Tax Cuts Not High Priority for Americans

GALLUP NEWS SERVICE

PRINCETON, NJ -- The White House is gearing up for a full court press to pass at least a modified version of President Bush's new economic stimulus proposal -- a plan that suggests tax cuts of at least $550 billion. Bush will head for Akron, Ohio, on Thursday to make a speech explicitly pushing for passage of the plan, and other administration officials have been out this week making public pronouncements of support for it. The tax cuts have taken on symbolic importance as representative of the efforts Bush is making to refocus his energies on domestic concerns as the war winds down in Iraq, and to blunt the efforts of Democratic presidential candidates who will no doubt focus on the weak economy as a major part of their campaign strategies in the months ahead.

Tax cuts are not new territory for the president. Bush made tax cuts a central part of his campaign in 2000, and pushed through a major tax cut plan that was passed into law in June 2001. Now, gearing up for another election, Bush is back to tax cuts as his major domestic focus.

Pollsters have asked a wide variety of questions about tax cuts over the past several years, and a review of the resulting data suggests that, while tax cuts sound good in principle, they have never been a high priority for Americans. The public's support for tax cuts drops well below the majority level when respondents in surveys are reminded of alternative uses of the money. One reason for this lack of urgency about passing tax cuts may be that Americans didn't think the 2001 tax cuts made a highly significant difference in their daily lives. Additionally, the public this year sees federal taxes as less of a burden than they have at any point since the 1960s.

Here in expanded detail are five key points derived from a review of existing survey data on tax cuts:

1. Tax Cuts Are Not a High Priority on the Public's Agenda

Americans simply don't rate tax-cut policy or cutting taxes as a major priority for the government. They didn't in 2000 and 2001, and they don't now.

Here's a table that summarizes data collected in a January CNN/USA Today/Gallup Poll, based on responses to a question that asked Americans to indicate how important they felt each of a series of issues should be for Congress and the president to deal with:

As can be seen, taxes are near the bottom of the list. Fewer than three out of 10 Americans considered taxes to be extremely important, in sharp contrast to issues such as the economy, the situation with Iraq, healthcare, and education.

This is not new. Polling conducted in May 2001, just a month or so before the first Bush tax cut was enacted into law, found that the possibility of "cutting federal income taxes" rated at the bottom of the list of proposals tested.

In this 2001 poll, only 23% of Americans said that cutting federal taxes should be a top priority. Twice as many gauged improving education as a top priority.

A recent NPR/Kaiser Family Foundation/Kennedy School of Government poll found further evidence for the low priority of tax cuts. Respondents were asked to choose between the importance of tax cuts versus "having the government provide needed services." The latter wins by over a two-to-one margin.

NPR/Kaiser /Family Foundation/Kennedy School of Government poll

What's more important to you, having the government provide needed services, or cutting taxes?

2. Less Than Majority Support for Bush Economic Proposals This Year, Although Tax Cuts Have Generated Support in Past

The fact that tax cuts have a low priority in the broad scheme of things doesn't necessarily mean that the public is opposed to them in concept.

We asked about tax cuts several times in the months before the Bush tax cut plan was enacted in 2001. A majority of between 52% and 56% supported the idea when the issue was identified as "the federal income tax cuts President Bush has proposed." An even higher percentage of the public favored the cuts when they were asked about them in a more generic way (" . . . favor or oppose Congress including a substantial tax cut in this year's federal budget"), without the specific reference to the president that typically causes members of the opposite party to react negatively regardless of the proposal.

Based on what you have read or heard, do you favor or oppose the federal income tax cuts President Bush has proposed?

Based on what you have heard or read, do you favor or oppose Congress including a substantial tax cut in this year's federal budget?

An early January 2003 Gallup Poll tested some very specific components of this year's Bush economic plan, and found substantial support for each.

Favor or Oppose the Following Economic Proposals

In other Gallup polling on Bush's plan this year, however, we have used the term "economic proposals" and have not identified them as tax cuts per se. Using this wording, support for the Bush plan has generally been considerably lower than was support for the "tax cuts" tested in 2001.

As you may know, George W. Bush announced a series of economic proposals earlier this year. Based on what you have read or heard, do you favor or oppose Bush's economic plan?

