First, polling suggests that Americans see the rich as surrounded by legions of the best tax lawyers and accountants money can buy, who use arcane loopholes in the tax code to shelter their income from the taxes the rest of us must pay. Accordingly, they assume the rich pay little or no taxes. For example, one poll found that only 24 percent of Americans believe the rich pay “the highest percentage of their income in total federal taxes.” Over half see middle-income earners as bearing the heaviest load. In reality, the IRS reports that the wealthiest 10 percent of taxpayers, who account for fully 70 percent of all income-tax receipts, send Uncle Sam an average of 18.7 percent of their income. The next wealthiest 40 percent face an average tax rate of barely 8 percent. Finally, the average tax rate paid by the bottom half of Americans stands at a mere 2.6 percent.
So it is not surprising that, in the abstract, Americans feel that wealthy individuals can belly up to the bar and shoulder a heavier tax burden, all for the common good. That’s not asking too much, is it?
Okay, perception is reality. But what do Americans think a “fair” tax burden looks like? What’s the maximum proportion of an individual’s income — even someone who meets the definition of being rich — that government should take in taxes?
The answers will surprise, and disappoint, the class warriors.
Between 2005 and 2009, the Tax Foundation commissioned a series of polls asking voters to assess the “maximum percentage of a person’s income that should go to taxes — that is, all taxes, state, federal, and local?” The mean response, between 14.7 percent and 16.0 percent, was well below today’s actual total tax burden.
Similarly, in 2009 Fox/Opinion Dynamics asked: “Out of every dollar, what’s the highest percentage anybody should have to pay?” Over half said the total tax burden should be less than 20 percent; another quarter thought it should top out at between 20 percent and 30 percent. Only one in ten saw a top rate of over 30 percent as acceptable.
Finally, yet another 2009 poll, this one commissioned by Resurgent Republic, asked voters to pinpoint “the maximum percentage that the federal government should take from any individual’s income — 10 percent, 15 percent, 20 percent, 30 percent, 40 percent, 50 percent or more?” One-third took the biblical view and said the government’s claim should be no greater than 10 percent of our incomes. Another third of voters would tolerate a total tax burden of somewhere between 10 and 20 percent. In all, 69 percent of registered voters — including 62 percent of registered Democrats — want to keep at least 80 percent of what they earn and will grudgingly concede the remaining 20 percent to the government. A tax system that crosses this line in the sand garners little support, a mere 7 percent of registered voters and only 11 percent of registered Democrats.
It’s rare to find such consistency in polls conducted by a wide array of polling organizations. And serendipitously for conservatives, this sentiment comports with current reality. The average federal tax rate tops out at 18.7 percent for the wealthiest tenth of Americans and registers below 10 percent for everyone else.
Liberals, we know, want to push an unprecedented tax burden on Americans that could exceed 25 percent of gross domestic product, and they envision federal spending trending even higher. The good news as we enter the final stages of the negotiations over the debt ceiling is that Americans will not tolerate this new normal.
— Michael G. Franc is vice president of government studies at the Heritage Foundation.