- Despite greater media attention polls don’t show support for #tax increases on the rich is stronger than in the past.
- Are Americans paying more attention to #taxes in general or taxing the wealthy in the wake of Occupy Wall Street?
- The public wants a #fairer and simpler #tax system, but it's unclear how they want to #reform the system.
Karlyn Bowman is a senior fellow and Andrew Rugg is a research assistant at the American Enterprise Institute. The views expressed in this article are the authors' and do not necessarily reflect those of any other person or institution.
In this article, Bowman and Rugg discuss the public's opinion about raising taxes on high-income individuals, views about flat tax proposals, and attitudes about how President Obama has handled tax policy.
We begin On the Margin's fourth annual look at public opinion on taxes1 with a short journey down memory lane to the little-known, but impressive, surveys conducted by the Roper Organization for Fortune magazine beginning in 1935. The first Roper/Fortune survey was released shortly after Louisiana Sen. Huey Long launched his "Share the Wealth" campaign designed to spread the nation's wealth by limiting annual incomes and capping inheritances. Fortune's editors wanted to know where the public stood on Long's proposals and began by asking, "Do you believe that the government should allow a man who has investments worth over a million dollars to keep them, subject only to present taxes?" The public split 45 percent to 45 percent. Those whom the in-person interviewers deemed "prosperous" were in favor of allowing millionaires to keep their fortunes 70 to 21 percent, while those the interviewers described as "poor" were opposed 60 to 29 percent. A question in Fortune's second survey explored another aspect of Long's platform by asking people how much money any one person should be allowed to inherit. Fifty-two percent in 1935 said there should be no limit while less than 1 percent put themselves at the other end of the spectrum, stating that people should not be allowed to inherit any money. Sixty percent of the prosperous said there should be no limit, as did a strong plurality of the poor: 47 percent.
The survey business was in its infancy in 1935, but hundreds of questions have been asked about wealth and taxes over the last 75 years. That large collection has many limitations.2 Americans aren't policy experts, and pollsters' questions about highly complex tax issues often produce wildly divergent results. The polls are better suited to revealing the general values that Americans bring to tax policy than to detecting their positions on specific issues. Also, pollsters tend to poll on a topic when it is hot and then drop it when their media partners move on to a new issue, making it impossible to know whether the initial responses persisted. Questions about the issues raised by the Occupy Wall Street (OWS) protest that began in Zuccotti Park in New York City in September 2011, for example, have virtually disappeared from the polls, making it hard to know if people's attitudes about tax fairness have really changed.
This article examines two tax issues that received significant attention in 2011. First, we look at attitudes on taxation of the wealthy after OWS began and put them in historical context. Then we examine views about a flat tax during the months after Republican presidential candidate Herman Cain offered his 999 plan in August 2011 and Republican presidential candidate Rick Perry proposed a 20 percent optional flat tax in October. Finally, we bring Tax Notes' readers up-to-date on how President Obama is faring on taxes in the public's view and whether tax policy is likely to be an important issue in the November election.
Taxing the Rich
Unfortunately, no subsequent polls used questions identical to those Fortune asked. Even if they had, different interviewing and sampling methods would make comparisons tricky. We do have a substantial body of questions about high-income individuals and the taxes they pay. Today, as in the past, most people believe the U.S. tax system benefits the rich. In a February 2012 ABC/Washington Post poll, more than two-thirds of Americans said the current system favors the wealthy. When the Pew Research Center asked people in December 2011 what bothered them most about the tax system, 11 percent said it was the large amount they paid, 28 percent said it was the system's complexity, and 57 percent said it was that wealthy people don't pay their fair share.
Polls taken in late 2011 and early 2012 by major pollsters, including Time, Gallup, CNN, CBS, Bloomberg, AP-GfK/Roper, and McClatchy, all show broad support for increasing taxes on the wealthy. In the September 2011 Time poll taken at the beginning of the OWS protests, for example, 52 percent strongly favored raising taxes on "higher-income people." Eighteen percent somewhat favored that and 28 percent opposed the idea. When questions are asked about "millionaires," there is also general agreement that they should pay more in taxes. In an October 2011 CNN/Opinion Research Corporation poll, 76 percent favored increasing taxes on millionaires. Agreement stretched across partisan lines, with 94 percent of Democrats, 75 percent of independents, and 56 percent of Republicans approving such an increase.
In his State of the Union address in January, Obama invoked tax fairness when he said:
"We need to change our tax code so that people like me, and an awful lot of members of Congress, pay our fair share of taxes. Tax reform should follow the Buffett rule. If you make more than $1 million a year, you should not pay less than 30 percent in taxes."
The president reiterated his support for that concept in his fiscal 2013 budget plan, although he has not outlined a specific proposal to implement it.
