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Americans Today Would Prefer Tax Stability

For most Americans, the terms of the tax debate have changed. A careful reading of poll data shows that most people want tax stability, not tax relief. [IMGCAP(1)]

Let’s start with the unsurprising fact that few Americans are paying attention to the details of this debate: Is it $350 billion? $550 billion? $750 billion? For most, the numbers are a blur. Ending double taxation on dividends? Capital gains rate reductions? Most people don’t have a clue. In the late-April/early-May Pew poll, just 19 percent knew a great deal about the kinds of taxes Bush has proposed cutting.

Furthermore, Americans don’t trust politicians when they say they will cut taxes. Polls over the past 30 years show that these promises — whether made by Republicans or Democrats — have little credibility. In 1969, in a Harris question, 86 percent agreed that politicians violate tax promises. Early in Ronald Reagan’s presidency, two-thirds of those polled by CBS News said it was beyond any president’s control to cut taxes to a real extent. In January 1989, long before George H.W. Bush broke his “no new taxes” pledge, 71 percent told NBC and Wall Street Journal pollsters he wouldn’t be able to keep it. Polls showed that when President Bill Clinton promised targeted tax relief, hardly anyone thought he was talking about them.

Not only are most people skeptical about promises to cut taxes, but they also rarely feel they get relief. Polls conducted after passage of Reagan’s 1981 tax cut showed only small numbers felt their taxes went down. After passage of the sweeping 1986 bipartisan tax reform legislation, even people in the polls’ lowest income category — many of whom had been taken off the rolls — said their taxes went up. In the new Pew poll, just 38 percent of the supporters of Bush’s tax plan said their taxes would go down significantly (23 percent of the national sample thought they would).

The tax revolt of the late 1970s had gale force in part because the economy was in terrible shape. Inflation was pushing taxpayers into higher brackets, resulting in real tax hikes without gains in real incomes. Indexation and low inflation eased that situation, explaining why income tax discontent, as measured by Gallup, isn’t rising. But the tax revolt also coincided with a change in the country’s beliefs about government. After a long period when Americans equated federal government activity with progress, attitudes toward Washington turned sharply negative in the mid-1960s. Except for brief periods in the mid-1980s and around Sept. 11, 2001, they haven’t improved.

Core Republican voters aren’t satisfied with the status quo about government’s size or scope, and they push for and vote for tax cuts to reduce government’s role at every opportunity. But some voters aren’t as troubled by the size of government. Still others are more or less inured to the size of the federal government or feel powerless to do much about it. Many people today are more upset about how the federal government spends their tax dollars than about what they pay.

Today, people don’t believe their federal taxes will be cut, and they certainly don’t want them raised. Stability becomes their goal. Americans’ current thinking about taxes explains some of the puzzles in current polls on the subject. Although most Americans aren’t beating the drums for a tax cut, more people approve than disapprove of the job the president is doing on taxes. When tax-cut questions are asked in a straightforward manner, people support cuts. But when they are reminded of things they want from Washington, tax cuts take a back seat.

Today’s polls show that neither party has an advantage when pollsters ask which party would do a better job on taxes. In a late-April ABC News and Washington Post poll, 46 percent preferred Republicans and 49 percent Democrats. In the early-May Fox News and Opinion Dynamics poll, 36 percent generally agreed with Democrats on taxes, 42 percent with Republicans. Although the questions aren’t asked as often, the GOP has a substantial advantage on “keeping taxes down” or “holding the line” on them (54 percent to 29 percent edge in a Battleground poll). When most Americans (60 percent or more in nine Gallup polls since 1959) expect their federal taxes to go up in the next year, the appeal of “holding the line” becomes clearer.

In the states, where people think politicians are closer to them and more accountable, tax sentiment looks quite different and a new revolt may be brewing. Nationally, the question is whether a committed tax cutter like Bush can get the public to the tax stability they crave.

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