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Public Has Mixed Feelings About Tax Cuts

Public Has Mixed Feelings About Tax Cuts

Americans want tax cuts but not at the expense of Social Security, Medicare and the national debt

by Wendy W. Simmons

GALLUP NEWS SERVICE

PRINCETON, NJ -- At first glance, it appears that Americans are overwhelmingly in favor of tax cuts -- 74% of Americans favor "a cut in federal income taxes," according to a Gallup poll conducted in September of last year. For the past 25 years, in fact, over 70% of the public has favored a generic tax cut. The highest level of support for tax cuts came in 1994, when 80% of Americans favored it. At the same time, when Americans are presented with the tough choice of tax cuts versus spending cuts, they become more ambivalent. When the maintenance of such high profile programs as Social Security and Medicare are presented as alternatives to tax cuts, support for tax cuts drops significantly. Additionally, there are mixed opinions among Americans on the choice of targeted versus across-the-board tax cuts, and recent surveys confirm that tax cuts are not a high priority for Americans in 2001.

There is no question that the issue of tax cuts will be important this year. One of the centerpieces of last year's presidential campaign was a debate between George W. Bush and Al Gore about what should be done with the federal budget surplus. Bush's campaign touted a $1.3 trillion tax cut that would reduce the tax rate of all taxpayers, regardless of their income. Gore proposed a battery of smaller, more targeted tax cuts that would benefit individuals and families with specific needs, such as college tuition and child care expenses. Both candidates claimed they would use much of the surplus to strengthen Social Security. The scope and specifics of tax cuts were a salient campaign issue and will be a challenge for the Bush administration -- the public has an appetite for federal tax cuts, but still supports specific spending measures.

Americans Perceive Excessive Taxes
To begin with, it is important to note that about six in 10 Americans (63%) consider the amount of federal income tax they pay to be too much, 33% think it is about right and almost no one (1%) thinks they are paying too little (April 7-9 2000). Americans' perceived tax burden has fluctuated somewhat over the years -- in the early 1960s, Americans were evenly split between those who thought they were paying too much in taxes and those who thought the tax burden was about right. The highest percentages of people who said their federal tax burden was too much came in 1969, when almost 70% of Americans thought the amount was excessive, and then again in 1999, when 68% of the public said they were paying too much.

Tax Cuts Under the Bush Administration
Congress began debating Bush's $1.3 trillion tax cut this week. Phil Gramm (R-Texas) and Zell Miller (D-Georgia) introduced an across-the-board tax cut to the Senate on Monday, hoping to begin the new congressional session on a bipartisan note. The House Republican leadership plans to follow course in the next couple of days.

Although the public has not been asked specifically about the Gramm/Zeller bill, a CNN/USA Today/Gallup poll conducted January 5-7, 2001, showed that over half -- 52% -- of Americans favor Bush's tax plan, based on what they have read or heard. However, the public is generally pessimistic about the new administration's ability to actually pass the tax cut -- only 38% of Americans think Bush will be able to pass such legislation (50% do not and 12% have no opinion on the matter).

While most Americans favor the Bush tax cuts, the public does not think tax cuts should be among the highest priorities for the Bush administration. Americans think the new president ought to give education, prosperity and Social Security first billing.

How important is it that the Bush administration does each of the following? Is it a top priority, high priority, low priority, or not a priority at all? [RANDOM ORDER]

TOP/HIGH PRIORITY SUMMARY TABLE

 

 

Top
priority

High
priority

Top/high
priority

       
 

