People Like Tax Cuts
October 16, 2003
It is considered paradoxical that middle and lower income workers who pay little or no income tax supported President Bush's 2001 and 2003 tax cuts. Since people tell pollsters they want more government services and are concerned about rising income inequality, some economists think they should oppose tax cuts that benefit people making more than they do. Surely the public is either uninformed or misinformed?
- According to surveys, some 66 percent of families earning less than $50,000 a year who said increasing inequality was a bad thing and that the rich pay less than they should in taxes also support eliminating the death tax.
- Whether someone thought taxes on the rich were too low or too high was irrelevant to their position on tax cuts.
- Half of the public thinks "most families have to pay the federal estate tax when someone dies," and just a third recognize that relatively few do.
- Most people say they pay more in federal income taxes than in Social Security and Medicare taxes.
- Only 29 percent thought high-income people would benefit most from Bush's proposal to accelerate and make permanent previously enacted tax cuts.
- Although those who were better informed were less likely than the uninformed to support the 2001 tax cut, as many of the most informed supported the tax cuts as opposed them.
- The most informed voters were no less likely to support eliminating the estate tax.
Finally, most people underestimate the size of the federal deficit -- but when told how big the deficit actually is, they are less inclined to say it is serious.
Source: Alan B. Krueger, "Cloudy Thinking on Tax Cuts," Economic Scene, New York Times, October 16, 2003.
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