Finance and Economics Discussion Series: Accessible versions of figures for 2025-107

Rates of return on private and public businesses

Accessible version of figures

Figure 1: Aggregate sales by business organization: SCF and IBD
(a) All pass-through receipts
(b) Sole proprietorships receipts
(c) S Corp receipts
(d) Partnership receipts
Note: The figure shows the aggregate sales in the SCF and receipts in the IBD. The SCF collects receipts data on the year prior to the survey wave. In panel 1b, SCF sole proprietors include sole-owned LLCs (“single member LLCs”), as these businesses are generally taxed as a sole proprietor (Internal Revenue Service, 2025). LLCs with multiple owners typically file as partnerships, and LLCs in the SCF with multiple owners are classified as such in panel 1d. Receipts are only collected for actively-managed businesses in the SCF, while income is collected for both active and passive businesses. The green lines in these figures, then, are scaled by the ratio of $$\frac{\text{income}_{active}+\text{income}_{passive}}{\text{income}_{active}}$$. Authors’ calculations using Board of Governors of the Federal Reserve System, Survey of Consumer Finances (SCF) and Statistics of Income, Internal Revenue Service, Integrated Business Database (IBD).

Figure 1 is a 4-paneled figure. A. The upper left panel shows the trends in aggregate private pass-through business sales. The x-axis represents years, ranging from 1985 to 2025 in 5-year intervals. The y-axis shows sales volume in trillions of nominal dollars, with values ranging from 0 to 30 trillion dollars. The graph features two solid lines: a green line with square markers every 3 years—representing the aggregate private pass-through business sales in the SCF—which begins at approximately (1988, 3.5 trillion dollars) on the x-y coordinates, and ends at about (2021, 22.5 trillion dollars). The green line is surrounded by a light green shaded area, which represents a 95% confidence interval. The red line with no markers represents the aggregate private pass-through business sales in the IBD. This red line starts at approximately (1988, 2.4 trillion dollars) and ends at about (2021, 19 trillion dollars). Both lines show an overall increasing trend from 1988 to 2021, with some fluctuations. The green line generally appears to be higher than the red line, especially in later years, though the red line is typically contained in the green shaded area (the confidence interval of the SCF estimates). B. The following 3 panels describe three different types of private businesses that make up the aggregate lines from the upper left panel. C. The upper right panel shows the trends in aggregate sales of sole proprietorships. The x-axis represents years, ranging from 1985 to 2025 in 5-year intervals. The y-axis shows sales volume in trillions of nominal dollars, with values ranging from 0 to 8 trillion dollars. The graph features two solid lines: a green line with square markers every 3 years—representing the aggregate private business sales from sole proprietorships in the SCF—which begins at approximately (1988, 1.5 trillion dollars) on the x-y coordinates, and ends at about (2021, 4.1 trillion dollars). The green line is surrounded by a light green shaded area, which represents a 95% confidence interval. The red line with no markers represents the aggregate private business sales from sole proprietorships in the IBD. This red line starts at approximately (1988, 0.7 trillion dollars) and ends at about (2021, 2 trillion dollars). Both lines generally increase slightly from 1988 to 2018, with the green line increasing notably from about 2 to about 4.1 trillion between 2018 and 2021. Aside from the final year, the green line and red lines are about equal, and the red line is always contained in the green shaded area (the confidence interval of the SCF estimates). D. The bottom left panel shows the trends in aggregate sales of S Corporations. The x-axis represents years, ranging from 1985 to 2025 in 5-year intervals. The y-axis shows sales volume in trillions of nominal dollars, with values ranging from 0 to 20 trillion dollars. The graph features two solid lines: a green line with square markers every 3 years—representing the aggregate private business sales from S Corporations in the SCF—which begins at approximately (1988, 1.4 trillion dollars) on the x-y coordinates, and ends at about (2021, 8.4 trillion dollars). The green line is surrounded by a light green shaded area, which represents a 95% confidence interval. The red line with no markers represents the aggregate private business sales from S Corporations in the IBD. This red line starts at approximately (1988, 1.3 trillion dollars) and ends at about (2021, 9.7 trillion dollars). Both lines show an overall increasing trend from 1988 to 2021, with some fluctuations. The two lines generally appear to be about the same, and the red line is typically contained in the green shaded area (the confidence interval of the SCF estimates). E. The bottom right panel shows the trends in aggregate sales of partnerships. The x-axis represents years, ranging from 1985 to 2025 in 5-year intervals. The y-axis shows sales volume in trillions of nominal dollars, with values ranging from 0 to 20 trillion dollars. The graph features two solid lines: a green line with square markers every 3 years—representing the aggregate private business sales from partnerships in the SCF—which begins at approximately (1988, 0.8 trillion dollars) on the x-y coordinates, and ends at about (2021, 9.4 trillion dollars). The green line is surrounded by a light green shaded area, which represents a 95% confidence interval. The red line with no markers represents the aggregate private business sales from partnerships in the IBD. This red line starts at approximately (1988, 0.5 trillion dollars) and ends at about (2021, 7.5 trillion dollars). Both lines show an overall increasing trend from 1988 to 2021, with some fluctuations. The two lines generally appear to be about the same, and the red line is typically contained in the green shaded area (the confidence interval of the SCF estimates).

