This is the first of three posts on AEI’s updated Public Opinion Study on taxes. Read the second post here.
Over the past few years, as our updated AEI Public Opinion Study on taxes shows, more and more Americans say they’re comfortable with the amount they pay in federal income taxes. Slightly more told Gallup pollsters this year that the amount they pay in income taxes is “about right” as opposed to “too high.” It’s completely odd. Hating your taxes seems like an American tradition, like Super Bowl Sunday or doing everything possible to drive around toll stations. What accounts for the change in attitudes?
The development is all the more puzzling because most people feel their finances are somewhat precarious now. The recession hasn’t really ended in most people’s minds, and they are anxious. Anxiety can even be seen in other questions about taxes. Sixty-nine percent told Gallup that the amount they pay in taxes is hurting their finances. Sixty-one percent told Fox News that their family’s paycheck is smaller this year because more taxes are being taken out.
Inferring that if people are insecure about their finances, they should also be unsatisfied with their federal income taxes is probably an overly simplistic way of looking at it. Economic anxiety may be the chief culprit behind the “about right” response for different reasons.
1: It’s all relative. People don’t compartmentalize different aspects of their financial situation. Priorities shift and right now, other financial concerns crowd out federal income taxes. Unease over unemployment and rising prices are particularly high. In the 2012 presidential exit poll, 38% checked the box indicating that unemployment was the biggest economic problem facing them. Thirty-seven checked rising prices. Only 14% checked taxes. As people’s concerns lie elsewhere, their income tax burden may feel comparatively manageable.
2: Other taxes. Other forms of taxation, like payroll and local property, may feel more burdensome now than the federal income tax. Recent polling data that compares these types of taxation is hard to come by though, which makes this point mostly speculative. The last time Gallup compared different taxes was five years ago. The data we do have suggest the federal income tax generally doesn’t rank above other kinds of taxes as the most unfair or the tax that has increased the most. As fewer people are paying any federal income taxes, the shift in attitudes could be following changing tax patterns as well.
3: Taxes in the future. Uncertainty about future tax increases may also motivate the “about right” response. People expect their taxes to go up. Fifty-nine percent told Fox News that it’s “very likely” that income taxes will go up in 2013. Confronted with the real possibility of higher taxes, the “about right” response may be an acknowledgement (resignation?) that the tax burden could be a lot worse.
Growing satisfaction in different policy areas is normally considered a positive development. That doesn’t seem to be the case with income taxes. Instead, the growing number reporting the amount they pay is “about right” may only mean that larger problems occupy people’s attention. Hopefully in the not-too-distant future, people will be carefree enough to be angry about our income taxes again. What a glorious day that will be.