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From 1990 to

agreed that "Social Security Trust Fund

IRA garnered 82 percent support

exhaustion will leave [the] system broke and

among investors, with only 10 percent

1997, the percent-

unable to pay benefits."68

opposed. It was particularly popular

age of sharehold-

The young trust government insurance

among investors 30 years of age or

ers listing Social

least. Only 5 percent of Generation X workers

younger (91 percent assent) and

(aged 34 and younger) surveyed by EBRI

among investors with portfolios worth

Security as their

$40,000 and less (87 percent assent).7 0

expected Social Security to be their most

primary antici-

important source of income. Thirty-six per-

cent of them expect the system to be bank-

The PaineWebber/Gallup survey results

pated source of

rupt by the time they retire, and another 64

confirm that stockowners strongly endorse

retirement

percent feel the same about Medicare. But

lower tax rates on investment and tax

income decreased

investors are even more skeptical of Social

breaks to deal with life-cycle events. The

Security. From 1990 to 1997, the percentage

preferences of younger and poorer investors

from 15 to 4.

of shareholders listing the program as their

trend toward liquidity, those of older and

primary anticipated source of retirement

wealthier investors toward lower marginal

income decreased from 15 to 4.6 9

rates on capital gains.

A vast and growing class of shareholders

We find investors and noninvestors sim-

has favorable attitudes toward capital, not

ilarly divided with respect to tax policy. For

because its members have stopped earning

example, in April 1997, the Index of

wages but because their wealth seeking is

Investor Optimism, conducted quarterly by

dual-sourced. They are both workers and

The Gallup Organization for PaineWebber

capitalists, and, during the 1990s, the

Incorporated, surveyed investor preferences

fastest-growing component of their wealth

on tax policy:

was in that humble IRA or 401(k) that kept

growing and growing and growing.

1. By a margin of 75 to 9 percent,

But what has not been known until

investors supported "a significant cut

recently is the degree to which "investment"

in the capital gains tax on the sale of

influences opinion as an independent vari-

homes."

able. Stockholders marry in unusual num-

2. By 66 to 15 percent, investors support-

bers; their mean income is slightly above the

ed "a significant cut in the capital

norm. They are disproportionately white, col-

gains tax on the sale of other invest-

lege educated, and middle-aged. Do their

ment securities, such as stocks and

opinions on taxation merely reflect those

bonds." Support was lowest among

traits? Or does investment help to shape

investors with portfolios of $40,000

them?

and less (54 percent) and highest

From January 20th to 24th, 1999,

among shareholders with investments

Rasmussen Research conducted a 6,400-

of $500,000 or more (82 percent).

person poll that queried respondents not

3. President Clinton's "Hope Scholar-

just on standard demographic variables--

ship" tax credits for higher education

race, sex, age, and income--but also on

received 79 percent assent, with 16 per-

whether they owned more than $5,000

cent opposed. Investors aged 30 and

worth of stocks, bonds, and mutual funds.

younger gave it 88 percent approval.

Respondents were then asked a key ques-

4. The runaway winner among proposed

tion on tax policy: "Do you favor or oppose

tax policies was a proposal "[e]xpand-

a capital-gains tax cut?" Asking that ques-

ing the IRA program to permit penal-

tion rendered it possible to test whether

ty-free withdrawals in order to pay for

investment made workers conscious of

higher education, first-time home pur-

their policy interest as investors. By compar-

chases, medical care, or living expenses

ing the answers among owners and nonown-

while unemployed." This "universal"

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