Do the really rich support Obama?

A commenter points me to a post by Robert Frank, The Rich Support McCain, the Super-Rich Support Obama:

More than three quarters of those worth $1 million to $10 million plan to vote for Sen. McCain. Only 15% plan to vote for Sen. Obama (the rest are undecided). Of those worth more than $30 million, two-thirds support Sen. Obama, while one third support Sen. McCain.
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Among Lower Richistani's, 88% cited tax policies as being "important" in making their decision. Only 11% cited the environment, 22% cited health care and 45% cited social issues.

Among the Upper Richistani's supporting Sen. Obama, tax policies ranked last, with only 16% citing them as important. "Social issues" ranked first, with "policies dealing with wars" ranking second (67%) and Supreme Court nominations and health-care issues ranking next.

This is a survey of 493 families, so one wonders about the power of the sample size as well as representativeness. But, the difference between the two groups is very large. Does this pass the smell test? To some extent I think it does when it is noted that social issues is one area where the wealthy tend to be much more libertarian than the American public, on average. The same magazine which reported that most CEOs support John McCain also noted that 4 years ago executives preferred that Republicans stay away from social issues.

In the $1-10 million bracket it seems plausible that tax policy could have significant effect on lifestyle in terms of consumption, as well as the ability to leverage capital so one could ascend up the class ladder.* On the other hand, it may be that in the range of tens of millions of dollars an individual gets very little marginal return on $5 million dollars here and $5 million dollars there. With the lack of constraint on personal consumption due to the vicissitudes of tax policy, social issues would naturally come to the fore. But, one also wonders if the focus on war reflects the macroeconomic concerns of the super-rich. That is, they are relatively buffered from year-to-year changes in tax policy in terms of their lifestyle, but they worry disproportionately about the instability which might emerge out of foreign expansion. In other words if the system collapses or fails the super-rich have the most lose despite being buffered from year-to-year changes in tax policy by their enormous wealth.

* A higher tax bill might mean that one purchases an extra vacation home in the United States, as opposed to Switzerland. And a higher tax bill might reduce the discretionary capital which one might use to enter into riskier, but high yield, investments, that might lead to more wealth and therefore no concern about the price differences between a home in Colorado vs. Switzerland.

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The sample size of the survey does concern me to a degree (I generally prefer sample sizes approaching or going past the 1200 mark, but that's just me). Even so, if there's any conclusion to draw from the respondents answers is that the super-rich are less concerned with their tax bill since, more often than not, they are able to pay their taxes without a problem. For the merely 'rich' (which I get a kick out of as someone who makes less than $40k a year in a small business that maybe pulls down $250k in a good year, say 1999 or so) their concern over their tax bill strikes me as laughable since they too, more often than not, are able to pay their tax bill, in full, on April 15th. My parents, co-owners of said small business, usually have to stretch it out over the rest of the year so they can make payroll and sale taxes while still paying their two and a half employees, keeping items in stock and generally have the money to run the business.
I can get the mindset of those in the $1 to $10 million bracket but think that it's wrong. For families that don't have an income even close to that bracket, they either have to leverage their income against an ever-growing debt on credit cards, loans and mortgages or live within their means, which causes some tightening of the belts, so to speak. A possible answer to why the 'merely rich' place such importance on tax policy is because they don't believe in tightening their belts anymore. Thus they would support a tax policy that favored either maintaining their current taxes or even lowering them. Personally, I'd rather see the tax on people like myself (greedy bastard that I am) lowered before the merely rich see the same lowering of their taxes. Nothing against the lower class rich, but they can absorb such tax hits far better than a family or individual making less than a $100k per year. I just wish they would remember that before going to the polls.

The word "millionaire" started to be used in the 20s, and inflation has been 12x since then. Someone with a house in a good neighborhood and a successful small business will be a millionaire today (net worth) without really being more than comfortable.

There was a recent flap about where middle class ends and rich begins. It's very relative question, but I'd say that $20-30 million net worth is a good cutoff between upper middle class and rich.

By John Emerson (not verified) on 20 Oct 2008 #permalink

"Of those worth more than $30 million, two-thirds support Sen. Obama, while one third support Sen. McCain ... and health-care issues ranking next."

Neat, this is exactly what I suspected in the last thread.

And here's why: I had read this paper from last year suggesting that CEOs (the one rich people group identified in favor of McCain) actually represent a negligible portion of the super-rich (top 0.01%-0.0001%). Wall Street investors utterly dwarf CEOs, and Obama's crazy campaign contributions suggested he had this group's backing: "Democrats garnered 57 percent of the contributions from the securities and investment industry". Also, while I realize the average doctor and lawyer aren't super-rich, the authors believe some significant fraction of the super-rich are exceptional members of these increasingly Democratic castes.

By Jason Malloy (not verified) on 20 Oct 2008 #permalink

the authors believe some significant fraction of the super-rich are exceptional members of these increasingly Democratic castes.

yes. the income/wealth isn't normally distributed. that's why mean and median income can be very different. winner-take-all-skewing.

Have you read the book The Millionaire Next Door?

It's a survey of the lifestyles of American millionaires, most of whom would fit into the 1-10 million dollar category.

What made the book such a bestseller of course was that most of these people had "ordinary" jobs and didn't earn all that much, I think upper 5 figures to lower 6 figures.

A lot of them owned small businesses, were very thrifty, and lead low consumption lifestyles. They focused on lowering their annual realized income by investing as much of their income as possible and spending as little as possible, and steadily, over the years, they became millionaires.

In the book, the author mentioned that these millionaires tended to worry about taxes. Specifically, they were worried that there would be changes to tax law which would tax their *net worth* (in the millions of dollars) and not just income (which wasn't all that high).

I think that this year is not a good year for this kind of study. The Republican party has been battered by a war that hasn't gone that well combined with apparently is the worst financial crisis in 70 years or so, and has nominated a weak, old Presidential candidate with doubtful health and a very minimally qualified VP candidate with extreme views. A lot of Republicans have bailed out.

If this election doesn't change the electoral map permanently, and if the Republicans reconstruct their party, the 2012 patterns will be more normal.

By John Emerson (not verified) on 20 Oct 2008 #permalink