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Friday, September 10, 2010

What's Behind Support for Increased Taxes on the "Rich"?

The idea of taxing the rich and redistributing the wealth has generally been met with approval from the American public. As I’ll get to in a minute, I think that’s primarily because most Americans are not rich and therefore are fine with sticking it to those who are.

Here’s a fascinating question that was first asked by the Roper Organization for Fortune Magazine back in March of 1939: “Do you think our government should or should not redistribute wealth by heavy taxes on the rich?”

At that time, nearing the tail end of the Depression and as war loomed both in Europe and in the Pacific, 35% of Americans said “yes” to the idea of heavy taxes on the rich, 54% said “no,” and the rest were undecided.

One might think the parlous economic times of the Depression would represent the apex of American support for redistributive policies. But not so. By March of 2009 when we most recently re-asked this question, 50% of Americans were OK with the idea of heavy taxes on the rich -- an increase of 15 percentage points since the Depression.

Other Gallup questions reveal that well over half of Americans more generally say that money and wealth in this country should be more evenly distributed among a larger percentage of the people. We have measured that finding in poll after poll over the last 20 years. A majority of Americans also say the amount of taxes paid by upper-income Americans is "too little," although that sentiment has actually been declining in recent years.

As noted, one of the reasons for these sentiments is the fact that most Americans consider themselves to be decidedly not rich. A very lonely 2% of Americans when we last checked a couple of years ago said that they were part of the upper class, and another 19% said they were part of the upper-middle class. The great mass of Americans put themselves in the middle or working class (8% say lower class).

The Census Bureau also tells us that about 2% of all households have $250,000 a year income or higher. That means that 98% of all households would not personally be affected by tax increases on those making $250,000 or more a year.

This $250,000 figure is important because it has taken on unique significance in the current debate on tax cuts. The Obama administration wants to keep the Bush era tax cuts in place for all Americans except those making $250,000 a year or more, which would be a de facto tax increase for the latter group.

Some polls have asked directly if Americans favor letting the tax cuts expire for the rich and not for everyone else. The results are somewhat mixed. One of these, for example, was an Aug. 25-26 Newsweek poll, which found 52% support for allowing “ . . . the Bush tax cuts for persons in the top two percent income category to EXPIRE in 2011 . . . ” An Aug. 5-9 NBC News/The Wall Street Journal poll, however, found 46% support for eliminating “ . . . the tax cuts for families earning more than $250,000 per year", with 51% opposing.  This poll, however, included this proposal in a list of alternatives, and when asked in a different way about keeping in place "....the tax cuts only for families earning less than $250,000 per year" a whooping majority of 66% agreed. 

Gallup recently used a three-part construction, asking respondents if they favor leaving all the tax cuts in place for everyone, removing the tax cuts for everyone, or letting the tax cuts expire only for those making more than $250,000 a year. Over 8 in 10 favored keeping at least some tax cuts -- 44% saying only for those making less than $250,000 a year, and 37% for everyone. Very few, 15%, would advocate letting the tax cuts expire for everyone (i.e., giving everyone an increase in taxes).

My colleague Jeff Jones has details on this survey here.  I think it's a little tricky to interpret.  The data show that Americans certainly would not want the adminstration to let all of the Bush tax cuts to expire.  And the majority do not favor keeping all of the tax cuts in place.  Of the alternatives, the Obama plan to cut out the cuts for the $250K+ crowd gets the most support, but it's not the majority.

Still, the broad contextual data suggest that the Obama admininstration has general sympathy from the public when it argues that the rich should pay more in taxes. 


BillyBob said...
September 10, 2010 at 2:51 PM  

I am curious about the profile of the 15 percent that want all of the tax cuts to expire. Jeff's chart indicates they are slightly more Democratic than Republican; no other data is provided. What can you share?

Anonymous said...
September 13, 2010 at 11:50 AM  

What polling methodologies were employed by Roper in 1939? Does anyone even know?

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