Among the top 0.1 percent, pass-through owners are far more common than well-paid execs. In 2014, there were 139,000 taxpayers with a combined pass-through income of $264 billion, the study finds. That’s eight times more income than collected by the top 10,700 executives in an S&P index.

Owners and entrepreneurs also have freedom in how much salary they pay themselves. By minimizing their salaries – and boosting profits – the wealthy can save a couple of percentage points in payroll taxes. That’s what the rich have been doing since 2001, the paper says, “paying themselves less in wages and more in profits.”

Zwick and his colleagues conclude most rich owners are actively involved in their businesses, no matter what their tax forms say.

‘Working Rich’

“Most top earners are working rich,” the study says. “They derive their income from human capital, not physical or financial capital.”

Typical pass-through businesses of America’s 0.1 percent are smaller regional businesses like car dealers, beverage distributors, or large law firms. And the last couple of decades have been good to these owners. Profits are up, along with the productivity of employees. But owners were able to grab most of these gains for themselves, rather than handing them to staff in the form of higher salaries.

The top 0.1 percent owner’s share of productivity gains rose from 40 percent in 2001 to 52 percent in 2014, the study finds. “As labor productivity grows, owner-managers appear to capture an increasing share.”

Business owners also have more ability to cheat on taxes than employees. While every dollar earned on a W-2 or 1099 form is automatically reported to the Internal Revenue Service, a private business can find ways to hide money or artificially lower profits.

Big Dent

Pass-through businesses put a big dent in the country’s tax gap -- taxes that should have been paid but weren’t. According to the Brookings Institution, more than 40 percent of the gap from 2008 to 2010 -- or $190 billion -- was a result of pass-through businesses underreporting income for tax reasons. Even if business owners follow the law, they can finagle themselves tax-free prizes like lavish travel budgets and company-owned cars and jets.