Tax me. Please
Tax opposition has been the organizing principle of Republican politics since the 1970s, from the property tax revolt to the “Taxed Enough Already” rhetoric of the Tea Party. But the visibility of these conservative mobilizations have disguised an important truth: Americans share a fundamental civic commitment to taxpaying.
For six years, I have studied Americans’ attitudes about taxes as they reveal them in surveys, interviews, public statements and the voting booth. The data are clear: Americans do not think it’s smart to avoid your taxes; they think it’s unethical.
Pollsters have been asking Americans whether “it is every American’s civic duty to pay their fair share of taxes.” Every year, about nine in 10 Americans agree with that sentiment. In 2009, 3 percent of respondents disagreed. That level of accord is very rare. To give you a point of reference: About 6 percent of Americans think the Apollo 11 moon landing was faked. On the civic responsibility of taxpaying, Americans are about as close to consensus as they ever get.
This sentiment has been stable for as long as questions like this one have been asked, even at the height of the Reagan revolution. In 1983, in an era when popular estimates of government waste were at a record high, tax cuts were at the top of the political agenda, and politicians competed to hate “big government” the most, Time magazine asked respondents if they agreed with the statement “Government spending is out of control, so there’s nothing wrong with holding back a little bit on taxes.” Such a leading question should have pushed Americans to express any unwillingness they felt about footing the bill for government. But given every opportunity to sign off on tax avoidance, 80 percent of Americans still said no, it was not OK to hold back on your taxes.
The social norm of taxpaying is one reason tax compliance in the United States is very high by international standards. Certainly our system of tax withholding and reporting is crucial to ensuring tax money is collected. Nonetheless, taking account of the actual risks of being caught and fined by the IRS, economists have suggested that most individuals, behaving rationally, would evade their taxes entirely. But in reality, more than 140 million households file their taxes every year, and about 83 percent of the total tax liability is paid to the IRS on time. Social scientists studying tax compliance explain this paradox by saying Americans have a culture of high “tax morale.”
This does not mean Americans are always happy with their taxes. Of course not. But what really upsets people about the US tax system is tax returns like Donald Trump’s. Trump’s 1995 tax documents, obtained by The New York Times this month, show that Trump could have avoided paying any federal income taxes for nearly two decades. When the rich can get away with paying less than middle-income people, Americans get very angry indeed.
Asked what bothers them most about taxes, Americans overwhelmingly say the feeling that the wealthy and corporations are not paying their fair share. This is the top issue for nearly two-thirds of Americans. In contrast, 8 percent of Americans say that their biggest concern is the amount they personally pay in taxes. What upsets most people about taxes is not the amount they contribute. They are angry about the amount that the wealthy can avoid contributing.
Their anger is not limited to out-and-out cheating. That wealthy people and companies can avoid taxes legally does not make the practice acceptable to most Americans. For instance, when big corporations avail themselves of overseas tax havens, a majority of Americans call that behavior “very unpatriotic.” Even when corporate tax avoidance is legal, most Americans believe corporations should be punished for taking advantage of the system. More than three-quarters of Americans say companies benefiting from international tax shelters should not be eligible for government contracts.
In interviews I conducted alongside my survey research, Americans often, of their own accord, raised the question of special tax breaks for corporations and the wealthy. Tax avoidance — not tax fraud — was the first issue raised by one interviewee, a 30-year-old Democrat from Connecticut. “Not tax dodgers so much, but people whose companies are headquartered in the Caribbean” and get away with paying less than they should, she said. “I’ve heard of a lot of corporations that have a good enough lawyer where they don’t pay,” a 56-year-old Republican woman in Texas told me. “I think it’s a travesty when a business is having the benefit of being in this country, but they’re not paying their fair share.”
Outrage at the wealthy and powerful manipulating the rules to not pay their fair share
Americans don’t think it’s smart to avoid the taxman: they think it’s wrong
of taxes is deeply embedded in the American tradition. In fact, the original Boston Tea Party, now wrongly remembered as an early example of American antitax fervor, was not motivated by high taxes. It was an act of resistance against what we might deride today as a corporate tax loophole. The British government wanted to give the British East India Co. a special tax break on tea they sold in the American colonies. Colonists worried that this policy would give the company an unfair market advantage and create a powerful monopoly. The Sons of Liberty responded, famously, by throwing the subsidized tea into Boston Harbor. From before the nation’s independence, Americans fought against special tax privileges for big business.
What does all this mean for Trump? In the heat of an election, motivated partisans on both sides tend to endorse their candidate’s positions and actions, including behavior they would decry in a political opponent. But when Trump told the Democratic nominee Hillary Clinton in the first presidential debate that paying no federal income taxes made him “smart,” his comment demonstrated a very fundamental divide between the Republican candidate and the electorate on a core question of civic responsibility. When the wealthy avoid paying taxes, it does not impress average people, it offends them.
Whether or not it costs Trump at the polls, the staying power of his tax issues highlights an underappreciated fact of American life: Paying your fair share of taxes is a norm that a vast majority of Americans hold dear. And while Americans have remained committed to the principle of taxpaying for more than 30 years, they have also grown markedly more positive about tax increases. In the late 1970s and early 1980s, about 1 in 5 measures raising taxes passed muster with the voters. In the past 10 years, voters have approved half of the 62 tax-increasing measures that have appeared on state ballots.
Voters today are as likely as not to approve a state tax increase. This sizable shift in the attitude of the US electorate could have important political consequence as the country grapples with vital problems such as climate change and infrastructure renewal that have expensive solutions. But we can do this only if the real views of the American people are reflected by their representatives in Washington.
Vanessa Williamson is a fellow in governance studies at the Brookings Institution and the author of the forthcoming book ‘Read My Lips: Why Americans Are Proud to Pay Taxes.’