Car Dealers Top Source of Pass-Through Income Among U.S. Top 1%
Economists from the University of Chicago Booth and Princeton have identified auto dealers as the leading source of pass-through business income among America's top 1%. This finding challenges common assumptions that tech billionaires or hedge fund managers dominate such wealth accumulation. Pass-through business income, derived from S corporations, partnerships, and sole proprietorships, is a key component in understanding how high-income earners generate their wealth. Auto dealers benefit from state franchise laws granting them local monopolies over new-vehicle sales for specific brands, enabling family-owned single-brand stores to sell for hundreds of millions. The study highlights the role of regulatory protections as a driver behind this phenomenon and notes that more than half of top 1% income growth since the 1980s has come from pass-through business profits. The researchers used anonymized tax data combined with yacht and jet registration records to identify industry leaders like the Brockway family, who sold their Mercedes dealership for several hundred million dollars.
Topics: auto dealers business ownership economists pass-through income top 1%