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Figure 2: Aggregate net income in SCF and IBD
(a) All pass-through
(b) Sole proprietors (Sch. C)
(c) S Corporations
(d) Partnerships
Note: author’s calculations from Board of Governors of the Federal Reserve System, Survey of Consumer Finances (SCF) and Statistics of Income, Internal Revenue Service, Integrated Business Database (IBD) and Individual file (INSOLE). Blue lines plot aggregate net income from SCF business section. Red dashed lines are tax return aggregates after adjustments for underreporting (adjustments as in Bhandari et al., 2020b). In panel (d), adjustment #1 re-creates the Bhandari et al., 2020b but adds other sources of business income that flows to households, in line with a “net income” concept. Adjustment #2 augments underreporting as in Guyton et al., 2021 and adds half of flows to estates and trusts. Adjustment #3 uses partnership profits reported in the INSOLE data from individual tax returns (adjusted as in Bhandari et al., 2020b) adds other sources of business income that flows to households, and retains half of flows to estates and trusts as in version 2. The dashed red line in panel (a) is the sum of the dashed red lines in panels (a), (b), and (c).

A. The upper left panel shows the trends in aggregate private pass-through business net income. The x-axis represents years, ranging from 1985 to 2025 in 5-year intervals. The y-axis shows income in trillions of nominal dollars, with values ranging from 0 to 3.5 trillion dollars. Two lines are plotted: aggregate net income from the SCF (Blue line), which begins in 1988 near 0.4 trillion dollars, shows a notable increase until 2006 (to about 2.1 trillion) then declines to 1.5 trillion in 2009 and 2012, before showing a notable increase to 3 trillion in 2021. The SCF aggregate is surrounded by a light blue shaded area representing a 95% confidence interval. The dashed orange line with no markers represents the aggregate private pass-through business net income in the IBD excluding financial income that these businesses pass along to their owners. It begins in 1988 near 0.4 trillion dollars, shows a notable increase until 2007 (to about 1.1 trillion) then declines to 0.8 trillion in 2009, before showing a notable increase to about 2.2 trillion in 2021. B. The following 3 panels describe three different types of private businesses that make up the aggregate lines from the upper left panel. C. The upper right panel shows the trends in aggregate Schedule C income. The x-axis represents years, ranging from 1985 to 2025 in 5-year intervals. The y-axis shows income in trillions of nominal dollars, with values ranging from 0 to 0.8 trillion dollars. Three lines are plotted: a light blue aggregate net income from the SCF, which begins in 1988 near 0.2 trillion dollars and increases to 0.3 trillion by 2003. A darker blue line begins in 2006, showing aggregate net income from the SCF based on a different SCF question. The dark blue line begins near 0.5 trillion in 2006 and declines to 0.4 trillion in 2012, increasing to near 0.7 trillion by 2021. The SCF aggregate is surrounded by a light blue shaded area representing a 95% confidence interval. The dashed orange line with no markers represents the aggregate Schedule C income from sole proprietors in the IBD begins in 1988 near 0.25 trillion dollars, steadily increases to about 