Taxes

Guidance for Lawmakers

Americans think the amount of taxes they pay is too high, but at the same time support increased taxes on the upper class and on big business and corporations. Americans particularly resent local property taxes, which they view as more onerous than federal or state taxes. High taxes are not a pressing priority for Americans in terms of what they see as the most important problem facing the country or what they think the top focus for government should be.

Fine Print

When pollsters ask Americans whether they would favor or oppose cutting federal income taxes, Americans are quick to support that action because it will put more money in their pockets. But, when Americans are given options of cutting taxes or spending more on domestic issues such as education and Medicare, or holding down the federal budget deficit, Americans are less supportive of cutting taxes, and in many instances, would prefer to spend more money on domestic problems.

Context

On a personal level, more than half of Americans say the amount of money they pay in federal income taxes is too high. The percentage of Americans saying their taxes are too high is much lower now than it was prior to President George W. Bush's tax cuts passed in the first term of his administration.

On a broader level, most Americans say they are dissatisfied with the amount Americans pay in federal income taxes; only about 4 in 10 Americans are satisfied. Fifty-four percent of Americans say the amount people pay in federal income taxes should be decreased, while 36% say it should remain about the same. Few Americans support raising taxes.

A strong majority of Americans believe upper-income people and corporations pay too little in federal income taxes. Americans are more divided as to whether lower- or middle-income people pay their fair share or pay too much in taxes each year; few say these groups pay too little.

Federal income taxes, however, are not the worst tax Americans pay to the government. According to an April 4-7, 2005, survey, 42% of Americans say local property taxes are the worst tax, or most unfair tax. This is followed by federal income tax (20%), state sales tax (17%), federal Social Security taxes (10%), and state income tax (7%).

Urgency: Overall Importance as Political Issue

The issue of taxes and tax cuts is not overly important to the American public at this time.

Every month, Gallup asks Americans to name, in their own words, the most important problem facing the country and also the top priority for the president and Congress to deal with. Few Americans ever mention taxes in response to either question. And, only 5% of Americans in March 2007 mentioned taxes as the most important financial problem facing their families right now.

Gallup periodically asks Americans to rate the importance of issues facing the nation. Last summer, just one in three Americans said taxes were an extremely important issue to their vote for Congress, ranking near the bottom of the list of issues. Even when Bush brought the topic of taxes to the forefront of his agenda early in his administration, cutting federal income taxes ranked at or near the bottom of Americans' priorities for the government.

Impact on Bush, Politics

The issues of taxes and tax cuts will probably have little impact on the Bush legacy. When asked what the Bush presidency will be most remembered for, only 2% of Americans say tax cuts. Most Americans say Bush will be remembered for the Iraq war.

Gallup occasionally asks Americans whether they approve or disapprove of the way Bush is handling taxes. Bush's approval rating on taxes has averaged 55% over his administration. But, it should be noted that Gallup has not asked this question since 2005, when the president's overall ratings were much more positive than they have been in 2006 and 2007.

In regard to Bush's tax cut plan, Americans generally supported his plan to cut taxes and supported making those taxes cuts permanent, but were divided as to whether they were a good idea for the country in principle and also about their impact on the economy and families around the country. Americans also recognized that the tax cuts would lead to a higher budget deficit.

Key Subgroup Differences

Views of taxes and tax cuts do not vary sharply by different segments of the population, such as gender, age, or politics.

However, there are some more minor variations about the amount people are paying in taxes by household income:

• Americans residing in higher-income households are more likely than those residing in lower-income households to say their federal income taxes are too high.

• But, Americans at all income levels agree that their taxes are fair. Americans at different income levels also agree that they are dissatisfied with the amount people pay in taxes and that taxes should be decreased.

There are also variations among partisan groups as to whether different groups in the country pay their fair share of taxes:

Democrats are much more likely than Republicans to say lower-income people and middle-income people are paying too much in federal income taxes. Democrats also are more likely than Republicans to say upper-income people and corporations are paying too little in federal taxes.

Gallup did find sharp political variations about Bush's tax cut plan early in his administration. A majority of Republicans supported the president's tax cuts, while most Democrats opposed them.

Republicans and Democrats are roughly even in their views of their own personal income taxes and their overall satisfaction in the amount Americans pay in taxes.

The Bottom Line

Americans are generally dissatisfied with the amount people are paying in federal income taxes, and would support decreasing federal income taxes. While a slim majority of Americans consider their taxes too high, most feel their taxes are fair and have much more positive about the amount they are paying in recent years. Americans would support higher taxes on corporations and think upper-income people are not paying their fair share of taxes. Overall, the tax issue is not a dominant priority for the public, and at this point, there is no urgency to change tax policy.