Now, they’re changing their minds.
Why? Their taxes could go up by millions of dollars if President Biden wins reelection and can enact key elements of his second-term agenda.
Between Trump’s courtroom dramas and the chatter about Biden’s age, it can seem as if the 2024 election is about nothing more than personalities.
The smart money knows better: There are real stakes that will directly impact Americans’ lives. The coming debate over taxes offers a prime example.
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Trump’s rich friends
Nelson Peltz, the billionaire investor who just lost his battle over the direction of Walt Disney Co., prominently apologized after Jan. 6 for his previous support of Trump.
“I’m sorry I did that,” he told CNBC.
Now, he’ll probably do it again, he told the Financial Times .
Peltz hosted a breakfast recently at his mansion in Palm Beach, Fla., for Trump and several fellow billionaires, the Washington Post reported. Steve Wynn, Elon Musk and Isaac Perlmutter, the former chairman of Marvel, all attended.
Rich people who disagree with Trump on policy but support him anyway may be especially common in California. His opposition to abortion and immigration, for example, is unpopular in Silicon Valley, but for many tech executives, concern about high taxes outweighs everything else.
Larry Ellison of Oracle backed former South Carolina Gov. Nikki Haley in the Republican primaries. He is now reportedly moving back to Trump.
Richard and Elizabeth Uihlein, heirs to the Schlitz beer fortune, backed Florida Gov. Ron DeSantis in the primaries. They’re also back with Trump.
The shift comes at an important time for Trump: His campaign committees have much less money than Biden’s. Even if Trump were willing to spend his own money — he spent none in 2020 — his finances are under pressure from court judgments and legal fees.
The coming tax fight
Like everyone else, rich people can have more than one reason for their political choices. Peltz, 81, has said, for example, that he thinks Biden, also 81, is too old to be president.
But one thread runs through much of the wealthy opposition to the president: taxes.
“At the end of 2025, on Dec. 31, all of the individual tax provisions of the 2017 tax bill will expire,” said Howard Gleckman of Washington’s Tax Policy Center. That includes some popular provisions such as the higher standard deduction and lower tax rates for average taxpayers.
The 2017 tax bill reduced taxes so much at the upper end that it was easy for Democrats to portray the bill as a tax cut for the rich, even though it did reduce rates for most taxpayers.
But allowing it to expire “would be cast as a huge tax increase for most American households,” Gleckman said.
Congress will have a limited set of choices:
- Allow all the popular tax breaks to expire and risk the wrath of voters.
- Extend them and cause the federal deficit to balloon by about $3.5 trillion over the following decade. (Both parties have repeatedly allowed huge deficit expansions, but interest rates and near-record debt have changed the calculus.)
- Find ways to offset the cost while preserving tax breaks for average Americans.
Option three is the scenario many ultra-wealthy Americans appear to be worried about.
Targeting the rich
If Congress decides that some or all the cost of renewed a tax cut needs to be offset, which party has the majority and whether the White House is occupied by Trump or Biden will have an enormous impact.
Republicans have had huge difficulty for more than a decade in uniting behind any concrete plan for cutting the federal deficit. Their dilemma has gotten harder to solve as the Republican voter base has become less affluent. Proposals to reduce the cost of big federal benefit programs, which were a GOP hallmark pre-Trump, have fallen out of favor.
A Republican-controlled Congress might not be able to come together on anything other than running up more red ink.
Democrats, by contrast, have mostly agreed on a solution: tax the rich. The two Senate Democrats who opposed upper-income tax increases, Sen. Kyrsten Sinema of Arizona and Joe Manchin III of West Virginia, are both retiring this year.
Biden’s proposed 2024 budget includes tax increases of $4.3 trillion over the next decade, according to Treasury estimates.
- Taxpayers with incomes above $400,000 a year ($450,000 for taxpayers filing jointly) would face a 39.6% tax rate, up from 37%.
- Those with incomes over $1 million a year would see their capital gains taxes increase.
- Private equity firm and hedge fund owners would take a hit. Biden would change the laws on taxing so-called pass-through income, ending provisions that greatly benefit them.
- Taxpayers with stocks, bonds and other capital assets worth over $100 million could also face a new 25% tax on the increase in the value of their holdings, regardless of whether they’ve been sold.
The political dilemma
Biden has already tested out a slogan for this fight:
“No billionaire should pay a lower tax rate than a teacher, a sanitation worker, a nurse!” Biden declared in his State of the Union speech in March. He cited Treasury estimates that America’s billionaires on average pay an effective tax rate of just 8%.
By contrast, Trump seldom talks about taxes. When he was president, he once memorably threw out his text on the subject halfway through a speech, declaring it “boring.”
That difference reflects the two men, but also the politics of the issue: Raising taxes on the very wealthy and large corporations polls well — and not just among Democrats.
The nonpartisan Pew Research Center found last year that about three-quarters of Democrats and more than 4 in 10 Republicans said that they were bothered “a lot” by the feeling that the rich weren’t paying their fair share.
For decades, wealthy Americans have been able to count on their friends in Congress, especially in the Senate, to bottle up popular ideas for upper-income tax hikes. But as both parties have become more populist, that strategy has become less of a sure thing.
Instead, a lot of rich Americans appear to have settled on a different way to hedge their bets: support a fellow billionaire for the White House.
What else you should be reading
The must read: Trump’s fate “may turn on whether he can hold, for seven more months, more support among Black and Hispanic voters” than any Republican in more than six decades, even as he stokes racial resentment among his bas of older, white conservatives, writes political analyst Ronald Brownstein.
Poll of the week: Four in 10 American adults say Jews face a lot of discrimination in our society, and 44% say Muslims face a lot of discrimination, according to a new Pew Research Center survey. The share seeing a lot of discrimination against Jews has doubled in the last three years, Pew finds.
The L.A. Times Special: Newsom and Democratic lawmakers detail first California budget cuts totaling $17 billion.
P.S. On Biden and the economy
How good is Biden’s economic record? It’s good, but Democrats shouldn’t delude themselves into thinking it’s something extraordinary, writes Matthew Yglesias.