0.8 trillion in 2021. D. The bottom left panel shows the trends in aggregate S Corporations net income. The x-axis represents years, ranging from 1985 to 2025 in 5-year intervals. The y-axis shows income in trillions of nominal dollars, with values ranging from 0 to 1.2 trillion dollars. Two lines are plotted: a blue line showing aggregate S Corporation net income from the SCF beginning in 1988 near 0.1 trillion, increasing through 2006 to 0.6 trillion, declining in 2009 to 0.5 trillion, remaining around 0.5 until increasing to 0.7 trillion in 2018, and 0.8 trillion in 2021. The SCF aggregate is surrounded by a light blue shaded area representing a 95% confidence interval. The dashed orange line with no markers represents the aggregate S Corporations net income from the IBD begins in 1988 near 0.1 trillion dollars, increasing through 2006 to 0.35 trillion, declining in 2009 to 0.25 trillion, then steadily increasing to 0.9 trillion in 2021. E. The bottom left panel shows the trends in aggregate net income from partnerships. The x-axis represents years, ranging from 1985 to 2025 in 5-year intervals. The y-axis shows income in trillions of nominal dollars, with values ranging from 0 to 2 trillion dollars. Four lines are plotted. The first is a blue line showing aggregate partnerships net income from the SCF beginning in 1988 near 0.1 trillion, increasing through 2006 to 1 trillion, declining in 2009 to 0.5 trillion, and increasing unevenly to 1.5 trillion in 2021. The SCF aggregate is surrounded by a light blue shaded area representing a 95% confidence interval. Two red lines and two orange with no markers represent four different estimates of aggregate partnership net income from the IBD beginning. The first estimate is a red solid line, representing profits from the INSOLE data, beginning in 1992 at around 0.1 and steadily increases to about 0.35 trillion in 2021. A red dashed line represents alternate profits from the INSOLE data, beginning in 1992 at around 0.2 and steadily increases to about 0.65 trillion in 2021. A orange solid line, representing profits from the IBD data that flow to individuals (as estimated in a previous paper) beginning in 1988 at around 0and steadily increases to about 0.3 trillion in 2021. An orange dashed line represents alternate profits from the IBD data, beginning in 1988 at around 0 and steadily increases to about 0.5 trillion in 2021.

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Figure 3: Predicted aggregate valuations
(a) Predicted aggregate valuations
(b) Predicted aggregate valuations—sales only
Note: author’s calculations from Survey of Consumer Finances and data from Campbell and Robbins, 2025. Solid blue line is SCF aggregate valuation of all pass-through actively-managed private businesses (organization types: sole proprietorship, partnership, S Corporation, or LLC, where solo-owned LLCs are mapped to sole prop tax filing status and multiple-owner LLCs are mapped to partnership filing status). Solid red line is the predicted value for these businesses, using equation 1 and multiples of value-to-sales and value-to-income—which vary by business tax filing status—from figure 3 of Campbell and Robbins, 2025. The time series is shorter than the full SCF time series due to the availability of the multiples from Campbell and Robbins, 2025. Panel (b) is predicted using only value-to-sales multiples.

