David S. Mitchell (Washington Center for Equitable Growth): “The other two-tiered U.S. tax system: How pass-through businesses let the ultra-wealthy dodge federal taxes” (April 15, 2026)

Many Americans likely remember when the legendary value investor Warren Buffett drew attention to a glaring unfairness in the tax code by pointing out that he paid a lower effective tax rate than his assistant. That observation about this two-tiered tax system sparked a national conversation—and, eventually, a policy proposal—about how investment income should not be taxed more lightly than income from wages.

But there is another two-tiered system embedded in the federal tax code that receives far less attention—one that may be just as consequential for tax fairness and economic efficiency. It is not about the difference between capital gains and ordinary income, the point Buffett was making, but rather about the difference between two types of businesses: C corporations and so-called pass-through firms. To understand it, it helps to once again look at Warren Buffett’s taxes and contrast his tax treatment to other extraordinarily rich Americans. Michael Bloomberg, the founder of the giant, privately owned wire service Bloomberg LP, can serve as an instructive example.

…