US rich aren’t paying their fair share in taxes, but …
If you ask people what bothers them most about taxes, the most common answer is that they think either corporations or the wealthy aren’t paying their fair share. Vanessa Williamson, a fellow at the Brookings Institution
Both President Donald Trump and House Speaker Paul D. Ryan want to slash taxes mostly for the wealthy, but most Americans think the wealthy already pay too little.
According to a Gallup poll from last April, 61 per cent of Americans feel that the rich contribute less than their fair share in federal taxes.
Democrats have the strongest sense of tax injustice, but a surprisingly large number of conservatives hold the same views: A plurality of Republicans (45 per cent) told Gallup that upper-income Americans don’t pay enough in taxes - more than those who said that the rich pay enough ( 32 per cent) or those who said the rich pay too much (20 per cent).
Yet, when the same Gallup survey asked if people would support “heavy taxes” on the rich, the Republicans disagreed. Although 45 per cent of them felt that the rich weren’t pulling their weight, only 22 per cent said that the government should tax the rich more.
This might seem like a contradiction, but it reveals how little faith most conservative voters have in the tax system. And it shows how Republican leaders might win support for their regressive tax ideas even among blue- collar constituents.
One key idea is that people don’t really care about rates - they care about loopholes, says Vanessa Williamson, a fellow at the Brookings Institution who recently published a book of interviews about American attitudes toward taxation.
“If you ask people what bothers them most about taxes, the most common answer is that they think either corporations or the wealthy aren’t paying their fair share,” she says. “But people tend to understand this as a problem of loopholes. They think that the reason rich people aren’t paying enough is that they have access to all these special deductions.” Williamson says that this impression, which is common on the left and the right, is influenced by the way that people file their own returns. “When you’re doing your taxes this time of year, you’re looking for your own ‘loopholes,’ in some sense,” she says. “You’re looking for your own deductions and tax credits, like the home mortgage deduction or the EITC. You’re not really thinking about the rates you’re paying.”
Instead, the process of filing income taxes reminds people of the system’s complexity. “The tax form itself reveals that there are a lot of moving parts here - and you don’t get to take advantage of all of them,” says Joe Thorndike, a tax historian at Tax Analysts. “You see these little categories, and it’s logical to think: ‘Why are all these other people getting these special deals?’ ”
There’s a widespread sense that the rich can afford to pay accountants to exploit all the nooks and crannies in the tax code, leaving the middle class to pay the price. As one person complained to Williamson in her book, “I know that I’m probably paying too much because of how I get my taxes done. The H& R Block lady is probably not the best at finding loopholes.”
Williamson says that most Americans support a progressive income tax, where the rich pay a higher percentage of their income. Even those who want a flat tax are motivated by a desire to see the rich pay their fair share, she says. Most of them believe that flat tax would be more progressive than the current situation because it would be simpler and therefore stop richer people from taking advantage of so many tricks in the tax system. — WP Bloomberg