In CNN’s Michigan poll, Trump is ahead by 21 points among working-class (noncollege) voters, while Biden is ahead by 10 points among college-educated voters. But Michigan is an overwhelmingly working-class state—according to States of Change projections, Michigan should be around 71 percent working-class eligible voters in 2024—so this a very unfavorable pattern for the Democrats. Compared to Biden’s successful effort in 2020, the fall off in working-class support suggested here is precipitous. According to States of Change data, Biden lost these voters by a mere 2 points in 2020, so the current deficit of 21 points represents a massive 19-point swing against him. In contrast, the college-educated swing against him in the CNN poll looks quite small: a 12-point advantage among these voters in 2020, compared to a 10-point advantage now.
- Date Posted:
- December 14, 2023
In a nutshell: Auten and Splinter erroneously allocated a large and growing amount of untaxed business and capital income to the bottom of the distribution due to several clear and long-understood mistakes in their methodology. Business income is one of the most highly concentrated forms of income, and its concentration has sharply increased since the 1960s. The top 1% of adult individuals earn about 55% of it according to tax data today. But AS assume that untaxed business income is very equally distributed. According to them, the top 1% earns only around 15% of it (Figure 1). In other words, the observable income of doctors’ and dentist practices, retail chains, real estate firms, oil and gas partnerships, law firms, etc., might be extremely concentrated, but their untaxed income, according to AS, is much more equally distributed. Is this realistic? In recent years about 50%-60% of untaxed business income corresponds to tax evasion; the rest is due to provisions in the tax code that reduce taxable income below economic income. The key provisions are the full expensing of investment for certain investments and generous depreciation schedules for non-expensed assets. These provisions accrue overwhelmingly to the very top of the distribution – owners of capital-intensive closely held businesses. As for tax evasion, there is no evidence to support the assumption made by AS that it is concentrated at the bottom of the distribution.