Read My Lips: Why Americans Are Proud to Pay Taxes 9781400885015

Citation preview

READ MY LIPS

READ MY LIPS ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★

W HY AM E RICANS ARE PROUD TO PAY TA X E S ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★

Vanessa S. Williamson

Princeton University Press Princeton & Oxford

Copyright © 2017 by Princeton University Press Published by Princeton University Press, 41 William Street, Princeton, New Jersey 08540 In the United Kingdom: Princeton University Press, 6 Oxford Street, Woodstock, Oxfordshire OX20 1TR press.princeton.edu Jacket art courtesy of Shutterstock All Rights Reserved ISBN 978-0-691-17455-6 British Library Cataloging-in-Publication Data is available This book has been composed in Baskerville 120 Pro and Berthold Akzidenz Grotesk Printed on acid-free paper. ∞ Printed in the United States of America 1 3 5 7 9 10 8 6 4 2

CONTENTS

List of Illustrations Preface: The Tax Revolt Was a Long Time Ago Acknowledgments Introduction

vii ix xvii 1

1. Pride and Prejudice and Taxes

26

2. How the Taxpaying Experience Obscures Low-Income Taxpayers

46

3. Where Should Tax Money Go?

79

4. How the Taxpaying Experience Shapes Attitudes about Progressivity

117

5. (How) Is Tax Money Wasted?

142

Conclusion Appendix A. The U.S. Tax System: A Brief Introduction Appendix B. Meet the Interviewees Notes Index

165

183 193 235 277

I LLUSTRATIONS

Table I.1. Demographics of Interviewees and Survey Respondents

18

Figure 0.1. The Success of Tax-Increasing State Ballot Measures, 1977–2014

xiv

Figure 1.1. Consistent Agreement on the Responsibility of Taxpaying

29

Figure 2.1. The Taxpayer Gap

47

Figure 2.2. Perceived versus Estimated Taxes

54

Figure 2.3. Partisan Estimates of the Taxpaying Population

74

Figure 3.1. Approval and Salience of Major Public Investments

83

Figure 3.2. Approval and Salience of Major Public Investments, by Party

84

Figure 3.3. Lower Estimates of the Taxpaying Population, More Welfare Opposition

109

Figure 5.1. What Americans Mean by Government Waste

148

PREFACE The Tax Revolt Was a Long Time Ago

When I tell people I study Americans’ opinions about taxation, their reactions are predictable. First, a pained look usually passes across the face of my interlocutor, as he or she regrets asking me about my presumably dreary work. Second, he or she informs me that Americans hate taxes. Americans are angry, I’m told, or selfish, or shortsighted, or prefer to be self- sufficient and are therefore intrinsically antigovernment. For one reason or another, Americans just do not want to pay the government’s bills. This popular vision of Americans as anti-tax ideologues surely draws some of its power from the media. On Fox News, conservative pollster Frank Luntz told Bill O’Reilly that taxes are an “emotional” issue for the voters because “nobody wants their taxes to go up.” Journalist Maria Bartiromo, hosting a 2015 Republican presidential primary debate, insisted “there isn’t anyone in this audience or watching at home tonight who would not like to pay less in taxes.” Perhaps surprisingly, this vision of the American public is common on the political left as well. On CNN’s

[ ix ]

preface “Crossfire,” Bill Press—the host representing the liberal viewpoint—opened the 1997 Tax Day show by saying, “It’s April 15, the one day all Americans agree on something—we all hate paying taxes.” On MSNBC, left-wing commentator Ed Schultz affirmed in 2011 that “there’s no doubt Americans hate taxes.” The idea is so entrenched that it is used to frame even contradictory evidence. In 2003 journalist Bill Schneider began a discussion on low support for tax cuts by saying, “Americans hate taxes. The country was founded on that, and it’s held steady for so long it seems like a fact of political life in this country.” Confronted by survey evidence that some Americans like filing their income taxes, Lou Dobbs asked rhetorically, “Who in their right mind loves paying taxes? They probably work for the IRS, for crying out loud.”1 As in the popular press, public opinion polls commonly assume that the only attitude Americans hold about taxes is one of enraged opposition. For instance, Gallup regularly asks, “Which of the following bothers you most about taxes?” and “Which do you think is the worst tax—that is, the least fair?” For good reason, most survey questions are not asked this way; negative questions carry a value judgment and predispose certain answers. And these questions collect only half the range of possible views. Asking people what is most bothersome about taxes ignores the possibility that they are not bothered. That the income tax is often chosen as the worst tax has very different implications when one learns, as I did in the course of my research, that it is equally commonly picked as the best tax. And yet tax questions are persistently asked in the negative.

[x]

ta x revolt was a long tim e a g o The idea that “Americans hate taxes” has become a truism without the benefit of being true. Instead, Americans see paying taxes as a civic obligation and a political act. To be a taxpayer, Americans believe, is something to be proud of. It is evidence that one is a responsible, contributing, and upstanding member of society, a person worthy of respect in the community and representation in the government. My work on taxes builds on a substantial body of scholarship that has looked at attitudes about public spending, and gives lie to the notion that Americans are knee-jerk opponents of government. Dating back at least to the work of the path-breaking social scientists Lloyd Free and Hadley Cantril in the late 1960s, scholars of public opinion have recognized that, though Americans tend to agree in principle with “small government,” they simultaneously approve of major public investments in economic opportunity.2 Forty years later, political scientists Benjamin Page and Lawrence Jacobs reviewed decades of survey data to conclude that a majority of Americans, including a majority of Republicans and the affluent, not only favor “concrete government programs targeted to jobs and wages, educational opportunity, and protections against illness and deprivation” but would even be willing to pay higher taxes to fund these efforts.3 In the face of so much contradictory evidence, how can we explain the longevity of the popular conviction that Americans hate taxes? It is hard to say with certainty, but one event within living memory seems to have played an outsized role in the consciousness of politicians, journalists, scholars, and perhaps the public as well—the tax revolt.

