The voices of Tax Policy Center's researchers and staff
While President Trump continues to promote what he says will be the biggest tax cut in history for middle-income households, it is increasingly clear that he and Congress won’t deliver on that promise. The bill, still being drafted behind closed-doors, will likely end up as large tax cut for business and high-income households and a modest one for those Trump describes as “middle class.”
The political question is: Will middle-income voters buy what the White House and congressional Republicans are selling? It increasingly looks like an uphill battle. Polls consistently show that Americans believe corporations should be paying more tax than they do today, not less. And the public is not inclined to back a plan that reduces business taxes.
A different tack
Acknowledging that reality, the Administration is claiming that middle-income workers will be the big beneficiaries of corporate tax cuts. A recent report by the White House Council of Economic Advisers claims workers and their families will receive $4,000-a-year or more in additional income if corporate tax rates are cut from 35 percent to 20 percent. Many independent experts say that claim is not credible.
But other GOP strategists advise a different tack. They argue that, as long as middle-income voters get a tax cut of their own—no matter the size--they’ll swallow bigger tax cuts for businesses and the wealthy. This is how Politico described this view, as it relates to proposals to cut the tax rate on pass-through businesses such as partnerships and sole proprietorships:
What the public sees
"The Jones family doesn't give a s--t if distribution tables that JCT or Treasury or TPC put out are skewed at some end because of the pass-through rate - they don't know or care about any of that," said Ryan Ellis, a conservative tax consultant. "To them, it's a new refrigerator, it's a vacation they couldn't take. That's the way they look at it, that's the way Republicans look at it, and that's how we sell tax relief to the middle class."
Problem is, that may not be how most of the public looks at it. The Tax Policy Center’s Vanessa Williamson, who has literally written the book about public opinion and taxes (Read My Lips: Why Americans Are Proud to Pay Taxes), says this approach will fail. This is how Vanessa put it to me in an email:
“People do not think wealthy people or corporations need a tax cut – in fact, the belief that corporations or the wealthy pay less than their fair share is by far the thing that bothers people most about taxes, far more than the amount they personally pay.”
Who pays their fair share
A 2015 Pew Research Center poll tells the story. It found that 64% of respondents were “bothered a lot” by the feeling that some corporations do not pay their fair share of taxes, and 61% were troubled by wealthy people failing to pay their fair share. By contrast just 27% were bothered “a lot” by the amount they pay in taxes.
At the same time, the public seems skeptical--though divided--over whether cutting corporate taxes would create jobs and boost economic growth. According to a December 2016 Harvard-Harris Insights internet poll, about one-third of those surveyed thought cutting business taxes would “create many new jobs,” while about two-thirds thought they would create “few” or “no” new jobs.
And how does the current debate stack up in people’s minds? According to an October, 2017 CBS/Nation Tracker survey, 58 percent believe the tax ideas now on the table (such as the Big Six plan) favor the wealthy while 18 percent believe it favors the middle-class.
In the past, the presidential bully pulpit has moved public opinion. But these days, with the nation so polarized, it is not clear whether Trump could change minds. But if tax reform is going to succeed, at least outside the Beltway, it increasingly looks like he’ll have to.
Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.
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President Donald Trump speaks about tax reform during an event at the Harrisburg International Airport, Wednesday Oct. 11, 2017, in Middletown, PA. Attribution: Alex Brandon/AP Photo