Figure 3 is a 2-paneled figure A. The left-hand panel graph compares SCF (Survey of Consumer Finances) self-reported values with model-predicted values from 1998 to 2022. The X-axis represents years from 2000 to 2020 in 5-year intervals. The Y-axis represents values in trillions of nominal dollars, ranging from 0 to 20 trillion, with major tick marks at 5, 10, 15, and 20 trillion. The graph contains two lines: the SCF self-reported values (Blue line with square markers, begins around 3 trillion dollars in 1998, shows a steady increase over time, ends at approximately 21 trillion dollars in 2022. The second line shows values predicted form a model (red line with circle markers), which also begins around 4.5 trillion dollars in 1998, follows a similar trend to the self-reported values, but with slight variations, ends at about 21 trillion dollars in 2022. Both lines demonstrate an overall upward trend, with the steepest increase occurring between 2015 and 2022. The model-predicted values closely track the self-reported values, with minor deviations throughout the period. The biggest gap is in 2016. B. The right-hand panel graph compares SCF (Survey of Consumer Finances) self-reported values with model-predicted values from 1998 to 2022. The model in this figure is different from that in the left-hand panel. The X-axis represents years from 2000 to 2020 in 5-year intervals. The Y-axis represents values in trillions of nominal dollars, ranging from 0 to 20 trillion, with major tick marks at 5, 10, 15, and 20 trillion. The graph contains two lines: the SCF self-reported values (Blue line with square markers, begins around 3 trillion dollars in 1998, shows a steady increase over time, ends at approximately 22 trillion dollars in 2022. The second line shows values predicted form a model (red line with circle markers), which also begins around 4.5 trillion dollars in 1998, follows a similar trend to the self-reported values, but with slight variations, ends at about 21 trillion dollars in 2022. Both lines demonstrate an overall upward trend, with the steepest increase occurring between 2015 and 2022. The model-predicted values closely track the self-reported values, with minor deviations throughout the period. The biggest gap is in 2016 and 2019.

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Figure 4: Yields, by type
(a) Income yields
(b) Capital gains yields
Note: author’s calculations from SCF and CRSP/Compustat data. These figures plot income yields (R_t^inc, in panel 4a) based on equation 2, and capital gains yields (R̃_t + 3^kg, in panel 4b) based on equation 3. R_t^inc are also found in appendix table 1 columns 3, 4, and 5, and R̃_t + 3^kg are also found in appendix table 1 columns 6 and 7. In panel (b), there is no 1989 return that can be calculated, as it is the first year in the time series. Returns calculated between 1989 and 1992, for example, are plotted as 1992 on the x-axis.

Figure 4 is a two-paneled figure. A. The left-hand panel plots the income yield from three sources: Compustat (orange line with circle markers), and two from the SCF: a black dashed line with star markers, and a black dash-dotted line with star markers. The X-axis runs from 1990 to 2025 in 5-year intervals. The Y-axis represents income yield (multiplied by 100), ranging from 0 to 15 with major tick marks at 0, 5, 10, and 15. The orange line always lies above the black dash-dotted line with star markers, except for 2001 when the orange circle is on top of the black star. The orange line typically lies above the black dashed line with star markers except for 1998, 2001, and 2016. B. The right-hand panel plots the capital gain yield from two sources: Compustat (orange solid line with star markers), and from the SCF: a black solid line with star markers. The X-axis runs from 1990 to 2025 in 5-year intervals. The Y-axis represents income yield (multiplied by 100), ranging from -10 to 30 with major tick marks at -10, 0, 10, 20, and 30. The orange line lies above the black line except for the 2004, 2007, and 2010 years and then again in 2016.

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Figure 5: Aggregate overall business return: SCF private, Compustat public business
Note: author’s calculations from SCF and CRSP/Compustat data. Figure plots overall rates of return for SCF private business and Compustat using equations 2 and 3, as advocated in Bhandari et al., 2020b. Orange line is the sum of Compustat income yield and annualized 3-year capital gains (appendix table 1, columns 5 and 8, respectively). Black lines add labor-adjusted SCF business income yields to SCF annualized capital gains (appendix table 1 columns 2, 3, or 4, and column 6).