[ xi ]

preface The year was 1978. All spring, the Bee Gees, and their little brother Andy Gibb, had been dominating the Billboard Hot 100. Fans of Saturday Night Fever were eagerly awaiting the release of John Travolta’s next movie, Grease. And in California, voters passed a ballot measure called Proposition 13, which slashed property taxes and instituted a property tax cap that would dramatically limit state funding for more than a generation.4 Similar measures were soon on the agenda in states across the country, in what came to be known as the “tax revolt.” The tax revolt shocked elites at the time and, only a few years later, was seen as the harbinger of the end of the New Deal consensus and the dawn of Reagan-era welfare state retrenchment.5 For years, the “tax revolt” has remained a powerful political memory.6 For scholars, too, the tax revolt became a touchstone. Much of the best research on tax attitudes dates to that era, as scholars attempted to understand what appeared to be a fundamental reorientation of American politics. The origins of the tax revolt in California were not a popular clamoring for the Reagan Revolution, but instead a demand for government protection against housing market vagaries—what amounts to a social program delivered via the tax code.7 Nonetheless, Proposition 13 changed the political calculus of the two parties. Until the 1970s, tax policy was not a major component of either party’s political platform.8 After the tax revolt, tax opposition would come to be the sine qua non of Republicanism, from Grover Norquist’s anti-tax pledge to the Tea Party movement.9 In the face of this staunch opposition, the Democrats failed to develop a unified message on taxation.10

[ xii ]

ta x revolt was a long tim e a g o While anti-tax activism has, to an important degree, defined national political debates since the 1980s, these mobilizations do not accurately represent the opinions of most Americans today. The Tea Party movement, at its height in 2010, had perhaps 200,000 active participants.11 The prominence of the tax revolt and the persistence of tax opposition as a rallying principle of the Republican Party disguise fundamental changes in American tax politics. That times have changed is evident on the home field of the tax revolt, the state ballot measure. Over the past three and a half decades, state ballot measures intended to raise taxes have steadily had more success (figure 0.1). In the late 1970s and early 1980s, about one in five of these measures passed muster with the voters. In the past ten years, voters have approved half of the sixty-two tax-increasing measures that have appeared on state ballots. Today, voters are as likely as not to vote for a state tax increase.12 Moreover, many different kinds of taxes have been successfully increased by popular vote. The list of successful tax increases includes both measures targeted at the wealthy and broad-based taxes affecting nearly all state residents. And these measures are not just raising small change, either. In 2010 voters in Oregon raised their top income tax rates and their corporate minimum tax, while voters in Arizona raised the sales tax. Each bill was worth hundreds of millions of dollars annually. Meanwhile, measures to cut taxes have dwindled in their significance. In stark contrast to sweeping measures like Proposition 13, tax cut ballot measures are now often what you might call “Grandma and Apple Pie” measures:

[ xiii ]

preface

Fraction of Measures Passing

0.8

0.6

0.4

0.2

0.0 1980

1990

2000

2010

Figure 0.1. The Success of Tax-Increasing State Ballot Measures,

1977–2014

Note: Dot size is relative to the number of measures in a two-year period. Dotted line is a simple line of best fit. (OLS, or ordinary least squares, is a mathematical calculation that fits a line through a scatter of data to highlight the overall pattern. One way to visualize this process would be to draw a vertical line from each dot to the line, and imagine how tilting the line would change those distances. Technically speaking, OLS finds the line that minimizes the sum of the squares of those vertical distances.)

legislation that offers a small additional property tax credit to seniors, military veterans, the disabled, and their surviving spouses. In Colorado in 2006 a measure appeared on the ballot to reduce the property taxes paid by veterans rated as “100% disabled” due to their military service. The state estimated the measure would affect a little over two thousand

[ xiv ]

ta x revolt was a long tim e a g o people, and would save each veteran perhaps as much as $500. The voters were very willing to be generous to such worthy beneficiaries; nearly four in five Colorado voters voted in favor of the 2006 measure, a tiny cost to the state that might slightly ease the finances of a few of the state’s wounded warriors. But here’s the shocking news. Putting aside these “Grandma and Apple Pie” measures that get landslide approval from the voters, tax cuts barely outperform tax increases at the ballot box any more. If there’s a tax revolt going on in America today, it is not coming from the voters. Though ballot measures have been shown to follow broad trends in public opinion,13 many different fiscal, economic, social, and political factors influence initiative and referendum campaigns. And, of course, not everyone votes. So votes for tax increases are not proof that public opinion as a whole has shifted. But the tax revolt was a long time ago. Particularly given how much tax voting has changed, this point of reference from nearly forty years ago is surely not the best way to understand how Americans think about taxes today. It is high time to reexamine contemporary American tax attitudes.

[ xv ]

ACKNOWLEDGMENTS

The idea for this book grew out of an earlier project on the Obama-era conservative movement known as the Tea Party. In talking with Tea Party activists, I was struck by how central being a taxpayer was to their identity: a point of honor and distinction even as they railed against what they believed their tax money was buying. I also realized that the most ardent conservative voices on taxation were the only ones that were getting much attention. I wanted to understand this apparent paradox of pride and anger in taxpaying and to look more broadly at how most Americans think about taxes. I am grateful to the many people who helped me transform those first questions into a research agenda, a dissertation, and eventually this book. I have been very lucky to benefit from a strong academic community. Theda Skocpol has been an inspiration, a mentor, a brilliant critic, and an excellent travel companion; I am profoundly grateful for her scholarship and her friendship. To Andrea Campbell, my deep appreciation for her expertise on taxation, her unfailing insight, and her words of encouragement. My sincere thanks to Dan Carpenter for his incisive reading of my dissertation and for his practical advice and exceptional support as I have navigated academia