%

%

%

Improving education

50

44

94

Keeping America prosperous

43

48

91

Ensuring the long-term strength of the Social Security system

46

43

89

Helping senior citizens pay for prescription drugs

42

46

88

Keeping the federal budget balanced

40

48

88

Ensuring the long-term strength of the Medicare system

40

48

88

Improving the healthcare system

43

44

87

Providing military security for the country

39

46

85

Improving conditions for minorities and the poor

30

50

80

Reducing the use of illegal drugs in America

36

42

78

Improving the quality of the environment

30

48

78

Improving race relations

28

47

75

Cutting federal income taxes

26

39

65

Improving the way political campaigns are financed

25

35

60



Americans Split Over Broad v. Targeted Tax Cuts
Tax cuts generally come in two forms: across-the-board cuts – those that would reduce the rate of all taxpayers, regardless of how much money they make -- and targeted tax cuts – those that tend to give tax cuts to people either in specific income groups or with specific needs. Depending on how the question is worded, the percentage of Americans who support each type of tax cut varies considerably. When presented with a choice between across-the-board cuts and targeted cuts to fix certain problems, Americans are split down the middle -- 41% favor across-the-board cuts, 44% favor targeted cuts (10% favored no tax cuts at all). However, when the question specifies the beneficiaries of the targeted cuts -- those making less than $70,000/year -- a majority (51%) favor the targeted cuts and about a third (33%) favor the across-the-board cuts (14% favored no tax cuts at all). Interestingly, even those people making more than $75,000/year – and thus would not benefit from the proposed cut -- were slightly more likely to favor the targeted cut (48%) than the across-the-board cut (41%).

NEXT TWO QUESTIONS SPLIT SAMPLE

Which of the following would you prefer to see Congress pass next year -- [ROTATED: broad, across-the-board tax cuts (or) targeted tax cuts to alleviate specific problems (or) no tax cuts at all]?

[BASED ON -- 506 -- NATIONAL ADULTS IN FORM A; ± 5 PCT. PTS.]

 

Broad, across-the-board

Alleviate specific problems


No tax cuts

MIXED/
NEITHER
(vol.)

No
opinion

2000 Sep 11-13

41%

44

10

1

4



Which of the following would you prefer to see Congress pass next year -- [ROTATED: broad, across-the-board tax cuts (or) targeted tax cuts benefiting mostly those making less than $70,000 a year (or) no tax cuts at all]?

[BASED ON -- 502 -- NATIONAL ADULTS IN FORM B; ± 5 PCT. PTS.]

 


Broad, across-the-board

Those making
less than
$70,000 a year



No tax cuts


MIXED/
NEITHER
(vol.)


No
opinion

2000 Sep 11-13

33%

51

14

*

2



The support for targeted tax cuts appears either to have strengthened during the presidential campaign -- a reasonable possibility given Al Gore's championing of such cuts -- or Americans are particularly sensitive to whether a tax cut will benefit certaingroupsor fix certainproblems. In the questions above, respondents were forced to choose between a broad cut and a cut to "alleviate certain problems." In a March 1999 poll, a majority of Americans -- 72% -- said they would prefer an across-the-board tax cut for all Americans, rather than targeted cuts for certain groups and for specific situations. Although the differences in question wording are subtle, it appears that the public is more apt to support tax plans that focus on problems, rather than groups of people.

If there are going to be tax cuts, which would you prefer [ROTATE 1-2]:

 

   

1999 Mar 5-7

 

An across-the-board income tax cut for all Americans (or)

72%

Targeted tax cuts for certain groups and for specific situations

26

No opinion

2

 

100%



Social Security, Medicare and Paying Off the National Debt Trump Tax Cuts as Priorities for Public
Although Americans disdain government programs in the abstract, the two largest government programs --Social Security and Medicare -- are top fiscal priorities for the public. When Americans are presented with a choice between spending more on "government programs" or more on tax cuts, a majority prefers to spend more on tax cuts. However, when asked specifically about spending money on Social Security or Medicare, a strong majority favors spending money on these programs instead of tax cuts. According to a variety of survey data collected over the past two years, the public has a hierarchy of fiscal priorities when it comes to the budget, with Social Security and Medicare at the top and paying off the national debt a close second.

An experiment embedded in a Gallup poll conducted July 16-19, 1999, illustrates the differing levels of public support for government programs in the abstract and specific government programs. A randomly selected half of the sample was asked whether they would prefer some of the surplus money to be used on tax cuts or increased spending on education, defense and Medicare. The other half was asked whether they would like tax cuts or increased spending on government programs. Majorities favored spending money on education, defense and Medicare rather than tax cuts, but majorities also favored spending money on tax cuts rather than government programs.

The specific question wording for form A:

As you may know, the federal government is currently running a budget surplus, meaning that it is taking in more money than it spends. President Clinton and Republicans in Congress both plan to use much of the surplus money for Social Security, but they disagree over what to do with the rest. How would you prefer the REST of the budget surplus used?

