The conventional wisdom going into tonight’s presidential debate is that Harris has the Upper Middle sewn up while Trump has built a coalition of aggrieved working class voters and tax-averse billionaires. But that’s not exactly the case. The “petit bourgeoisie,” the richest people not-so-rich towns – many of them entrepreneurs or business owners – swing hard Trump, a fact documented in Arlie Hochschild’s new book Stolen Pride. This goes a long way to explaining Harris’s proposed 10x increase in startup deductions announced last week. Apparently, her staff is paying attention to layoffs, business starts, and entrepreneurship through acquisition.
She is trying to sew up the Upper Middle. She’s just not there yet.
As it stands, new small businesses can deduct $5K on their taxes. Harris proposes letting them deduct $50K in order to make the starting up process a bit easier. That makes a ton of sense as an economic priority given that, prior to the pandemic, the fraction of new businesses as percent of all US businesses had been cut in half since 1978, a decline seen across 50 states and just about every sector. Between 2009 and 2019, roughly 400K new businesses launched annually. That’s feeble. Interestingly, the decline in entrepreneurship was even strong among college grads, dropping from roughly 12% in 1985 to 5% in 2014.
Though the pandemic served as an accidental corrective to the tune of 24% (conservatively half of those businesses sold candles), the numbers remain poor. That’s particularly worrying right now because (as we’ve covered before) there’s an assault on the exact sort of people (let’s call them the Unfounding Fathers) who would have, were they part of a previous generation, run their own business. A third of layoffs in 2023 targeted middle managers, up 10% over three years amid stagnating wages. These kind of lower management roles constitute 30% or corporate payroll and are responsible, according to Harvard Business Review research, for $3T in corporate waste annually. They aren’t coming all they way back. Which means more of those Upper Middle voters Harris counts on are likely to become entrepreneurs. We’ve gotta do something and there’s a huge and obvious opportunity in front of us. [2]
