Opinion: Daily Journal

How High Is High Enough?

RALEIGH – I drive cars. I like cars. I want my car to be reliable, safe, and efficient.

That means I am the best expert you will ever find about how I feel about my car. That does not make me an authority on cars. If you ask me detailed questions about which car you should buy, how much you should pay for it, or how to maintain it properly, you would be well advised not to risk your money or life on the answers.

We make this distinction all the time in our daily lives. We don’t confuse knowledge with intelligence, or a snap opinion for a considered judgment. Yet when it comes to surveys about complex issues, politicians and activists often trumpet the results of poll questions that add little to a real understanding either of the facts of the case or what most voters would think if they knew those facts.

Most Americans are busy and don’t follow politics closely. That’s why pollsters can so easily make use of cold questions to manufacture whatever political talking points they like.

Take the hot topic of the present moment: taxes. Conservatives point to polls showing a general public disdain for tax increases, deficit spending, and government growth. Liberals point to polls showing public support for tax increases on corporations and the wealthy.

It is not necessarily inconsistent to think taxes in general are too high and that some specific taxpayers aren’t shouldering their fair share. But the more fundamental problem is that when pollsters ask questions about taxes, they assume much more information than respondents possess.

Quick: tell me how much you paid in federal, state, and local taxes last year. What percentage of your income went to taxes? How does it compare to the share of income you spent on housing, clothing, food, or other goods and services?

Stumped? I would be, too. I study tax policy as part of my job, and I could offer you only a rough approximation of my total bill for income, payroll, property, sales, excise, and other government taxes and fees, plus the amount of indirect taxes I shoulder as an employee or consumer.

To ask people for their general philosophical views on taxes is one thing. To ask them specific questions about tax rates, tax fairness, or tax reform without providing them some data to chew on is to produce results with a limited application to the real world.

The truth is that much of the current sentiment in favor of tax hikes for “the wealthy” is based on the fiction that rich people have lower effective tax rates than poor or middle-income people. It is also based on a gross public underestimation of current tax burdens.

According to the liberal Citizens for Tax Justice, the least-affluent 20 percent of Americans pay about 16 percent of their income in federal, state, and local taxes. The next quintile (call them lower-middle income if you like) pay 21 percent. The third quintile (true middle) pay 25 percent. The fourth quintile (upper-middle) pay 29 percent. The final quintile, the most affluent Americans, pay about 31 percent. So the tax burden on wealthiest Americans is already about twice as high in proportional terms as the tax burden on the poorest Americans.

I believe that if more voters knew these facts, they would be less inclined to favor soak-the-rich tax schemes. I based this belief on the fact that, when asked by multiple pollsters what the maximum tax burden ought to be, instead being asked to guess at what it is, the vast majority of respondents say the maximum tax burden ought be lower than 30 percent, and in the most recent survey on this topic – an April 2009 poll by Opinion Dynamics (see p. 25) – a slim majority said it ought not to exceed 20 percent.

In other words, almost all Americans think it would be unjust to force anyone to pay a third or more of their income to the government. So the best response to the Left’s tax demagoguery is to improve public knowledge of tax facts. Will do.

Hood is president of the John Locke Foundation.