There's a Mind-Boggling Number of Rich People in America

Owen Zidar (0:02)

Bloomberg Audio Studios, Podcasts, Radio, News.

Tracy Alloway (0:18)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (0:22)

And I'm Joe Weisenthal.

Tracy Alloway (0:23)

Joe, I have a very exciting episode for you today.

Joe Weisenthal (0:26)

Go on.

Tracy Alloway (0:27)

We are going to be talking about pass-throughs. S-Cores and the US. Tax Code.

Joe Weisenthal (0:32)

This is so great. I'm so excited about this because I remember during some of those tax cut negotiations, and you'd have, who is that? I think it was a senator from Wisconsin, Ron Johnson, and he was like, or I don't know which one it was, but he was like, oh, we really need to preserve some pass-through. And I didn't learn about it.

And then I was like, well, you know, whatever. And then I missed it. And I was like, great. So finally here in 2026, I can learn about something that I really should have learned in December of 2017

Tracy Alloway (1:02)

Well, actually, I'm glad you said that because this is sort of the thrust of what this entire conversation is going to be, which is when we talk about tax breaks for the wealthy, we normally talk about or we think about Jeff Bezos paying like zero percent income tax or something like that. But actually, a lot of the tax cuts that we've seen, I guess, since the 1980s and now most recently under Trump administration have been for escores for these pass-through entities which generally get framed as small businesses. That's right. But as it turns out, a lot of these businesses are actually phenomenally large and very, very wealthy.

Joe Weisenthal (1:39)

Yeah, there's a few things that I think are really interesting here. So obviously, people just love the sound of small business, right? Like small business makes people feel good, whatever it is, people like, it's sort of something aesthetically nice about-

Tracy Alloway (1:54)

Something very American as well. Like you think about Tocqueville and his big impression of America was, oh, it's this nation of entrepreneurs.

Joe Weisenthal (2:01)

Yeah. So there's something about small business that feels good, etc. The other thing that I'm really interested in, and I brought this up a couple of times on the podcast. I think when a lot of people think about the United States or the American economy and the sort of distribution of wealth and income, and so forth, people talk about inequality. Then they think, okay, there's a 1 percent or a 0.1 percent that's insanely wealthy. You mentioned Jeff Bezos and a handful of others like that. Then people are aware of the fact that for a country as rich as ours, there's probably unacceptably high levels of poverty, and people perceive there correctly to be a lot of people who are financially struggling, etc.

But I always think that the missing thing is like that fat layer of rich people, and the thing that I'm always reminded by it, we're recording this September 9th.

I think by the time people listen to this, we'll have already been there, but whenever we go to Southern California.

Tracy Alloway (3:03)

Orange County, Huntington Beach.

Joe Weisenthal (3:05)

You just see all these people with boats, and you see all these people, you go to a steakhouse or something, they have their own private wine locker at the steakhouse. It's like, there's a lot of rich people, and they're not all the tech billionaires.

Tracy Alloway (3:21)

They're not all on the Forbes 400 or whatever.

Joe Weisenthal (3:23)

We have a big fat layer of really rich people, and they're not people who made some great invention, et cetera, necessarily, or some great, huge breakthrough. But whether it's real estate or cars or just some sort of simple business, a lot of really rich people in this country.

Tracy Alloway (3:42)

Yeah, and we should talk about them, try to figure out who they are, how many of them there actually are. And the one other thing I would also add that makes this sort of a very Odd Lots-y episode is we talk a lot about the private markets, right? Private credit, private markets, private equity. And often, when we are talking about those specific businesses, we are talking about these types of businesses. So, you know, a private equity firm, you think of it as this Wall Street entity, but it owns a portfolio of, I don't know, HVAC companies in Missouri or something.

Joe Weisenthal (4:12)

And the last thing I'll say, and I don't know how much we'll get into this part per se, but like if you think about, I don't know, if like the dark matter of American politics, et cetera, privately owned companies are often, or the owners of privately owned companies, some regional beverage distributor or something like that, are often very important figures in regional politics, et cetera. If you want to get your handle on that, should know who these people are and how they got there.