Polls conducted after the State of the Union speech showed strong support for the proposed "Buffett rule." A late January United Technology/National Journal poll found that 65 percent favored establishing a new rule that anyone who earns at least $1 million annually must pay at least 30 percent of their income in taxes. A March 2012 Ipsos/Reuters poll, which mentions the Buffett rule by name, shows roughly the same level of support (64 percent). A plurality of Republicans (49 percent) and majorities of Democrats (76 percent) and independents (59 percent) favored the rule.
Questions about the proper level of taxation for people who make more than $250,000 usually show majority support for higher taxes on that group, but the majorities are often smaller than those from questions about millionaires.
Despite the greater media attention on taxing the wealthy in late 2011 and early 2012, the polls do not indicate that public support for tax increases on the rich is significantly stronger than in the past. If anything, piecing together the data we have provides some evidence that public support for such tax increases may be weaker than in the past, although there are few solid trends.
In seven questions asked by the Roper Organization between 1972 and 1992, between 72 and 80 percent said high-income families pay too little in taxes. In 1992 Gallup started asking about whether upper-income people pay too little, too much, or the right amount in federal taxes. Seventy-seven percent said they did pay too little. That response has moved downward since 1992, and in 2012, 62 percent said they paid too little:
Upper-Income People Pay
Too Fair Too
Much in Share of Little in
Federal Federal Federal
Taxes Taxes Taxes
Mar. 1992 4% 16% 77%
Mar. 1993 5% 16% 75%
Apr. 1994 10% 20% 68%
Apr. 1996 9% 20% 68%
Apr. 1999 10% 19% 66%
Apr. 2003 10% 24% 63%
Apr. 2004 9% 24% 63%
Apr. 2005 7% 22% 68%
Apr. 2006 8% 21% 67%
Apr. 2007 9% 21% 66%
Apr. 2008 9% 24% 63%
Apr. 2009 13% 23% 60%
Apr. 2010 15% 26% 55%
Apr. 2011 13% 25% 59%
Apr. 2012 10% 25% 62%
Source: Gallup, Apr. 2011.
Another perspective is provided by Pew. At the beginning of each year, Pew asks people what issues should be a priority for the president and Congress. For the first time this year, Pew asked about tax fairness. Sixty-one percent said it should be considered a top priority, placing it seventh out of 22 issues considered. (Eighty-six percent mentioned the economy, the top issue.) Without an earlier identically worded category, it is impossible to say whether tax fairness is more or less salient than in the past. Tax fairness ranked much higher as a top priority than simplifying taxes, the wording Pew used in its 2011 question (18th of 22 issues) and tax cuts in 2010 (17th of 21 issues).
Pew updated a different question in December 2011 and the results shown below suggest little change in overall attitudes about the federal tax system:
Present Federal Tax System Is
Very Moderately Not Too Fair at
Fair Fair Fair All
1985 2% 41% 31% 24%
1997 3% 42% 31% 23%
2003 4% 47% 32% 16%
2011 (Apr.) 4% 45% 30% 20%
2011 (Dec.) 3% 40% 31% 24%
Sources: For 1985 and 1997, Time/CNN; for 2003, NPR/ Kaiser/Harvard; for Apr. 2011, CNN; for Dec. 2011, Pew
Americans have long felt that high earners do not pay their fair share of taxes. They don't resent great wealth, nor do they particularly admire it. At times, however, they express concern about the excesses of wealth. In the wake of the financial crisis, attitudes toward Wall Street have been especially negative. But that negativity hasn't translated into heightened anger about the amount of taxes people pay personally. Many think the tax system as a whole has a lot wrong with it, an attitude that may stem partly from the belief that the system favors the wealthy. A late 2011 Pew poll, like a 2003 NPR/Kaiser/Harvard poll, found 59 and 52 percent, respectively, saying "there is so much wrong with the federal tax system that Congress should completely change it." A new bipartisan Battleground poll that found substantial support for taxing the rich more heavily also found that solid majorities believed the president would increase spending with new-found money from taxing the rich more heavily. Only around a quarter felt he would use it to help pay down the debt and deficit. This strongly held view may dampen enthusiasm for taxing millionaires more.
Flat Tax Fever?
Although there haven't been many memorable moments from the 2012 Republican primary campaign, voters are likely to remember hearing about Cain's 999 tax plan. Cain's plan and Perry's flat tax proposal received substantial media attention early in the campaign and prompted pollsters to update some old questions about a flat tax and ask some new ones.
A few pollsters repeated questions that were first asked in the mid-1990s, when Republican presidential candidate Steve Forbes made a flat tax a cornerstone of his 1996 presidential run. (In 1992 when Democratic presidential candidate Jerry Brown proposed a flat tax, pollsters asked few questions.) Then, as now, a lot of people weren't sure what they think. In a February 1995 question from CBS News and The New York Times, 35 percent said that they didn't know enough to say whether the flat tax was a good idea or a bad idea. The pollsters changed the question's wording in 1996. In the new question, 38 percent said they didn't know enough to state an opinion, and in subsequent polls in 2004 and 2011, 37 and 28 percent, respectively, gave that response. Of those who did have opinions, no more than a third favored the idea.
