Voting with Their Wallets: Wealthy Taxpayers Backed Obama
As Republican ratchet up their cries of "socialism" regarding President Obama's plan to return upper income tax rates to Clinton-era levels beginning in 2011, ABC offered a comic profile of Americans earning over $250,000 a year and their schemes to avoid the higher bills. Of course, lost in this propaganda-fest are two inconvenient truths. First, the wealthy, along with most everyone else, did very well indeed during the 1990's. Second, those wealth Americans - those with family incomes topping a quarter million dollars per year - voted for Barack Obama for President.
As I first noted just after the election in November, exit polls revealed that Barack Obama beat John McCain 52% to 46% among those earning over $200,000 annually:
In 2004, the same group overwhelmingly backed George W. Bush over John Kerry by 63% to 35%. (Unfortunately, the exit polls do not show more granularity above the $200k threshold. In all likelihood, McCain did much better among the top 1% of earners who would have received 58% of the benefits of his tax cut.)
Given the prevailing conservative mythology, upper class taxpayers' support for candidate Obama is striking, if not a surprise.
Not a surprise, that is, because President Obama's budget proposal delivers on his campaign pledge to provide tax cuts to 95% of American families while rolling back the Bush tax cuts for those earning over $250,000 a year. As Mark Penn noted in the Politico after the election:
"Barack Obama promised he would lower taxes for 95 percent of Americans and presumably raise them for the 5 percent who benefited most under President Bush's tax policies. But, remarkably, the most affluent 5 percent supported Obama and that was perhaps the key to his victory last week."
All of which raises the question: why?
No doubt, Bush fatigue played a part for wealthier Americans, as for everyone else. And like John Kerry, Barack Obama won among the most highly educated Americans, a proxy of sorts for income. (While both Democrats carried the one-sixth of Americans with post-graduate education, George W. Bush in 2004 unlike John McCain won among college graduates.)
But a more basic answer may be this. Given the huge windfall they experienced under George W. Bush, many wealthier Americans likely concluded they could easily afford the small sacrifices needed to repair the economic devastation Bush and his Republican allies wrought.
And a massive windfall it surely was. As the Center for American Progress noted, the Bush tax cuts delivered a third of their total benefits to the wealthiest 1% of Americans. And to be sure, their payday was staggering. As the Center for Budget and Policy Priorities detailed in 2008, in 2007 millionaires on average pocketed $120,000 from the Bush tax cuts of 2001 and 2003. Those in the top 1% stashed an extra $45,000 a year. As a result, millionaires saw their after-tax incomes rise by 7.6%, while the gains for the middle quintile and bottom 20% of Americans were a paltry 2.3% and 0.4%, respectively.
And as the New York Times detailed in 2006, the 2003 Bush dividend and capital gains tax cuts offered almost nothing to taxpayers earning below $100,000 a year. Instead, those windfalls reduced taxes "on incomes of more than $10 million by an average of about $500,000." As the Times revealed in a jaw-dropping chart, "the top 2 percent of taxpayers, those making more than $200,000, received more than 70% of the increased tax savings from those cuts in investment income." So it should come as no surprise that the income share of the 400 richest Americans doubled over the past decade.
So while ABC delivers it nonsensical analysis of upper-class tax schemes and the Republican Party peddles it lies about small business taxes and looming socialism, a majority of better-off Americans already voted for Barack Obama with their wallets. Perhaps aware of the historical reality that the stock market and the economy overall almost always perform better under Democratic presidents, they apparently followed Harry Truman's famous advice:
"If you want to live like a Republican, vote Democratic."
UPDATE: After being deluged with reader complaints, ABC has posted an update to its story, explaining that "ABC News published a version of this story which some readers felt did not provide a comprehensive enough analysis of Obama's tax code for those families making $250k or more."