[ xvii ]

acknowledgments and publishing. I am also grateful to the field of fiscal sociology, which is thriving in large part due to the work of Isaac Martin, Ajay Mehrotra, and Monica Prasad. Jennifer Hochschild and Heather Marrow taught me a great deal about how to conduct qualitative research and how to present its results. Immense thanks also to my colleagues in graduate school who were willing to read (and reread) drafts of this work: Alyssa Battistoni, Charlotte Cavaille, Katie Einstein, Shelby Grossman, Alex Hertel-Fernandez, Carly Knight, Jen Page, Jen Pan, Beth Pearson, Amanda Pinkston, Ethan Porter, Molly Roberts, Chiara Superti, and Kris-Stella Trump. The book has also been much improved by my colleagues in the world of public policy. At the Brookings Institution, thank you to Darrell West and Bob Brier for reading the manuscript, and to Bill Gale and all my new colleagues at the Tax Policy Center, whose data I have been relying on for years and whose recent feedback on my research has been invaluable. Also, a note for anybody who wonders why their book is not done: it is probably because the extraordinary Curtlyn Kramer is not your research assistant. The central argument of this book came together during a residency at the Blue Mountain Center, an inspiring community of writers, artists, and activists. My research would not have been possible without the emergency assistance of the formidable Claire Sandberg. (When she is not moonlighting as an interview coder, Claire is rewriting the rules of political mobilization; her work deserves its own book.) Thanks also to my interview transcribers: Melissa, Elizabeth, and Nancy. Christopher Mitchell provided very useful feedback on the introduction.  

[ xviii ]

acknowledgments I would also like to express my appreciation of my editor, Eric Crahan, at Princeton University Press, for his unerring advice and for his faith in this project. Thanks also to the anonymous reviewers, whose critiques vitally strengthened my argument and immeasurably improved the manuscript.  My work has received financial support for which I am most grateful. First and foremost, my sincere thanks to the American taxpayers. My academic career rests on the foundation I received in the excellent public schools of New York City and Sacramento, California. In addition, my graduate education was funded in part by the National Science Foundation. Thanks also to the Washington Center for Equitable Growth; Harvard’s Institute for Global Law and Policy, Center for American Political Studies, and Inequality and Social Policy Program; and the Tobin Project. I am indebted to my interviewees and survey respondents who shared their time and their thoughts. In particular, I thank Alexa, who surely does not recall an email she sent me following our interview: Please do let me know if you have anything else to run by me (free of charge ;)). I feel like I accomplished more in having my voice “heard” through you than through any elected official! Ha. I found the generosity and the pessimism of this  off-hand remark highly motivating, and I hope this work succeeds in accurately presenting the voices of the American taxpayers I surveyed and interviewed. I also thank Matthew, who emailed me from a military base in Afghanistan more than a

[ xix ]

acknowledgments year after our interview to check how the project was going. (Matthew: I cannot really explain what took so long, but I am glad to report the book is done.) Finally, thanks to my family. To my parents, Liz and Arthur Williamson: you were my first readers and are still my target audience. I am also very grateful to Betsy and Douglas Johnson for their comments; it is a rare set of in-laws that one trusts with one’s book manuscript. Above all, thank you to my husband, Bradford Johnson, who has the sharpest political mind and warmest political heart of anyone I’ve ever known. This book is dedicated to our son, Storry. May our taxes build a brighter future for your generation.

[ xx ]

READ MY LIPS

INTRODUCTION All accumulation . . . of personal property, beyond what a man’s own hands produce, is derived to him by living in society; and he owes on every principle of justice, of gratitude, and of civilization, a part of that accumulation back again to society from whence the whole came. —American revolutionary Thomas Paine, 1797 Woman now holds a vast amount of the property in the country, and pays her full proportion of taxes, revenue included. On what principle, then, do you deny her representation? —National Women’s Rights Convention, 1866

Since the founding of the country, Americans have talked about taxes as a debt owed to one’s fellow countrymen.1 As Thomas Paine argued, the whole of one’s livelihood, beyond the meager life an individual could secure in a state of nature, is due to the society in which one lives. Taxes are how one pays one’s community back for making a civilized life possible, he argued. The sentiment was echoed a century later by Supreme Court Justice Oliver Wendell Holmes, Jr., who wrote, “[T]axes are what we pay for civilized society.”2 But responsibility does not run only from taxpayer to community; taxpayers also make claims upon government.

[1]

introduction Like the National Women’s Rights Convention, those seeking greater representation have often situated their demands in terms of being taxpayers. To contribute to public coffers means one should be consulted on public affairs, they argued. Taxpaying is seen as evidence of one’s worthiness for citizenship. It is an idea consecrated most famously in the United States in the Revolutionary-era slogan “no taxation without representation.”3 To use the language of political theorist Judith Shklar,4 taxpaying is an emblem of public standing, proof of one’s virtue and entitlement to political power. In the contemporary era, debates about who deserves to be American are still couched in the rhetoric of who pays taxes. Immigration reformers have campaigned under the slogan “Viva Taxes!” to highlight the eagerness of unauthorized immigrants to pay their share, and, by implication, their worthiness for legal residency.5 In the lead-up to the 2016 election, Republican Donald Trump and Democrat Hillary Clinton both discussed the status of immigrants in terms of taxes. “Our undocumented workers in New York pay more in taxes than some of the biggest corporations,” said Clinton, arguing for a path to citizenship for these immigrants.6 A few months later, Donald Trump justified the cost of mass deportation of more than eleven million undocumented residents, along with other draconian immigration policies, by saying that these immigrants “are here illegally. They are not paying taxes.”7 Throughout American history, taxpaying has been a symbolic battlefield on which political elites have fought to define the limits of citizenship. It is not only America’s leaders who treat the paying of taxes as a responsibility owed to society and evidence that

