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We’re one month into 2021. There’s a pandemic, an economic slump, and a new president and vice president. Congress is considering another pandemic relief bill and may address new tax proposals too. And tax season starts next week. There’s no time like the present to ask my friends and family what they think about taxes!
Last week, in an informal, unscientific survey, I asked how they felt about how much they pay in federal, state, and local taxes; whether the federal government should cut spending or raise taxes (or both) in response to deficits; and whether the federal government should assist state and local governments. Here’s what my friends told me.
I heard from 33 people. What are they like?
Most are female and white, and five are people of color. Most live with a partner, and over half have children living in their home. Over half have completed graduate school, and most range in age between 31 and 65, with half between age 31 and 49. More than a third have an annual household incomes between $100,000 and $200,000. Seven report incomes less than $100,000, and 12 report incomes over $200,000. Most live in Maryland, Michigan, Pennsylvania, and Wisconsin that levy state income taxes. At least one respondent lives in Florida, which levies no state income tax.
How do they feel about the amount of federal income tax they pay?
Nationally, an April 2020 Gallup poll found that 46 percent of Americans thought the amount of federal income tax they paid was too high, but 48 percent said it was just right.
More than three-quarters of my surveyed friends and family feel the amount they pay is fair (though 11 of them would prefer to pay less). Just four respondents believe they pay too much. Three think they should pay more.
Illustrating a key finding in Brookings Institution/TPC colleague Vanessa Williamson’s latest book, Read my Lips: Why Americans are Proud to Pay Taxes, one respondent proclaimed: “We are proud to support our country through taxes, although it would feel better to pay less, financially. If we were getting better healthcare, universal childcare/pre-k, or if large corporations were paying more taxes, I would feel better about how much I pay and be open to paying more.”
Two others expressed specific dissatisfaction with the federal $10,000 cap on state and local tax deductions (SALT).
How do they feel about the amount of state and local tax their household pays?
More than 80 percent feel the state and local taxes they pay are fair, though five of them would rather pay less. Five others say the amount is too high. One respondent says the sales tax is particularly unfair. Another calls property taxes “arbitrary” while another was frustrated that public schools struggle despite high property taxes.
Respondents to my survey are a bit more sanguine about their state and local taxes than, say, voters in California. A November poll by the Berkeley Institute of Governmental Studies (IGS) found a historically high share—81 percent—of voters who felt the level of state and local taxes paid by the average Californian is high. (IGS noted that only during the recessions of 1982 and 1991 did that share exceed 75 percent. Does the federal SALT cap have anything to do with it?)
In response to federal budget deficits, do they support any revenue measures or spending cuts?
I set this question up by first explaining that in fiscal year 2020, the deficit was $3.1 trillion, in large part because of federal spending on pandemic relief, as well as tax cuts enacted in late 2017.
Big majorities of my respondents favor tax increases on corporations, high-wealth households like investors, and highly compensated people. Narrow majorities support tax cuts for small businesses and moderate- and lower-income households. Three want tax cuts for highly compensated households. Slightly less than half support spending cuts of some kind.
Their views track with national polling. Pew found that in January 2019, 48 percent of Americans called reducing the budget deficit a top priority. And Gallup found that 69 percent of Americans thought corporations pay too little in federal taxes, and 62 percent felt upper-income people pay too little.
Do they support federal aid to state and local governments?
To set up this question, I told my respondents that, according to one estimate, state, local and tribal governments are facing a $300 billion budget shortfall through fiscal 2022.
Nearly three-quarters support federal aid, three do not, and six are not sure. Said one respondent, “I am not in favor of saving or replenishing state or city pension plans.” Another supports more federal aid, but wants the “federal government to specify how money is used… [for example] for schools.”
Their opinions are consistent with findings from a July 2020 CNBC/Change Research poll. It found that more than two-thirds of voters supported relief for state and local governments.
How might their views—and the views of Americans overall—change?
That’s a question that my informal questionnaire can’t answer, but rigorous public opinion research and analysis on taxes can.
Lucky for us: Syracuse University’s Christopher Faricy, Harvard University’s Stefanie Stantcheva, and Vanessa Williamson, experts in that field, and will discuss Americans’ views on taxes in an online TPC event this Friday at noon.
I’m looking forward to it—and my friends are too.
Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.
Mark Lennihan/AP Photo