You probably don’t want to hear this, especially this week. But your taxes are probably too low.
Fifty-six percent is also the highest overall share Pew has ever found, over the nearly three decades it has asked Americans this question.
So are Americans’ tax levels actually getting more burdensome? By at least one measure, the answer is no; in reality, the opposite. At the same time that Americans have become more likely to complain that their taxes are too onerous, their tax rates have generally been falling.
Federal tax rates fell pretty much across the board as a result of the 2017 tax cuts signed into law by President Donald Trump. Yes, those tax changes were especially generous to higher-income households and corporations, but nearly everyone enjoyed a tax cut.
Taxes materially increased in fewer than 5 percent of households as a result of the law, when all provisions are accounted for (rate cuts, the cap on state and local tax deductions, etc.), according to the nonpartisan Tax Policy Center.
That’s not the only reason tax burdens have declined in recent years.
Early in the coronavirus crisis, Congress passed sweeping stimulus and relief programs administered through the tax code, such as direct payments and an expanded child tax credit. As a result, in 2021, an unusually high share of households had either zero or negative tax liabilities — even when accounting for all federal income, payroll and excises taxes — Congress’s nonpartisan Joint Committee on Taxation estimated that year.
Perhaps Americans are expressing frustration about their tax burdens today because they’re comparing their rates with those unusually low levels from early in the pandemic. Except that also seems unlikely, because many Americans apparently didn’t notice them even as those temporary tax breaks and payments were taking effect, surveys suggested at the time.
Since then, nearly every state has cut taxes, too.
So why is there such a disconnect today between the direction of tax changes and the direction of Americans’ views of their taxes? Obviously, the cost of living has risen a lot since covid-19 began to affect the global economy. That weighs heavily on consumers’ minds and might cause any expense, taxes included, to grow more salient. Dealing with the IRS is no picnic either.
Additionally, the tax code is extremely opaque. Between paycheck withholding and the complex interactions across different provisions of the tax code, it can be difficult to discern whether your tax obligations actually rose or fell from one year to the next. As a result, people’s perceptions regarding the size and fairness of their tax bills are heavily influenced by the messages they hear from politicians and pundits about the tax system.
And those political narratives have changed in some important ways in recent years.
For decades, Republican politicians have been telling Americans that their taxes are too high (regardless of where actual tax levels are). Then, in the past decade or so, Democratic politicians, perhaps wary of being branded as “tax and spend” liberals, all but conceded the issue.
From moderates such as President Biden to progressives such as Rep. Alexandria Ocasio-Cortez (N.Y.), Democrats have basically agreed with Republicans that (most) Americans are overtaxed. Democrats still wish to expand the social safety net, however, which requires — you guessed it! — more tax revenue. Democrats square the circle with some mathematical jujitsu, by claiming that all those safety-net expansions can be paid for solely by soaking “the rich.”
Who counts as rich, you ask? It’s a vanishingly small sliver of the population. According to Biden, only the top 3 percent of households (i.e., those earning more than $400,000 a year) can afford to pay higher taxes; according to Ocasio-Cortez, it’s instead only roughly the top 0.03 percent (i.e., those with a net worth above $100 million).
Alas, there’s not remotely enough money on those would-be money trees to pay for all the things that Democrats want. Or even the things that past Congresses have already committed to: Recall that the United States already has large fiscal deficits in the years ahead, even without creating new programs. We also already have a lower overall tax burden as a share of the economy than most rich countries, which generally have broader tax bases and higher average rates than we do.
Including for the middle class.
By all means, raise taxes on the ultrawealthy. They should pay more. But if we really want a more robust welfare state, or even to sustain the welfare state we’ve already promised, that probably requires higher taxes from most of the rest of us, too.