[2]

introduction one has a right to participate in the political system. This is also, as I will demonstrate over the following chapters, how most Americans today think about what it means to pay taxes. Behind the forms and the tables, the technical jargon of marginal rates and tax incidence, the act of taxpaying taps into Americans’ fundamental political values: their sense of fellowship with other people and their feelings of representation by the government. Americans treat taxpaying as a civic commitment, an act that helps define their ties to the community and the country. Because they see taxpaying as an important civic duty, Americans express outrage when they perceive others as failing to live up to this political obligation. Asked what “bothers you most about taxes,” 67 percent of Americans say the feeling that some—either the rich, the poor, or corporations— are not paying their share. A mere 8 percent of Americans are bothered most by the amount of money they themselves pay.8 It is not that most Americans mind chipping in to pay for public investments. Instead they worry that other people are not doing their part. The tax system is complicated, however, and it is hard for an individual to gauge whether others are paying their share. Listening to the news only encourages these doubts. The Wall Street Journal has famously excoriated a supposed “nontaxpaying class,” those “lucky duckies” too poor to owe federal income taxes.9 And reports of corporate tax avoidance regularly make the rounds; “The World’s Favorite New Tax Haven Is the United States” reads a Bloomberg News headline, while Forbes reports on “26 CEOs Who Made More Than Their Companies Paid in Federal Tax.”10 Based on articles

[3]

introduction like these, it is easy to imagine that neither the rich nor the poor are paying much in taxes. The message that many people are cheating the tax system falls on fertile ground in part because it jibes with the experience of taxpaying. The salience of “loopholes” in the income tax code suggests to tax filers that the wealthy are getting special breaks, to the point that many wonder if a flat tax, free from loopholes, would raise taxes on the wealthy. At the same time, the relative invisibility of the sales and payroll taxes leads many to doubt that the poor pay taxes at all. Thus the taxpaying system encourages Americans to believe that many people are not paying their share. In reality, the concern that a large swath of the American public is not paying taxes is overblown. Being a taxpayer is a membership in one of the most inclusive of clubs. Poor people, and undocumented immigrants, pay a very substantial part of their income in sales taxes, payroll taxes, and fees. The reality of taxpaying in America does not match the public perception when it comes to the poor. It is typically conservatives who underestimate the breadth of the taxpaying population, but liberals have their blind spots as well. For instance, the U.S. tax system is, on the whole, more progressive than the tax systems of Europe.11 That is to say, the American tax system places a heavier tax responsibility on the wealthy than on the poor. Of course, European countries’ spending is far more redistributive, meaning that people without much money, or who lose their job, or who get sick, have a much stronger social safety net to catch them and get them back on their feet. But those robust protections for the poor come with a tax system that is

[4]

introduction comparatively flat. In America, wealthy people pay a much higher percentage in taxes compared to the poor and middle class—at least until you reach the few thousand households making many millions of dollars or more each year.12 And even taking account of the loopholes, the special rates for investment income, and the reduction in top tax rates since the middle of the twentieth century, the existing graduated income tax is vastly more progressive than a flat tax would be. Public understanding of the tax system matters for several reasons. Most obviously, misperceptions lead many Americans to endorse different tax policies from those they would choose if they had better information. In particular, the underestimation of the taxpaying population and the misunderstanding of the graduated income tax’s progressivity push American public opinion to the right. Support for the flat tax is higher than it would be if people understood how much such a policy would lower taxes on the wealthy. And many Americans who express strong opposition to the social safety net wrongly imagine that poor people pay little or nothing in taxes. But these misunderstandings have a deeper impact as well, precisely because taxpaying is seen as a civic and moral duty. It is not just that people incorrectly think the poor are not paying much in taxes; the rhetoric that encourages the invisibility of low-income taxpayers denies poorer people full stature as citizens. Similarly, it is not merely that people misunderstand the relative importance of loopholes and rates; it is that they see tax avoidance by the wealthy as evidence of a fundamental corruption of government. Ironically, the depth of the American civic commitment to

[5]

introduction taxpaying makes the failures of government—perceived and real—especially potent frustrations.

Taxpaying as a Political Act One might imagine that people think of taxes as consumers, in the same way they consider the price of a gallon of milk. I disagree. Consumer thinking is small, transactional thinking; it is the considerations that go into choices like whether a ten-dollar difference in price is worth the drive across town. But when you ask Americans about taxes, their thoughts are anything but small. They talk about what their country means to them and how their government has let them down, about who “counts” as an American, and about the world they hope to leave for their children and grandchildren. Ask about taxes, and you hear about politics. I do not mean that taxpayers are never thinking about the dollars coming out of their wallets. Of course, anyone who has ever driven across county lines for a break on the sales tax, or waited for a state “tax holiday” to make a major purchase, has allowed economics to influence their taxpaying behavior. In situations where tax costs are very noticeable, there is evidence of a self-interested response to tax levels. Smokers oppose cigarette taxes more than nonsmokers do, and property owners tend to oppose property taxes more than do renters.13 The poor dislike the sales tax, while the wealthy dislike the income tax.14 But taxpayer preferences do not always seem to reflect economic considerations. Strikingly, when the entire federal income tax was forgiven in 1942 (during the transition

[6]

introduction to a tax-withholding system), those whose tax responsibilities had been erased were no more favorable toward the new tax plan than those who did not benefit from the windfall. The tax plan was, in fact, very popular with both groups, getting the approval of about four in five Americans.15 Simple self-interest does not always predict Americans’ tax attitudes. So taxpayers are sometimes responsive to the economic costs they encounter and sometimes they are not. One explanation may be that it is extremely difficult to assess one’s individual tax costs against the benefits one receives from government. Public goods do not come in individual serving sizes. What is the value to me, as an individual American, of the roads or the fire department? When considering the cost of veterans’ benefits, how do I put a price on the winning of World War II? It is difficult to imagine how one could conclusively make such a calculation. Moreover, as philosophy professors Liam Murphy and Thomas Nagel point out, taxes fund the legal system that defines and protects property rights in the first place. We cannot, therefore, imagine ourselves as having an income that is truly “pre-tax”; our income exists in the context of a tax-funded government that ensures the enforcement of contracts. Assessing the total benefits one receives from government would require comparing one’s current lifestyle to the “no-government world” that is “Hobbes’s state of nature . . . a war of all against all.”16 By such a standard, almost every taxpayer is coming out ahead—and it is not at all obvious what that fact should tell us about how much we should each be paying.