Figure 5 plots the overall rate of return from public firms in Compustat (the orange line with circle markers), and two from the SCF: a black dashed line with star markers, and a black dash-dotted line with star markers. The X-axis runs from 1990 to 2025 in 5-year intervals. The Y-axis represents the overall yield, ranging from 0 to 0.4 with major tick marks at 0, 0.1, 0.2, 0.3 and 0.4. The orange line lies above the black line except for the 2004, 2007, and 2010 years and then again in 2016 (when it lies above one of the two black lines).

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Figure A.1: Rate of return on S&P 500 firms
Note: author’s calculations from CRSP/Compustat data. Figure plots average annualized 3-year returns and 1-year return.

Figure A.1 plots two rates of return from public firms in the S&P 500 in Compustat: a 1 year return (gold dotted line), and an annualized 3-year return (pink line). The X-axis runs from 1985 to 2025 in 5-year intervals. The Y-axis represents the overall yield, ranging from -0.4 to 0.3. The gold line is more volatile from year to year relative to the pink line.

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Figure A.2: Aggregate overall business return: SCF private, Compustat public business
(a) Private firms, by labor adjustment, and public firms
(b) Private firms, by legal organization
Note: author’s calculations from SCF and CRSP/Compustat data. Figure plots overall rates of return for SCF private business and Compustat as in original Moskowitz and Vissing-Jørgensen, 2002 and Kartashova, 2014. Panel A includes the baseline labor adjustment for wages only (as in Moskowitz and Vissing-Jørgensen, 2002 in solid blue line) and alternate labor adjustments as in Saez and Zucman, 2020 and Smith et al., 2023. In panel A, SCF aggregate market values augmented with external data on IPOs and M&A are used. In panel B, non-corporate organizational forms include partnerships, sole proprietorships, and LLCs; corporate organizational forms include both C and S Corporations. Panel B wage adjustment accounts for wage labor only (as in Moskowitz and Vissing-Jørgensen, 2002.

Figure A.2 is a two-paneled figure. A. The left-hand panel plots the rate of return from 4 sources: Compustat (solid red line), and three from the SCF: a blue dashed line with star markers, and a blue dashed line with star markers, and a blue dotted line with circle markers. The X-axis runs from 1990 to 2025 in 5-year intervals. The Y-axis represents rate of return ranging from 0 to 0.3. The red line lies above the blue lines in the 1991, 1994, and 1997 years, then the red line is below the blue lines in 2000, 2003, 2006. In 2009 they are all about the same (slightly below zero). The red line then alternates being above and below the blue lines: in 2012 it is above, in 2015 it is below, in 2018 it is above and 2021 it is below. B. The right-hand panel decomposes the dotted blue line from the left hand panel: it is replicated as a solid blue line in this right-hand panel, and decomposed into the return from private corporations (green dashed line) and non-corporate private businesses (green dash dotted line). Both green lines basically track the blue line, meaning that neither one drives the private returns over this period.

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Figure A.3: Replication of Bhandari et al., 2020b
(a) All pass through
(b) Sole proprietorships
(c) S Corporations
(d) Partnerships
Note: author’s calculations from Board of Governors of the Federal Reserve System, Survey of Consumer Finances (SCF) and Statistics of Income, Internal Revenue Service, Integrated Business Database (IBD) as in Bhandari et al., 2020b). In panel A.3d, ⋆ denotes an estimate of business profits from partnerships to individuals (this concept is not reported in the IBD, so Bhandari et al., 2020b estimate it).

