To comprehend U.S. tax policy, you need to understand how taxes impact small business owners. That's because when politicians discuss taxes, they almost always pay attention to their effect on those who own companies. So what does IRS data show about small business owners and taxes? Business ownership is a bigger source of income for wealthy people than for those who have less money. IRS data show that income from business ownership accounted for 20 percent of the adjusted gross income (AGI) of tax filers with incomes of more than $250,000 in 2008, but only three percent of the AGI of those earning less than $250,000. The pattern is similar for wealth. In 2004 (the latest available data), closely held business stock, non-corporate business interests and limited partnerships accounted for 20 percent of the net worth of all Americans. But the numbers are much higher for the wealthy. For those with a net worth of under $1.5 million, these three types of assets accounted for only 17 percent of net worth, but for those worth more than $20 million, their share was one third. However, business ownership is accounting for a less of the incomes of affluent Americans over time. In 1993, 29 percent of U.S. tax returns with greater than $200,000 had business and professional income and 58 percent had partnership and S corporation income, but in 2007, the shares were only 19 percent and 42 percent, respectively. Similarly, in 1993, business ownership accounted for almost 25 percent of the income earned by tax filers with more than $200,000 in AGI, but by 2007, this share had fallen to a little over 21 percent. Income (and tax payments) from business ownership is concentrated in the hands of a small number of people working for themselves. IRS data show that in 2008 only two percent of personal tax returns with business income were filed by business owners making more than $250,000 per year. However, the owners with incomes exceeding $250,000 per year accounted for more than two-thirds (70 percent) of income from business ownership. Few U.S. tax filers are wealthy small business owners, but wealthy small business owners account for a disproportionate (to their share of tax filers) chunk of Americans' income. IRS figures show that in 2008, only 1.4 percent of U.S. tax filers had business income and earned more than $250,000 per year, but this slice of tax payers accounted for five percent of aggregate AGI. Politicians care a lot about how taxes affect small business owners. A couple of patterns sum up the data on small business owners and taxes. Business ownership is a bigger contributor to the wealth and income of the affluent than of those with less money, but this difference is shrinking over time. In addition, few small business owners are wealthy, but those that are account for a sizable chunk of the personal income tax paid in this country.