[7]

introduction If conducting an individual cost–benefit analysis on civilization as a whole is a futile exercise, it should be no surprise that most people do not attempt it. Instead, Americans think like Thomas Paine in his observation that opens this chapter; they consider their ties to the society in which they live. But not everyone agrees on the appropriate level of gratitude, or to whom they should feel grateful. One’s willingness to pay taxes depends a great deal on whether one shares a sense of fellowship with those receiving the perceived benefits of taxation—that is, whether one believes that one’s taxes are going to people whose lives and interests are closely tied to one’s own.17 As social scientists have observed, debates about taxes often center around the limits of the community, the boundaries of “us” and “them.”18 Concern that unpopular minorities may benefit from public spending is a very common source of tax opposition.19 Racism has been shown to be a “major factor” in white people’s support for California’s 1979 property tax cap, Proposition 13.20 An earlier wave of property tax caps in the South was also inspired by threats to the existing racial order; so closely linked were race and tax in the post-Reconstruction era that white supremacist governments often termed themselves as a return to the “rule of the taxpayer.”21 In the twenty-first century, taxation remains a racialized issue; in surveys, one’s level of opposition to paying taxes is well predicted by one’s level of antipathy toward African Americans.22 Both historically and in the contemporary era, anti-tax attitudes are often tied to anger that minority groups might benefit from public spending.23 Like other civic commitments, taxpaying rests on a norm of “ethical reciprocity”:24 people are more willing to chip in

[8]

introduction when they think others are doing their part, too. Unsurprisingly, then, opposition to minority groups’ receipt of public benefits is often framed as assessments of whether recipients are working hard and contributing to society. In his classic study of opposition to welfare spending, Martin Gilens concludes that: In large measure, Americans hate welfare because they view it as a program that rewards the undeserving poor. First, the American public thinks that most people who receive welfare are black, and second the public thinks that blacks are less committed to the work ethic than are other Americans.25 This racialized distinction between the hard-working taxpayer and the lazy recipient of tax dollars helps undermine public commitment to taxpaying. If tax opposition is high in conditions of racial and ethnic diversity, the opposite holds true when a community feels threatened from the outside. In times of war, citizens rallying around the flag are often willing to shoulder a larger tax obligation. The passage of major new taxes, and especially the expansion of progressive taxation, often coincides with grave military threats.26 A federal income tax was first passed during the Civil War, and it was expanded to most wage earners to help pay for World War II. Wartime taxes are often accompanied by a language of shared sacrifice and shared responsibility—and a marked increase in tax compliance.27 When an existential threat is faced, war can unite a community and drive up public support for taxation.

[9]

introduction So contestation over taxes tends to recapitulate other conflicts over the boundaries of the community. Racial and ethnic divisions often undercut social solidarity, reduce approval of public investment, and increase tax opposition. Times of war, by contrast, can encourage a nation to band together and bear new costs in both blood and treasure. Attitudes about taxes are about more than individual costs and benefits; they lay bare the limits of social cohesion and demarcate the front lines of social strife.

How Americans Learn about Tax Policy Taxpaying is an act that carries deep symbolic resonance about one’s place in the community—but how can an individual taxpayer be sure that others are chipping in their fair share? Taxation is, by any standard, a complicated subject. In daily life, the average American likely encounters sales taxes, income taxes, payroll taxes, and gas taxes. One might notice special taxes on cigarettes and alcohol, or hear news about corporate taxes and estate taxes. And then there are little fees that crop up on everything from a cell phone bill to vehicle registration. It is reasonable to be unsure how all these taxes add up and who ends up paying what. (For a brief overview of the U.S. tax system, see appendix A.) If we are to understand Americans’ attitudes about taxation, we need to take account of both their values and their information about the tax system. Many scholars have questioned Americans’ capacity to understand or respond to tax policy, and concluded that manipulative politicians, or plain lack of intelligence, are

[ 10 ]

introduction the root of the trouble. Perhaps most prominently, political scientist Larry Bartels, studying the Bush tax cuts of 2001 and 2003, finds that Americans were ill-informed, insensitive to some of the most significant implications of the tax cuts, and largely disconnected from (or misconnected to) a variety of relevant values and material interests.28 Bartels named his 2005 article “Homer Gets a Tax Cut,” implying that the American people share traits with the ignorant, incompetent, and lazy cartoon character Homer Simpson. Other studies of Bush-era tax reform come to similar conclusions. Political scientists Jacob Hacker and Paul Pierson are also pessimistic, arguing that elites can “confuse voters” and “prey” on their ignorance.29 It is a bleak picture. Rather than imagine policy ignorance as a character flaw, or a near-universal public susceptibility to manipulation, we can see it as the result of the mediated and direct information voters and taxpayers receive. The uncomfortable reality is this: smart, educated, and politically engaged people are often wrong about facts that matter for making policy judgments.30 With better facts at their disposal, many of these same people would have different political priorities and support different policies.31 Rather than deride the electorate as being a bunch of Homer Simpsons, we need to consider when and why members of the public receive—or fail to receive—the relevant facts that would allow them to correctly connect their values and interests with policy proposals.