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Figure A.4: Aggregate business and capital income: SCF income section and INSOLE personal income tax filings
(a) All: pass-though business, capital income
(b) Pass-though business income (Sch. C and E)
(c) Capital income (incl. cap. gains)
(d) Capital income (excl. cap. gains)
Note: author’s calculations from Survey of Consumer Finances and Statistics of Income Individual and Sole Proprietor INSOLE data and PUF data. Light blue line plots aggregate income from SCF income section (Section T). Red lines plot the aggregates from the INSOLE and PUF files. In panel A.4a, dotted red line is aggregate Schedule C and E income (ordinary business income) and capital income including capital gains from individual tax filings, and the red solid line augments these Schedule C and E income aggregates for underreporting (as in Bhandari et al., 2020b). Panel A.4b repeats panel A.4a but includes only Sch. E and C business income. The bottom panels plot capital income (taxable interest, non-taxable interest, and dividends) with and without capital gains (panels A.4c and A.4d, respectively).

Figure A.4 plots aggregate Schedule C and E income in the SCF (blue solid line) and the INSOLE file from SOI (orange line) and an under-reporting adjusted estimate of INSOLE file from SOI (the solid brown line). The blue line begins in 1988 at around 0.4 trillion, increasing to 1.2 trillion in 2006, falling to 1.05 trillion in 2009, and then steadily increasing to 1.8 trillion in 2018. The orange line begins in 1989 at 0.2 trillion, increasing to 0.7 trillion in 2006, falling to 0.6 trillion in 2009, and then steadily increasing to 1 trillion in 2018. The brown line begins in 1989 at 0.4 trillion, increasing to 1 trillion in 2006, falling to 0.8 trillion in 2009, and then steadily increasing to 1.4 trillion in 2018.

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Figure A.5: Share of financial income reported by owners of partnerships in SCF
Note: author’s calculations from SCF data. Figure plots share of capital gains (pink line) and capital gains plus dividends, interest and rent (brown line) that owners of SCF partnerships later report in Section T income section.

Figure A.5 plots the share of portfolio income in the SCF the flows to owners of private partnerships. There are two lines for the share of portfolio income: the gold line is the share of interest, dividends, and capital gains that are reported by owners of partnerships in the SCF, and the pink line is the share of capital gains only. The gold line is about 0.2 to 0.3 (20 to 30%) in 1989-1998 surveys, then increases to 0.45 by 2013 survey, remaining at that level until falling to 35% in 2022 survey. The pink line begins around 0.4 in the 1989 survey, falls to 0.2, then increases to around 0.3 until 2001, increases to 0.4 by 2007, then 0.75 in 2010, and 0.5 in 2013, 2016 and 2019, before falling to 35% in 2022 survey.

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Figure A.6: Predicted aggregate valuations
Note: author’s calculations from Survey of Consumer Finances and data from CRSP, 2025 and Compustat, 2025). Solid line is SCF aggregate (for active businesses with industry codes only), and dashed blue lines are predicted from equation 6.

Figure A.6 plots the compares SCF (Survey of Consumer Finances) self-reported values with model-predicted values from 1989 to 2022 surveys. The X-axis represents years from 1990 to 2025 in 5-year intervals. The Y-axis represents values in trillions of nominal dollars, ranging from 0 to 25 trillion. The graph contains one solid blue line with square markers: the SCF self-reported values, which begins around 2.5 trillion dollars in 1989, shows a steady increase over time, ends at approximately 21 trillion dollars in 2022. Predicted values form 3 models are shown dashed and dotted lines. A blue dashed line shows values predicted from a model, which also begins around 2.5 trillion dollars in 1989, follows a similar trend to the self-reported values (solid blue line), but with slight variations, ends at about 22 trillion dollars in 2022. A dotted blue line from a second model follows the dashed blue line, sitting slightly above it in the figure. A black dotted line shows a third model prediction and sits above both the blue dashed and dotted lines in all years except the 1992 survey. All lines demonstrate an overall upward trend, with a local peak around 2007 before falling in 2009 and generally increasing after that. The model-predicted values closely track the self-reported values, with minor deviations throughout the period. The biggest gap is in 2016..

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