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Trump tax plan: the data says both middle class and rich bullish

Trump tax plan: the data says both middle class and rich bullish

Framing tax reform as a boon for the middle class, as President Trump has done, is smart political messaging. Just over half (52 percent) of the middle class expect Trump’s economic policies to help “people like them,” as do 62 percent of the upper class. Only half as many (27 percent) of the poor say the same.

But first tax reform has to happen, and few think it will. Just 19 percent of adults think it is “extremely” or “very” likely Congress will pass such legislation this year. Fewer than one in 5 people (16 percent) expect their taxes to get lower in the next year; most expect the amount of federal taxes they pay to stay the same (42 percent) or get higher (39 percent).

These data come from SurveyMonkey’s most recent Economic Confidence survey, conducted from October 2-10 among 11,474 respondents.

Federal tax changes

Those who identify as “poor” are the least likely to expect that their taxes will get lower (12 percent) and the most likely to expect that their taxes will get higher (52 percent) in the next year. The one percent who identify as “upper class” are the most likely to expect that their taxes will get lower (35 percent) and the least likely to expect that their taxes will get higher (25 percent) in the next year. (One benefit of having more than 11,000 respondents, is we can look into the actual as well as the proverbial “1%.”) Those identifying as part of the “middle class” fall directly in the middle, with 17 percent expecting their taxes to fall in the next year and twice that many (35 percent) expecting their taxes to rise.

The middle class is the largest socio-economic group in the U.S.—40 percent of people self-identify as middle class rather than poor, working class, upper middle class, or upper class. These folks are, as expected, middle-income: 59 percent live in households with incomes between $30,000 and $99,999, with about a quarter (24 percent) falling in the $50,000 to $74,999 bracket. According to the U.S. Census Bureau, the median household income in 2016 was $59,039.

Those who identify as members of the middle class are more likely than those both above and below them on the socio-economic ladder to care about tax reform. A full 25 percent of the middle class single out “taxes and government spending” as the biggest economic problem facing the country today, significantly higher than the 14 percent of the poor and 15 percent of the upper class who say the same. By promising tax cuts that will benefit the middle class, Trump is targeting the one issue that matters more to them than anyone else.

Biggest economic problem facing U.S.

Nevertheless, our survey results show that those in the middle class are doing pretty well relative to their peers. SurveyMonkey’s Economic Confidence Index is a measure that combines responses to five survey questions about how respondents are doing financially now compared to last year, and how they expect to be doing in the coming years relative to now. The overall index value for the month of October was 57 on a scale from 0 to 100, indicating a quietly optimistic economic outlook. Among the middle class, the index score was a bit higher—62—much better than the score for those who identify as poor (41) or working class (53) but falling short of the score among those who make up the upper middle class (66) or the upper class (64).

A third of the middle class (33 percent) say they are better off financially than they were a year ago, significantly better than the 12 percent of the poor who say the same but not nearly as good as the 47 percent of the upper class who also say they are better off. Although the economy has improved in the past year, with unemployment falling and the stock market reaching record highs, these improvements clearly haven’t affected everyone equally.

Those identifying as poor are the most pessimistic about gains in the stock market:  57 percent say that neither they nor most Americans will benefit from gains in the stock market, and another 22 percent say that most Americans will benefit but they will not. On the other hand, those in the upper class are the most confident: 32 percent say that both they and most Americans will benefit from gains in the stock market, though another 43 percent acknowledge that they expect to benefit though most Americans will not.

Opinions on who benefits from stock market gains

Those in the middle class are neither totally optimistic nor pessimistic, but they have more of a collective viewpoint than other groups: 43 percent say that both they and most Americans will benefit from gains in the stock market, while another 32 percent say that neither they nor most Americans will benefit.

In terms of Trump’s ability to help “people like them,” these data show that the middle class is looking forward to tax reform instead of relying on stock market gains to drive their own economic growth.