[ 11 ]

introduction In the contemporary context, taxation is a subject of great political controversy: Republicans and Democrats hear very different messages about taxation.32 The most obvious difference in partisan rhetoric on taxes is Republican opposition to taxation, and especially the progressive forms of taxation. One central component of that message, in recent years, has been an emphasis on the percentage of American households that do not pay federal income tax.33 This rhetoric is perhaps most famously associated with the 2012 Republican presidential candidate Mitt Romney.34 “Forty- seven percent of Americans pay no income tax,” said Governor Romney at an election-year fundraiser. The 47 percent, Romney argued, are people who are dependent upon government, who believe that they are victims, who believe that government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you name it. That that’s an entitlement. And the government should give it to them. This contrast between a purported freeloading, non-taxpaying population and the upstanding, hardworking taxpayers was certainly not initiated by Governor Romney. Since at least 2010, conservatives have regularly used the narrowing of the income tax base to question the civic worthiness of low-income Americans. Some have even asked whether those who do not owe net federal income taxes should be allowed to vote.35 Thus those who come into contact with conservative media hear a profoundly negative message

[ 12 ]

introduction regarding taxes in general, and especially the fairness of the income tax. But Americans don’t learn everything they believe about taxes from the media. Taxes are also a fact of daily life. Only a handful of scholars have looked in any great detail at how the individual’s experience of taxpaying, most Americans’ most frequent interaction with government, influences the way they perceive tax policy or government more broadly.36 In fact, researchers tend to talk about tax policy as something hidden from public view.37 This is an oversimplification. While it is true that many parts of the tax code are obscure, some aspects are extremely salient. Above all, there is the near-universal requirement to file an income tax return, an annual ritual that shapes Americans’ understanding of tax policy writ large.38 The paperwork is extremely arduous, undertaken by 143 million households each year, taking taxpayers an average of eight hours apiece to complete.39 So central is the income-tax filing process to American public life that one question on the U.S. naturalization exam for new citizens, alongside those asking about the Declaration of Independence and the branches of government, is “When is the last day you can send in federal income tax forms?” Income tax filing reaches the status of Americana. There are reasons to think that an arduous taxpaying process is a good thing. It might encourage taxpayers to think about what government provides (or fails to provide). To the extent that the income tax awakens Americans’ sense of connection to their government, its inconvenience may be a price worth paying. 40

[ 13 ]

introduction But the income-tax filing process provides only an incomplete fiscal education for tax filers. First, the process draws attention to credits and deductions as the factor that lowers one’s tax obligations. For lower-income families, the Earned Income Tax Credit may be keeping them out of poverty; higher earners, who typically itemize their taxes, have a wide array of deductions to keep in mind. By contrast, tax rates are hardly evident at all. Unless you file your taxes the old-fashioned way, you probably will not encounter the IRS’s marginal rate tables. And filing your taxes does not require the calculation of your effective income tax rate (the net amount of income taxes paid over the year as a percentage of your income). Thus the income-tax filing process draws attention to the savings one gets from “loopholes,”41 not the impact of the tax rates.  What is more, the experience of income tax filing can be extremely frustrating and anxiety provoking,42 a process that provides a deeply disempowering lesson about citizens’ relationship to their government. The complexity of the tax filing process implies that it has been written with someone else in mind. Even the comparatively simple Form 1040 is rife with special privileges offered to certain people and not others. The document inquires about a taxpayer’s farm income, alimony, earnings from S corporations and trusts, foreign taxes, and residential energy credits. Confronted by this onslaught of  special privileges, a  reasonable inference is that the government is in the business of providing for special interests.  In addition, the prominence of the income tax stands in sharp contrast to the other taxes most people pay. While

[ 14 ]

introduction one’s income taxes are an annual hassle, one can easily be entirely unaware that one has paid an excise tax.43 Taxes that are paid in a lump sum, or that require additional paperwork on the part of the payers, are thrust under the taxpayers’ noses. Other taxes are paid incrementally and automatically and so are more likely to escape a busy taxpayer’s notice.44 In this way, the taxpaying process obscures the cost of low-hassle taxes. But high-hassle taxes are not the most expensive taxes for most American families. In fact, about half of U.S. households do not have a net federal income tax liability; the big expenses for those families are sales and payroll taxes. So the prominence of the income tax not only helps distract from other taxes, but it reduces the visibility of certain taxpayers, especially lowerincome people. In sum, parts of the tax code are made very prominent to Americans, while other parts mostly go unnoticed. This differential visibility interacts with the partisan information one receives about taxes to shape what Americans believe about the tax system, which has crucial implications for public attitudes about tax policy.

How I Asked Americans about Taxes In recent decades, it has become common to treat public opinion as “That Which Polls Measure.”45 Surveys are indeed tremendously valuable; they allow us to create representative samples of the public and quantify differences of opinion among groups of people and over time. Surveys can provide some respondents with different information from

[ 15 ]

introduction others, allowing researchers to assess how opinions might change if people were better informed or were encouraged to focus on certain aspects of an issue. But surveys also have important limitations. First, without hearing respondents’ trains of thought, we often have to speculate as to how they interpreted a question and what they were trying to convey by choosing a particular answer. Moreover, surveys reflect the interests and concerns of the survey-maker rather than of the respondents, and elitist biases limit the range of questions that are asked.46 There is, as I noted earlier, far more survey data on the income tax, a tax paid by upper-income people, than the sales and payroll taxes that take a far larger bite out of the average American family’s budget. One alternative way of assessing public opinion is through interviews. Open-ended interviews empower the respondents to set the agenda, rather than assuming the researcher knows exactly what questions to ask. Interviews are also good at capturing nuance, ambiguity, and uncertainty, and they allow respondents to easily express the strength of their opinions and elucidate the connections between their ideas. Interviews have their own shortcomings, however. Most important, one’s pool of interviewees cannot be assumed to be representative of the public as a whole. No matter how carefully one seeks a diverse group of respondents, those who are willing to be interviewed may simply be different from people who choose not to speak up. In my research, I rely on both quantitative survey data and qualitative interviews. Bringing these two kinds of data together helps counteract the weakness of each individual

