Why the super-rich favor Kerry.

Why the super-rich favor Kerry.

Why the super-rich favor Kerry.

Moneybox
Commentary about business and finance.
Oct. 12 2004 4:52 PM

Millionaires for Bush, Billionaires for Kerry

Why the super-rich favor the candidate who will raise their taxes.

Buffett's got money to burn
Buffett's got money to burn

In Fahrenheit 9/11, a tuxedoed President Bush jokes: "This is an impressive crowd—the haves and the have mores. Some people call you the elite. I call you my base."

Assuming they're economically rational creatures, rich people should support Bush. After all, Bush has cut taxes on the rich and promises to cut more, while Kerry vows to raise them. But the reality is clearly more complicated than rich = Bush supporter and poor = Kerry supporter. As Thomas Frank notes in What's the Matter With Kansas, plenty of struggling Great Plains denizens are reliable Republicans. Meanwhile, in many affluent enclaves on the East and West Coast—Bushenfreude hot zones—the rich seem to favor Democrats. And while Billionaires for Bush archly satirizes the Republican Party's efforts to cater to the extremely wealthy, there are plenty of billionaires who are ardently supporting Kerry. (See: Soros, George.)

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Which raises the question: How rich do you have to get before you start favoring Kerry?

While the haves will surely give Bush a majority of their votes this fall, the have-mores might not. In September, the research firm Prince & Associates surveyed 400 people worth more than $1 million for Elite Travelermagazine. (Note to self: Try to get gig writing for this magazine.) The rich folk favored Bush by a 58-42 margin. Not too surprising. But when you break out the numbers, they tell a different story. The petit bourgeoisie millionaires were passionately for Bush: Those worth between $1 million and $10 million favored Bush by a 63-37 margin. But the haute millionaires, those worth more than $10 million, favored Kerry 59-41.

Russ Prince explained the difference by noting that, absurd as it may sound, those with a net worth of merely seven figures don't feel financially secure. "The people with less than $10 million are still very focused on their personal financial situation in the short term," he told the Wall Street Journal,where the results were first published.

Indeed, being a millionaire isn't what it used to be, thanks to inflation and high housing prices. According to this report from Merrill Lynch, there were 2.3 million Americans with financial assets worth more than $1 million in 2003. And if you counted home values, the number of asset millionaires would be several times higher.

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But at some point, millionaires get so rich that they don't really have to worry about how to pay the mortgage, or for that new Bentley. And if you can live off the tax-free interest of your municipal bonds, it really doesn't matter whether the top marginal income tax rate is 33 percent or 39 percent.

On Wall Street, veterans speak of "f***-you money": the nice round figure a guy needs to set himself up for life, buy (and decorate) multiple residences, create trust funds for kids, and still have enough cash to buy expensive toys and pursue new business ventures. At a certain point—somewhere north of $10 million—wealth may become "f*** you and f*** you, Republicans" money. This is the kind of cash that George Soros, Warren Buffett, Peter Lewis, and the 200 business leaders who endorsed Kerry possess. People with such sums don't need to worry about how income or capital gains taxes affect their daily lives. Raise 'em, lower 'em, who cares? They're still going to be disgustingly rich. And so they are free to devote their attention—and resources—to other areas: the environment, education, foreign policy, the Supreme Court, social issues, stem-cell research, the war on drugs, whatever. And it seems that for many of the truly wealthy, focusing on those other issues leads them to favor Kerry over Bush.

Now, the Prince survey is unscientific and small. And depending on where you live, the magic number that signifies true financial freedom varies enormously. On $500,000 a year a person could live like a king in Topeka, Kan., and barely scrape by on the Upper East Side of Manhattan.

But the general thrust of the argument rings true. The specter of plutocrats spending millions of their own hard-earned dollars to elect somebody who wants to raise their taxes is mystifying to the materialists at the Wall Street Journal editorial page and the Club for Growth, who think that man is a purely economic being who lives and dies by marginal tax rates alone. But to many people who have made f***-you money, taxes are a byproduct of wealth, not an obstacle to its creation. It's hard to find anybody who has made $1 billion, or $100 million, or even $50 million complaining about high marginal tax rates. Of all the luxuries massive wealth affords, one of the nicest is not having to worry about tax policy.