The underlying dimension in these data suggests a basic level of support for tax cuts in theory or in principle, particularly when they are asked about in isolation (that is, without any competing arguments for why they might not be a good thing; see below).

3. Given Alternatives, Americans Back Away From Tax Cuts

It is generally the case that support for a proposal will be lower when it is explicitly juxtaposed against an alternative, or when negative consequences of the proposal are made clear in the question wording used in surveys. That's certainly the case this year. Listed below are seven examples of questions asked in the past several months that have tested the level of support for tax cuts against some specified alternative. In each one, support is well below the 50% or majority level.

The lowest levels of support are evident in the NPR/Kaiser Family Foundation/Harvard Kennedy School of Government poll in which the question specifies that the alternative would be to spend the money on what are apparently attractive domestic programs such as education, healthcare, and Social Security. Support is also low in the Los Angeles Times poll, which notes that there is an increasing deficit and high costs of war to take into account.

4. Tax Cuts Don't Have a Highly Significant Impact on People's Lives

One reason why tax cuts may be a fairly low priority for Americans could be the fact that tax cuts simply don't make a great deal of difference in many Americans' lives. Here are some examples of polling conducted after the June 2001 tax cuts were passed into law:

Next, thinking about the major pieces of legislation which the House or Senate passed this year, please say how much of a difference each of the following will make to you and your family as a law

The Tax Cuts Passed by Congress Earlier this Year

As you may know, Congress passed and President Bush signed a law that would cut tax rates over the next 10 years. As part of the law, most taxpayers will receive a rebate check of $300 to $600 from the federal government in the next few months.

How much of a difference will this tax rebate check make to you and your family?

Do you think that the new tax cut law [ROTATED: will be a good thing for the country, will not make much difference, or will be a bad thing for the country]?

In all of these situations, less than a majority of Americans said that the tax cuts would make a significant difference in their lives or were a good thing for the country.

5. Concern About Paying Too Much in Taxes Has Dropped Significantly

Another reason why the concept of tax cuts may not resonate as much with the public this year: Americans aren't nearly as worked up about their taxes as they have been at any time in the recent past.

The data this year are clear. Just half of the American public says that the amount they pay in federal income tax is too high, according to an April Gallup Poll. That's a lot of people, but nowhere near as many as we've seen in our previous polling. In 2001, for example, 65% of Americans said their taxes were too high. In 1999 it was 68%. In fact, we have to go all the way back to 1962, when John F. Kennedy was in the White House, to find a time when as few as 50% of Americans said their taxes were too high.

The April Gallup Poll also found that about two-thirds of the public say that their taxes are "fair." That, too, is considerably more positive than in previous years.

Concern over terrorism and the war in Iraq may be a major factor in driving down negative perceptions of taxes this year. Americans could well be somewhat more willing this year than in times past to give their government the benefit of the doubt and assume that their tax money is being well spent and used for something productive. The current war with Iraq is nothing like the all-encompassing nature of World War II, but it's interesting to note that the public's perception of taxes as fair was as high as 90% in February 1944.

Second, it's just possible that Americans truly believe that they are paying less in taxes this year as a result of the Bush tax cuts passed into law in 2001.

And then there is the property tax issue. Off and on over the last 14 years, we've asked people which of five different taxes (federal income, state income, state sales, Social Security, or property tax) is the worst -- that is, the most "unfair." This year, the property tax wins hands down as the most negatively rated of all -- beating out federal income taxes by 17 points. So it's quite possible that worry about federal taxes is being eclipsed by concern over local taxes, which keep increasing in most places as local taxing authorities have to cope with the rising costs of security, education, and infrastructure repairs.

Here are the basic data:

Do you consider the amount of federal income tax you have to pay as too high, about right, or too low?

Summary

Tax cuts sound good in principle, but aren't a high priority for Americans. Support for the concept of tax cuts is well below the majority level, particularly when the American public is reminded of alternative uses of the money. Two reasons for the public's lack of tax cut enthusiasm may be that Americans don't think that tax cuts make a highly significant difference in their daily lives, and the public now sees federal taxes as less of a burden than they have at any point since the 1960s.

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