[ 16 ]

introduction methodology. I use surveys to provide breadth and representativeness, and interviews to capture the depth of meaning and thought processes. By drawing on multiple kinds of data, I have greater leverage in understanding American opinion. Between the summer of 2013 and the spring of 2014, I conducted interviews with people living across the United States. A great deal of tax policy is determined at the local level, and so interviews in one city or state could easily miss much of the larger story. For this reason, I took advantage of the online crowdsourcing tool, Mechanical Turk,47 to reach a wider geographic range of interviewees, who were interviewed for approximately an hour each by phone. Each of the forty-nine interviewees was paid fifteen dollars for his or her time, in addition to a small payment for the completion of an introductory survey. Mechanical Turk has been shown to provide access to a relatively broad slice of the U.S. population.48 Nonetheless, to make the pool of interviewees even more diverse, I first contacted potential participants from groups that are underrepresented among Mechanical Turk participants, including Republicans, older people, those reporting lower levels of education, and black and Hispanic respondents. I then sampled from the remaining population of potential participants to complete the interview pool. There was a very high level of interest in participating in an interview—over four hundred survey respondents volunteered to be interviewed—and so I had many potential interviewees to choose from. Table I.1 provides a summary of my interviewees’ demographics, along with those of the respondents to my survey

[ 17 ]

introduction Table I.1. Demographics of Interviewees and Survey Respondents* Interviewees (%) Age

Gender Race and Ethnicity

8

13

13

25–34

26

15

18

35–49

31

27

26

50–64

33

25

26

65+

2

17

18

Male

45

50

49

Female

55

50

51

White (only)

76

70

74

Black

12

11

12

8

7

14

Asian

6

9

5

High school or less

14

37

40

Some college or 2-year degree

41

25

28

4-year college degree

37

22

18

8

14

9

Democratic

43

37

35

Republican

29

27

28

Independent

29

31

33

Under $20k

22

17

18

$20k–39,999

24

17

20

$40k–59,999

24

17

16

Advanced degree Political Party**

Household Income

U.S. Adults (%)

18–24

Hispanic Education

Q14 Survey (%)

[ 18 ]

introduction

Household Income (continued) Region

Interviewees (%)

Q14 Survey (%)

U.S. Adults (%)

10

13

12

$60k–79,999

2

7

9

$100k

$80k–99,999

16

23

25

Northeast

22

19

19

Midwest

26

22

23

West

18

22

23

South

33

36

36

*For details of how respondents were asked about their race, partisanship, and other characteristics and attitudes, please consult the Methodological Appendix, which includes the complete text of the survey, available here: https://dataverse.harvard.edu/dataverse /readmylips. **The percentage of people who describe themselves as “independent” on surveys can be somewhat misleading, because many people who like to say they are independent are actually pretty partisan. Most people who at first describe themselves as an independent will, in a follow up question, say that they “lean toward” or are “closer to” the Democratic or Republican Party. These “leaners,” as they are sometimes called in political science, have been shown to vote similarly to those who declare their partisanship right away. Throughout the book, I include “Democratic leaners” with Democrats, and “Republican leaners” with Republicans. The percentage of “true independents”—those who say they do not lean to either party—is 5 to 10 percent of Americans. For a nice review of this issue, see Philip Bump, “The Growing Myth of the ‘Independent’ Voter,” Washington Post, January 11, 2015.

(which I will discuss in a moment), and the makeup of the U.S. adult population as a whole. Even with the high rate of responsiveness, there are still categories of people who were hard to interview. Most obviously, it was difficult to find people over the age of sixty-five to participate; the oldest interviewee was sixty-seven years old. The sample also includes a lower percentage of Hispanic people, and of people with only a high school education, compared to the national adult population. Nonetheless, my recruitment strategy resulted in a pool of interviewees whose

[ 19 ]

introduction attitudes about taxes are largely in line with nationally representative survey samples, at least in the aggregate.49 What is valuable about interviews is not in their aggregation, however. Interviews are a productive exercise because they provide depth, a capacity to contextualize opinions within a whole person. For that reason, I include a brief biography of each interviewee in appendix B. Additionally, I am careful never to extrapolate from distribution of opinions among my interviewees to that of the general American population. When I make a claim about the U.S. population as a whole, it is grounded in quantitative survey data, not the distribution of opinions among my interviewees. My quantitative data come from multiple sources. In addition to using existing data from well-regarded polling firms, I also conducted a survey in November 2014. This poll of one thousand U.S. adults, which I will refer to as the “Q14 survey,” is an opt-in panel from the survey firm Qualtrics.50 The result is a demographic pool that more closely matches the American public as a whole (table I.1). The Q14 survey is relatively unusual in that it included a series of twelve open-ended questions that allowed respondents to express themselves at greater length. These questions reiterate some of the most productive questions from my interviews, including the following: • • • •

When you hear the word “taxes,” what comes to mind? When was the last time you paid any kind of tax at all? How does it feel to be a taxpayer? What kind of tax makes up the biggest part of your family’s budget?

[ 20 ]

introduction • What are you glad that your tax dollars pay for? • What are you upset that your tax dollars pay for? Using such broad questions gave my respondents as much leeway as possible in their answers. This approach puts the respondents in charge of telling the researcher what matters to them about taxation. It also avoids the pitfall of assuming that respondents have a certain base of knowledge about taxing and spending policies. Scholars often ask Americans about revisions to the income tax rates or their support for the estate tax, but are then left to debate whether the respondents really knew what the policies in question do.51 Using an open-ended approach, I get a more complete sense of what Americans think and know about the tax code.52 The Q14 survey allows me to quantify public opinion in a way that interviews cannot. First, I can measure the frequency with which Americans hold particular views about taxes. For example, after reading and categorizing the answers to the question, “What kind of tax makes up the biggest part of your family’s budget?” I can say that 17 percent of Americans think the sales tax is the most expensive for their family. Second, I can also use the survey data to test whether certain groups of Americans hold significantly different views from other groups of Americans. To pick an example that will come as little surprise to most political observers, my survey demonstrates that Republicans are more likely than Democrats to say they are glad to pay for military spending. It is worth taking a moment to be clear about what it means to say that Republicans are more likely than Democrats to hold a particular opinion or belief. When I report

