What Do Americans Think about Taxes?

Attitudes about tax policy are an important aspect of the dynamics of public opinion about how best to deal with the current federal deficit and the looming increases in spending associated with entitlement programs like Medicare. Democratic and Republican politicians have staked out different positions on the question of whether taxes in general ought to rise, and who in particular should bear the burden of those increases. With that posturing in mind, it is useful to understand exactly what Americans think tax rates should be.

In light of those debates, we fielded the following question about marginal tax rates:

Typically, a family of four earning $100,000 pays a marginal income tax rate of 25 percent, before accounting for deductions. That is, for each additional dollar they earn, they pay 25 cents in federal income taxes. In your opinion, what should the federal income tax be, before deductions, for a family of four earning $100,000?

Respondents indicated their response using a slider that ranged from 0 to 100% (unless a respondent clicked on the slider, their default response was set to missing).

For the entire sample of 1000 respondents we interviewed, the average response was 25%, a figure that rises to 27% for those respondents earning less than $100,000 a year. This suggests that, on average, Americans are pretty comfortable with the federal income tax burden that those earning $100,000 currently bear.

But what do these Americans think about the tax rates for those who are more well off? We followed up our original question with this item:

And, in your opinion, what should the marginal federal income tax rate be, before deductions, for a family of four earning X?

The amount X was randomly selected to be $250,000, $500,000, $750,000 or $1,000,000 and responses were measured using the same 0 to 100% slider.

On average, Americans appear somewhat progressive in their views about marginal tax rates. The average proposed marginal tax rate for families earning $250,000 and $500,000 was 31%, or about 6 percentage points more than for a family earning $100,000. For families earning $750,000 or $1,000,000, our respondents believed the appropriate marginal tax rate is 34%, or about 9 points more than for an income of $100,000. For respondents earning less than $100,000 (presented in the first column in the table below), the levels are different (34 and 37%, respectively), but the gaps are very similar (7 and 10 points).

Of course, tax policy has a strong partisan component, so we look at how responses to these questions vary by a respondent’s partisanship. Two patterns are most apparent, even when we restrict our analysis to those earning less than $100,000, as we do in the table below. First, Democrats believe taxes should be higher on those earning $100,000 than do Republicans—32 versus 23%, a gap of about 9 points.

Second, despite this greater comfort with higher taxes for moderate income households, Democrats are also more progressive in their views about taxes. Specifically, relative to what they believe those earning $100,000 should be paying, Democrats’ preferred marginal tax rate for families earning $250K or $500K a year is about 8 points higher, while for families earning $750K or $1 million it is about 13 points higher. By contrast, Republicans believe families at both those two levels should only pay 3 and 6 points more, respectively.

So not only are Republicans more skeptical of taxes than Democrats, they are also far less likely than Democrats to support higher taxes on higher earners. And Independents, shown in the last column of the table, appear to have attitudes roughly in between their more partisan counterparts.

As officeholders grapple with how best to deal with the federal deficit, these results suggest that the attitudes of their respective supporters are likely to continue to contribute to partisan conflict over tax policy.

Preferred Marginal Tax Rate for Families at Different Income Levels Among Respondents Earning Less Than $100,000 (0-100%)
  Overall        Democrats        Republicans        Independents
For families earning $100,000 27% 32% 23%  26%
For families earning $250,000 or $500,000 34% 40%  26%  33%
For families earning $750,000 or $1,000,000 37%  45%  29%  35% 
         
Difference, families earning $250,000 or $500,000 relative to families earning $100,000 7% 8% 3% 7%
Difference, families earning $750,000 or $1,000,000 relative to families earning $100,000 10% 13% 6% 9%
Source: YouGov Poll, February 6-9, 2012        

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