(based on form A: n = 513; margin of sampling error = +/- 5 percent)

To increase spending on education, defense, Medicare and other programs (or) 61%

To cut taxes (or) 33

Neither /other 5

The specific question wording for form B:

As you may know, the federal government is currently running a budget surplus, meaning that it is taking in more money than it spends. President Clinton and Republicans in Congress both plan to use much of the surplus money for Social Security, but they disagree over what to do with the rest. How would you prefer the REST of the budget surplus used?

(based on form B: n = 518; margin of sampling error = +/- 5 percent)

To increase spending on other government programs (or) 28%

To cut taxes (or) 64

Neither/other 07

No opinion 01

Other survey data show a similar pattern. According to a Washington Post poll conducted October 12-19, 2000, a minority of Americans (20%) preferred spending the budget surplus on tax cuts, when given a choice among tax cuts, strengthening Social Security and Medicare, and reducing the national debt. A plurality (44%) of Americans said they would like to see the surplus spent on Social Security and Medicare, 24% preferred that the extra money be spent on debt reduction. In a Pew Research Center poll conducted February 9-14, 2000, tax cuts were at the bottom of the list of what Americans would like to do with the surplus -- just 12% of Americans said they would like the extra money used on tax cuts, 44% wanted the money used for Social Security and Medicare, 18% wanted the funds directed towards paying down the national debt and 24% favored spending the money on domestic programs such as health, education and the environment. An NBC News/Wall Street Journal Poll, conducted October 13-15, 2000, found that most registered voters (53%) preferred a presidential candidate whose first priority was paying down the debt, rather than one whose first priority was cutting taxes (39%).

The public's preference for spending over tax cutting may be a function of the strong economy America has been enjoying. It may be that the public sees the budget surplus as an opportunity to fix existing problems. In an August 1999 poll, Gallup asked Americans whether the government ought to cut taxes even if it means putting off some important things that need to be done -- just 21% of the public agreed that cutting taxes should take precedence; 58% disagreed. When asked the same question in 1979 -- a very weak economic period -- 62% of Americans thought tax cuts should take priority, whatever the cost, and only 12% disagreed.

Inheritance Taxes
Another high priority for Bush will be to eliminate the estate tax. Although the Republican leadership has been quite vocal about the importance of eliminating this tax, most Americans do not have strong feelings about the estate tax either way. When asked whether the federal inheritance tax was too high, about right, or too low, a majority of Americans (53%) said they did not know enough about it to say (June 22-26, 2000). On the other hand, when the details of the inheritance tax are explained to them in the question, 60% of Americans favored eliminating it. It appears that this support is principled, rather than self-interested, because only 17% of respondents thought they would personally benefit from such a tax cut. (Experts estimate that around 2% of the American public would benefit from an elimination of the estate tax.)

As you may know, federal inheritance taxes currently apply to estates valued at more than $1 million. A new proposal would eliminate all inheritance taxes on estates over $1 million as well. Would you favor or oppose that proposal?

 

 

Favor

Oppose

No opinion

 

 

 

 

2000 Jun 22-25

60%

35

5



If such a proposal were passed into law, do you think you would or would not personally benefit from such a law in the future, or don't you know enough to say?

 

 

Would personally benefit

Would not personally benefit

Don't know enough to say

No
opinion

 

 

 

 

 

2000 Jun 22-25

17%

43

39

 


Survey Methods

The results below are based on telephone interviews with a randomly selected national sample of 1,055 adults, 18 years and older, conducted January 15-16, 2001. For results based on this sample, one can say with 95 percent confidence that the maximum error attributable to sampling and other random effects is plus or minus 3 percentage points. In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.

Based on what you have read or heard, do you favor or oppose the federal income tax cuts George W. Bush has proposed?

 

 

Favor

Oppose

No opinion

 

 

 

 

2001 Jan 5-7

52%

33

15



Do you think Bush will or will not be able to pass the federal income tax cuts that he has proposed?

 

 

Will

Will not

No opinion

 

 

 

 

2001 Jan 5-7

38%

50

12



*Less than 0.5%

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