Question: The current income tax system taxes people at high income levels at higher rates than lower income people. The flat tax proposal would replace the current income tax system and would tax people at all income levels at one, flat tax rate. Do you think replacing the current income tax system with one flat rate sounds like a good idea, or a bad idea, or don't you know enough to say (1995)?
Question: The current income tax system taxes higher income people at higher rates and lower income people
at lower rates. Some people have proposed replacing that system with a flat tax which would tax people at all income levels at one flat tax rate. Would you favor or oppose replacing the current income tax system with one flat tax rate or don't you know enough to say? (1996, 2004, 2011).
Good Idea Bad Idea Enough
Feb. 1995 26% 38% 35%
Jan. 1996 27% 33% 38%
Nov. 2004 26% 34% 37%
Nov. 2011 32% 36% 28%
Source: CBS News/The New York Times, latest that of Nov. 2011.
It's hard to know precisely what people are reacting to in those questions. Replacing the current system is a pretty big lift, so it isn't surprising that opinions would be tentative or unformed.
To provide a sense of how different question wording influences responses, we look at another flat tax question. In 1996 ABC News and The Washington Post asked about impressions of a "flat-tax system, where everyone pays the same tax rate no matter what their income." Perhaps because the ABC question's request for impressions was softer than the CBS/New York Times question's request to classify the idea as good or bad, almost everyone was willing to give a response. Forty-eight percent had a favorable impression of a flat-tax system and 48 percent an unfavorable one. The results were virtually identical, 47 to 48 percent in their October 2011 poll, which used different wording. When asked their impressions about Cain's plan in the same October poll, "the idea to set the federal income tax rate at 9 percent, corporate taxes at 9 percent, and create a national sales tax, also of 9 percent," 36 percent had a favorable impression and 56 percent an unfavorable one.3
Although many Americans aren't familiar with the term "progressivity," questions that ask them about whether higher-income people should pay a higher tax rate usually elicit support. On five occasions since 1995, NBC News and The Wall Street Journal have asked people whether they prefer "a graduated income tax system in which people with higher incomes pay a higher tax rate, or a flat tax system in which everyone pays the same rate regardless of income." The results have been virtually constant over the years, with a majority consistently supporting a graduated income tax system.
Question: Would you prefer a graduated income tax system, in which people with higher incomes pay a higher tax rate, or a flat tax system in which everyone pays the same rate regardless of income?
Income Tax Prefer a Flat
System Tax System
Apr. 1995 56% 40%
Sept. 1995 57% 38%
Jan. 1996 54% 41%
Mar. 1996 54% 39%
Nov. 2011 56% 40%
Source: NBC News/The Wall Street Journal, Nov. 2011.
Another general value is simplicity, and questions that emphasize it generally produce support. In a comprehensive Washington Post/Kaiser/Harvard survey on tax attitudes, 58 percent said in 2003 that a flat federal income tax would be simpler than the current system, and only 7 percent said it would be more complex.
Whether people consider a flat tax fairer is not clear. In the Washington Post/Kaiser/Harvard study, respondents were equally divided about whether a flat tax system would be more (32 percent) or less fair (33 percent). A substantial number (28 percent) did not have an opinion.
Echoing the views described above, most people believe the rich would benefit the most from a flat tax system. In a 2004 CBS/New York Times question, 54 percent said rich people would benefit most, 26 percent said middle-income people, and 6 percent said low-income people. In 2005 the results were virtually identical: 53, 25, and 6 percent, respectively. But different phrasings of the question show very different results. In the February 2003 Washington Post/Kaiser/Harvard poll mentioned above, 41 percent thought people with higher incomes would pay more under a flat tax while 35 percent thought they would pay less. In a November 2011 McClatchy/Marist poll, 36 percent thought the wealthy would pay higher taxes and 38 percent lower taxes.
Most people believe their tax rates would remain the same under a flat tax. In a November 2011 CBS poll, for example, 29 percent thought they would pay more, 15 percent thought they would pay less, and 43 percent thought they would pay the same. Another interesting reaction to flat tax questions is that when pollsters mention a rate like 10 or 17 percent, people generally like a flat tax, perhaps because the rate seems low to them. Of course, rates at those levels are indeed too low to replace the revenue raised by the current tax system.
