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While I did not purchase the document, I did rely on famous economist Tyler Cowen to summarize it. I feel pretty comfortable with that decision as he's an SME.

While I did not purchase the document, I did rely on famous economist Tyler Cowen to summarize it. I feel pretty comfortable with that decision as he's an SME. > the 1% are mostly working people who supplement wage income with some kind of side business income. This is exactly what you would expect if you think about lawyers, doctors, software developers, consultants This is.... not what I would expect, at all. If you told me my thesis was just wrong and that the 1% (not .1%) just made wage income, I could accept that. But- you think it's normal for highly paid professionals to work a self-employed side gig, and that's what tips them into that top percentile? Like, a Bain consultant is going out and doing some extra side consulting in her copious spare time outside of her 80 hour a week job? This seems bizarre & unlikely (I am just relying now on your interpretation of the paper). Worth noting that high-earning doctors, lawyers, some developers can be self-employed, and so neither an employee or employer (especially for doctors I think that's the path to the highest income). Not sure how that factors in to the paper

mdorazio 8y ago
Yes I think that's extremely normal. And that's exactly what the paper talks about - self-employed = pass-through income. If you're a lawyer or consultant and you bill your clients through your 1-person LLC (extremely common), your income is pass-through income and the paper would conclude that you are a "top earner" whose income comes from owning a business. On the doctor side, it's quite common for specialists to be technically self-employed and bill hospitals for their time rather than being a true FTE. See the issue with using the abstract comments here? Also important to note is that the paper isn't looking at individual earners, it's looking at households (it bases its information on tax filings, most of which for 1%+ people would be joint filings). If you and your wife each make $220k in total compensation (relatively easy in the Bay Area or NYC for example), congratulations, the paper says you're a 1% earner. Back to my main point - if you want to talk about business owners in the job-creating sense vs. income, it's important to distinguish between 1% and 0.1%. The latter is composed mostly of medium-size business owners (a good thing!), but the former is not.

mdorazio 8y ago

Yes I think that's extremely normal. And that's exactly what the paper talks about - self-employed = pass-through income. If you're a lawyer or consultant and you bill your clients through your 1-person LLC (extremely common), your income is pass-through income and the paper would conclude that you are a "top earner" whose income comes from owning a business. On the doctor side, it's quite common for specialists to be technically self-employed and bill hospitals for their time rather than being a true FTE. See the issue with using the abstract comments here? Also important to note is that the paper isn't looking at individual earners, it's looking at households (it bases its information on tax filings, most of which for 1%+ people would be joint filings). If you and your wife each make $220k in total compensation (relatively easy in the Bay Area or NYC for example), congratulations, the paper says you're a 1% earner. Back to my main point - if you want to talk about business owners in the job-creating sense vs. income, it's important to distinguish between 1% and 0.1%. The latter is composed mostly of medium-size business owners (a good thing!), but the former is not.