On Taxes, an Energized Minority

On Taxes, an Energized Minority

During the 2008 campaign Barack Obama skillfully crafted a popular position on renewing the big Bush-era tax cuts. Obama pledged to keep the lower tax rates for families earning less than $250,000 per year—the vast majority of American taxpayers—while letting the top tax rate revert to its 2000 level.

With the tax cuts set to expire at the end of this year President Obama has stuck to that position, despite a concerted effort by conservatives to insist that none of the tax cuts should be allowed to expire in the midst of a recession. What is more, he has managed to keep at least a slim majority of Americans on his side. A YouGov/Polimetrix survey fielded last week found that 42% of the public support the president’s position—a 4-point increase from 2008. Another 11% go even further, wanting to let all the tax cuts expire. Only 28%—slightly fewer than in 2008—favor retaining all the tax cuts, including those for the richest taxpayers.

Despite this sustained public support for the president’s position, Democratic leaders in Congress were unwilling to bring the issue to a vote before adjourning last month. Several moderate members of the Democratic caucus had already come out against letting the tax cuts for top-earners expire, and many more were said to be reluctant to cast votes on the issue in the run-up to the election. In light of the popular support for the president’s position, was that a political miscalculation?

Probably not. For one thing, likely voters in next week’s election are much more evenly divided in their views about the Bush tax cuts. The plurality favoring selective cuts going forward shrinks from 13 points in the general population to just 2 points among midterm voters. This difference is partly due to the much-noted “enthusiasm gap” between Republicans and Democrats. However, even among political independents projected turnout is more than 30 points higher among those who want the top-rate tax cuts renewed (73%) than among those who want them to expire (42%).

Even more importantly, the sizable minority of people who want the tax cuts for affluent taxpayers renewed seem to attach much more weight to this issue than the slim majority who want them to expire. In a statistical analysis taking separate account of prospective voters’ broader partisan attachments, those who support President Obama’s position on the tax cuts are only 6% more likely than those who are unsure about the issue to say they will vote for a Democratic House candidate. Even those who want to let all the tax cuts expire are only 9% more likely to vote Democratic. By comparison, those who want to keep the tax cuts for affluent taxpayers in place are 22% more likely to say they will vote for a Republican House candidate.

An even more lopsided difference appears in the impact of tax cut preferences on presidential approval. People who support President Obama’s position on this issue are only slightly more approving of his overall performance than those who are unsure, while those who want to renew all the tax cuts are moved about five times as far toward disapproving. Among political independents, a whopping 76% of those who want continued tax cuts for the rich say they strongly disapprove of the president’s performance; only 27% of those who support his proposal for selective extension of the tax cuts are equally disenchanted.

These differences in preference intensity cannot be explained in terms of simple self-interest. On average, the people who want to renew the tax cuts for top earners are somewhat more affluent than the population as a whole; but only 8% say they have household incomes of $150,000 or more—incomes that might put them within hailing distance of having their own taxes hiked. Half have household incomes of less than $50,000, and almost that many say they don’t even know anyone who earns more than $200,000 per year.

These results suggest that candidate Obama’s skillful-looking proposal to allow the tax cuts to expire only for the richest 2% of taxpayers has turned out to be very costly for President Obama and his party, despite its overall popularity. Of course, the president and his allies in Congress could still push to implement the proposal in a lame duck session. If they do, it will be a principled choice rather than a politically expedient one. For expedient politicians, an energized minority trumps a tepid majority every time.

 

 

Tax Cut Preferences, 2010
“As you probably know, many of the major tax cuts passed by Congress during the Bush administration are due to expire at the end of this year. Would you favor … ?”
  General Population Congressional Voters
Making these tax cuts permanent 28% 39%
Extending the tax cuts for households earning less than $250,000 per year but letting the tax cuts expire for households earning more than $250,000 per year 42% 41%
Letting all the tax cuts expire as scheduled 11% 12%
Don’t know 18% 8%
N (weighted) 1000 668

 

 

Political Impact of Tax Cut Preferences, 2010
(OLS regression parameter estimates with standard errors in parentheses)
  Democratic
House Vote
Obama
job approval
Extend all tax cuts -.219
(.042)
-.184
(.027)
Extend all but top tax cuts .057
(.040)
.029
(.024)
Let all tax cuts expire .091
(.048)
.043
(.033)
Party identification (-1 to +1) .442
(.018)
.327
(.015)
Intercept .514
(.037)
.427
(.020)
Standard error of regression .276

.274

R-squared .70 .49
N (weighted) 668 1000

 

Tax Cut Preferences, 2008
“As you probably know, many of the major tax cuts passed by Congress during the Bush administration are due to expire at the end of this year. Would you favor … ?”
  General Population Congressional Voters
Making these tax cuts permanent 30% 31%
Extending the tax cuts for households earning less than $250,000 per year but letting the tax cuts expire for households earning more than $250,000 per year 38% 39%
Letting all the tax cuts expire as scheduled 14% 17%
Don’t know 16% 13%
N (weighted) 1000 650

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