Democratic candidates and policymakers are increasingly targeting wealthier Americans in their tax proposals, though the definition of "rich" remains fluid and often includes small-business owners with significant net worth. This emerging tax approach aims to address income inequality but raises questions about who ultimately bears the burden.
David Crowley, the Democratic nominee for governor of Wisconsin, emphasized the need for those earning “enough money” to pay their “fair share,” though he did not specify income thresholds. This debate reflects a broader discussion among Democrats about taxation and fairness, often focusing beyond billionaires to include affluent small-business owners.
Economists Owen Zidar and Eric Zwick highlight in their book "The Everywhere Millionaire" that a substantial portion of American wealth lies with these “Main Street millionaires.” According to their research, more than three million small-business owners have net worths above $5 million, collectively holding more than thirteen times the wealth of the Forbes 400 richest Americans. They argue that this group includes franchise owners, plumbers, and auto dealers, who benefit from favorable tax treatment often unavailable to wage earners.
The authors contend that small-business owners have used their political influence to reduce tax burdens, citing efforts to increase the federal estate tax exemption as a key example. The Tax Cuts and Jobs Act of 2017 doubled the estate tax exemption to $11.2 million per individual, with further increases since, and a current 40% tax rate on estates exceeding that threshold. Republicans codified the elevated exemption permanently in 2025.
Critics of the current tax framework argue that large inheritances and investment income escape sufficient taxation, perpetuating wealth inequality. United Airlines CEO Scott Kirby recently voiced support for near-total inheritance taxes at high wealth levels, criticizing current laws that allow investors to avoid taxes on asset appreciation. However, such proposals often clash with practical enforcement and political resistance, particularly from small-business owners who lack extensive tax planning resources.
While Democrats often spotlight billionaires to rally public support, many of their policies would impact middle-market entrepreneurs. California’s Proposition 40 aims to impose a 5% wealth tax on billionaires, a strategy chosen for political viability, according to economist Emmanuel Saez. Saez has also worked on wealth tax proposals targeting those with assets over $30 million, though these efforts have faced pushback from state leadership.
Similarly, local politicians like New York City Mayor Zohran Mamdani criticize billionaire wealth but propose tax hikes that would predominantly affect owners of smaller enterprises. Michigan Senate candidate Abdul El-Sayed has proposed taxing inheritances over $1 million and removing the Social Security payroll tax cap at $184,500 earnings, potentially broadening tax liabilities well into what many consider upper-middle-class income levels.
As progressive politicians push to expand tax revenue and address inequality, the definition of who qualifies as "rich" continues to shift—often encompassing a wider range of Americans than traditional measures might suggest. This evolving dynamic underscores the complexity of tax reform debates amid growing economic disparities.