The Republican tax plan makes it more rewarding to do business in the U.S., whether as a corporation or as a part-owner of an LLC or similar pass-through structure. The proposal does not seem to have caught on with young people. Why not? I’m reading a book by a psychology professor who studies American generations. This one is about Americans born since the mid-1990. From iGen:
As it turns out, iGen’ers are actually less likely to want to own their own business than Boomers and GenX’ers were at the same age, continuing a trend started by Millennials (see Figure 7.4). Just as they are cautious about driving, drinking, and dating, iGen’ers are cautious about going into business for themselves.
Entering college students show the same trend: in 2016, only 37% said that “becoming successful in a business of my own” was important, down from 50% in 1984 (adjusted for relative centrality). So, compared to GenX college students, iGen’ers are less likely to be drawn to entrepreneurship. These beliefs are affecting actual behavior. A Wall Street Journal analysis of Federal Reserve data found that only 3.6% of households headed by adults younger than 30 owned at least part of a private company in 2013, down from 10.6% in 1989. All the talk about the young generation being attracted to entrepreneurship turns out to be just that—talk.
So it makes sense that they don’t like business tax cuts if nobody among their peer group is involved in business, except as a wage slave.
[Of course, one could argue that a business tax cut makes it more likely that iGeners will have W-2 jobs to begin with and that jobs will pay more because global business will be more enthusiastic about headquartering and operating in the U.S. But I wouldn’t expect the average American to see things that way. People seem to evaluate tax policy on the theory that everyone’s behavior will remain unchanged after a massive change to tax rates.]