When "don't know" responses are as high as those in the CBS/New York Times questions in Table 3, it is best to be cautious in interpreting other polls that purport to show clear opinion on a flat tax. When people don't know much about a topic, their reactions to specific proposals depend on the information they are given in the questions, and responses vary widely as a result. When they don't have much information, their answers often reflect broader values and not specific policy preferences. Questions about a flat tax reveal a broad preference for a simpler and fairer tax system. There isn't a clear consensus, however, on whether a flat tax system achieves those goals. Advocates and detractors of a flat tax system still have their work cut out for them. The balance sheet when it comes to tax issues remains very much in flux.
Obama, the Political Parties, and Taxes
Americans are usually optimistic when a new president takes office, so early evaluations from the public tend to be positive. In an April 2009 ABC/Washington Post poll, for example, 69 percent approved of the job Obama was doing handling the presidency, and 26 percent disapproved. His approval rating on handling taxes was lower but still significant (54 percent). Even in the early days of his administration, people were not optimistic that Obama would be able to keep his campaign promise not to raise taxes on those making less than $250,000. Skepticism of politicians' tax promises is longstanding.
How have Obama's overall ratings and his ratings on handling taxes changed during his first term? Questions about handling taxes aren't asked as often as questions about how he is handling his job overall. But the pattern on both questions is the same. Some of Obama's lowest approval ratings came in the fall of 2011. As the public saw more economic improvement in early 2012, Obama's ratings rose. In early April, the president was at or close to 50 percent approval rating in most polls. His handling of taxes has followed the same trajectory, with a dip in late 2011 and then a small recovery. In October 2011 the president's overall approval rating and his approval rating on handling taxes both were 42 percent in the ABC/Washington Post poll. In February 2012 his ratings inched up in both areas.
It is not possible to say at this stage how important taxes will be in the general election campaign. Early in the president's term, with an economy reeling from the financial crisis, taxes or tax reform weren't high priorities for the public. When the Pew Research Center asked people in January 2009 about top priorities for the president and Congress, 44 percent said reducing federal income taxes for middle-income earners was a top priority, ranking 15th out of 20 issues. The last time Pew used that wording, in 2010, 42 percent gave that response. In a February 2012 Gallup poll, 45 percent said a candidate's positions on the economy would be extremely important in influencing their vote. Twenty-nine percent said taxes would be, and a quarter cited the gap between rich and poor. Taxes ranked sixth of nine issues the pollsters examined.
In 2010 the Republican Party led the Democratic Party in most polls as the party better able to handle taxes. How much that specific issue contributed to the Republicans' impressive electoral gains in 2010 is hard to determine. The economy swamped other issues. Exit pollsters asked voters what the highest priority for the next Congress should be. Eighteen percent of voters said cutting taxes should be the highest priority; they voted heavily Republican. In comparison, 40 percent said reducing the deficit should be the highest priority and 37 percent gave priority to spending to create jobs.
As the 2012 campaign begins, Democrats have regained some of the ground they lost in 2010 and 2011, but not all. In recent polls, Republicans maintain a narrow advantage on the tax issue. More broadly, the GOP brand is tarnished. In an April CNN and Opinion Research Corp. poll, 46 percent had a favorable view of the Democratic Party (46 percent unfavorable). The corresponding responses for the GOP were 41 and 51 percent. As of late April, we have found only a few questions that ask people about a matchup on taxes: In an ABC/Washington Post poll, 42 percent self-identified registered voters said Mitt Romney would do a better job handling taxes and 45 percent said Obama would do better. In Quinnipiac University's April poll, registered voters split evenly, 43 to 43 percent.
Recent public attention has changed tax attitudes very little. Americans are dissatisfied with the amount high-income individuals pay in taxes, although it is not clear how much intensity that issue has. The public wants a fairer and simpler tax system, but it's unclear how they want to reform the system. Both sentiments have held for a long time.
While taxes, taxing the rich, and tax reform are unlikely to be the central issues in November, they will continue to be discussed. The president continues to champion the Buffett rule. A significant array of tax cuts is set to expire at the end of the year and there is some talk that Republicans may bring those cuts up in the run-up to the election. If the economy continues to improve, other issues such as taxes could come to the fore. But if polling over the past year is any indication, widespread support for any specific significant change will likely remain elusive.
1 The three previous articles are Karlyn Bowman, "What Do Americans Think About Taxes?" Tax Notes, Apr. 6, 2009, p. 99, Doc 2009-6493 , or 2009 TNT 64-15 ; Bowman, "What Do Americans Think About Taxes: An Update," Tax Notes, May 24, 2010, p. 917, Doc 2010-9284 , or 2010 TNT 102-6 ; and Bowman, "Tax Cuts, Tax Reform, and Public Opinion," Tax Notes, May 9, 2011, p. 609, Doc 2011-8322, or 2011 TNT 91-7 .
2 Most of the questions used are archived at the Roper Center at the University of Connecticut.
3 The question inaccurately described Cain's plan, referring to 9 percent corporate taxes when the plan actually proposed a 9 percent VAT. The erroneous description was consistent with much of the media reporting about the plan.