably less firepower.
That is not a reason to spare the billionaires. It is a reason to put the tax where they can actually be reached: billionaire fortunes first, inheritances second, wage-based payroll caps not as substitutes for either.
Because targeting Main Street businesses is politically unpopular, Democrats have often confined themselves to lambasting billionaires. California’s Proposition 40 does more than that. It seeks to impose a 5% tax on the fortunes of residents with more than $1 billion in net worth. That is the right order of operations: billionaire fortunes first, and only fortunes that size could carry the load.
French economist Emmanuel Saez, one of the initiative’s architects, recently explained to the New York Times that targeting only billionaires was a strategic choice because they “are no longer very popular.” That is not cynical political triage. It is basic fairness. Put less flatteringly, it is marketing.
In 2020, Saez worked with 14 California Democratic lawmakers, including now-Attorney General Rob Bonta, to craft a bill imposing a 0.4% wealth tax on taxpayers with more than $30 million in assets. The proposal died amid opposition from Gov. Gavin Newsom. If Proposition 40 passes, wealth-tax proponents should not be surprised if they subsequently push the threshold lower. Lowering it is a correction only while it remains confined to very large fortunes. Any slide toward Main Street wealth is the retreat this argument rejects.
New York City Mayor Zohran Mamdani names and shames billionaires such as Citadel CEO Ken Griffin. That is not a head-fake. It is the point. His proposed tax hikes would primarily burden owners of local bodegas, plumbing companies and other small businesses. That is the head-fake. Any version that does not land first on fortunes like Griffin’s is marketing with a policy costume.
Abdul El-Sayed, Michigan’s Democratic nominee for U.S. Senate, advocates imposing an additional death tax by requiring heirs to pay income tax on inheritances worth more than $1 million. Some 24 million Americans could get soaked, most of them solidly middle-class. That is not a rich-person tax.
He also wants to remove the $184,500 earnings cap on the 12.4% Social Security payroll tax “to make sure the rich pay their fair share.” That proposal has the same defect, and it reverses the order: it taxes wages rather than fortunes, and it stops at $184,500 while inherited billions remain beyond reach. If the goal is to make the rich pay, the richest taxpayers are the obvious place to begin.
If you earn more than $184,500, you are rich. Congratulations. You are still not one of the billionaires whose concentrated fortunes define the inequality Democrats claim to oppose.
Progressives don’t merely want to redistribute wealth. They want to raise taxes to aggrandize their own power and level opponents. Then they get to decide what is fair, who has enough and who must be made to pay.
The trick is to define “rich” downward until it reaches the merely successful, while the money at the very top stays beyond reach. Tax the billionaires. Leave the Main Street millionaire’s door open.