[ 21 ]

introduction differences by party one might wonder if the difference is actually due to another characteristic that is correlated with partisanship. Republicans are, as a group, older, wealthier, and less ethnically diverse than Democrats are. Perhaps it only seems like Republicans believe X while Democrats believe Y, when in reality the difference of opinion is between the old and young, the rich and the poor, or between white people and people of color. The possibility that some unconsidered factor is the real driving force behind your results is what social scientists call “omitted variable bias.” One can never test every possible variable, but when I report a difference of opinion between two groups of Americans, it has been rigorously tested against alternative explanations via a statistical technique called multiple regression, which allows researchers to pit variables against one another and see which one best predicts a given result. The regression results are available in the online Methodological Appendix.53 Alongside aggregate survey data, I let people speak for themselves; the reader will see quotations from my interviewees and survey respondents throughout the book. So that you can distinguish interviewees’ comments from survey respondents’ open-ended responses, I’ve assigned each of the interviewees a pseudonym, such as “Alicia,” “Brandon,” “Lawrence,” and “Sharlene.” You can read more about each interviewee in appendix B, and find the full transcripts of the interviews in the Methodological Appendix. Survey respondents are described with a short descriptive phrase, such as “a forty-year-old woman from Michigan” or “a Republican from California.” Regarding the survey

[ 22 ]

introduction respondents’ spelling and grammatical errors, I decided that reproducing every small typo would be a distraction. But I use the respondents’ exact text when the level of error seems informative about the writer—for instance, where the number of mistakes suggests that the respondent’s level of education is especially low, or where nonidiomatic phrasing implies that English is not the writer’s first language. I note the unedited quotes with a carat (^). In all, the survey and interview data strongly reinforce one another. The main differences are in terms of tone— just the difference one would anticipate between a lengthy phone conversation and a brief anonymous online interaction. Interviewees answered at greater length, with more deliberation, and expressed their negative emotions in more muted terms. The survey respondents were generally less circumspect. Their word choice was saltier, sometimes even crude, and their opinions more extreme. But substantively, the views of the interviewees and the survey respondents were strikingly consonant, as the following chapters will demonstrate. Together, these data provide new insight into how Americans think about taxes.

The Structure of This Book This book is about Americans’ remarkable commitment to the civic duty of taxpaying. To be a taxpayer is to be a contributing citizen, Americans believe, the sort of person who has a right to respect from other citizens and to representation in government. Those who are believed to be nontaxpayers are understood, if they are poor, to be unworthy of

[ 23 ]

introduction public benefits, and if they are rich, as evidence of a fundamental corruption of the democratic process. Chapter 1 explores what Americans mean when they describe taxpaying as civic responsibility and moral obligation, and to whom that sense of obligation extends. Many Americans assume that immigrants are not paying their share in taxes, and conclude that immigrants are unworthy of taxfunded benefits. Chapter 2 examines the “taxpayer gap”—the fact that, though the vast majority of Americans perceive themselves as taxpayers, they also believe many adults in the United States, particularly among the poor, do not pay any taxes at all. This misperception results in part from an inattention to the cost of sales and payroll taxes, which are the primary taxes that lower-income Americans pay. Republicans in particular pay almost exclusive attention to the income tax, even when other taxes are more expensive to them personally. Chapter 3 assesses attitudes about public spending, and how those views are shaped by the “taxpayer gap.” In keeping with the body of political science research, I find that Americans are almost universally in favor of the spending they see in their local communities, and largely hostile to spending seen as benefiting outsiders. Social welfare programs receive tepid support in part because of widespread beliefs that immigrants and other perceived nontaxpayers are benefiting unfairly.54 Even taking account of partisanship, people who imagine that fewer Americans pay taxes are more likely to oppose welfare spending. Chapter 4 turns from perceptions of taxpaying by the poor to perceptions of taxpaying by the rich. Though most

[ 24 ]

introduction Americans think the tax code should have graduated rates that are higher for the wealthy, many discount the importance of tax rates because they believe the rates are undermined by “loopholes.” Some even mistakenly infer that a flat tax would raise taxes on the rich. The belief that the rich don’t pay taxes reinforces cynicism about the democratic process. In chapter 5, my respondents discuss “government waste,” a term that taps into deep worries about the power of special interests, the incomprehensibility of the government’s budgets, and the economic distance between politicians and their constituents. I conclude by considering what public attitudes about taxation tell us about the quality of democracy in America. Taxes are the dollars that American citizens raise and allocate together, according to the principle that everyone’s voice should be taken equally into account. As such, attitudes about taxes can serve as a barometer for public confidence in the democratic process more generally. Moreover, because taxes are such a fundamental political issue, the possibility that most people are wildly misinformed about the subject should raise serious questions about the meaning of democratic governance. My findings are largely a reason for hope; in general, my respondents were more public spirited and more informed than the common political rhetoric would lead one to believe.

[ 25 ]

1 Pride and Prejudice and Taxes

When I say the word “taxes” to you . . . what do you think of when I say that? Daniel, 35, independent from California: I think of taxes as the cost of sort of running the country and maintaining a culture, infrastructure of our society. The cost of being an American. ★ ★ ★

As you know, I’m studying Americans’ views of taxation and my plan is to eventually write a book about it. But if it were your book on your views, what would be the most important chapter? Alicia, 30, Democrat from Florida: I would think social responsibility, things we all owe each other as members of a functioning society. We’re not—, you know, no man is an island. We are all in this together. And, I think that more people—, I would just really want to drive home the fact that I really think more people should take more responsibility for making sure that we’re all okay as opposed to just themselves. ★ ★ ★

So, I want to talk to you a little bit about the income taxpaying process. How do you feel when you’re filling out your income taxes?

[ 26 ]

p ride and prej udice and ta x e s Roy, 61, Republican from Ohio: Oh, I feel like I am doing my part in supplying the needs and to help pay for things in this country that are needed. So, in a small way, I do feel like it’s my civic duty and that I’m responsible for paying taxes.

The subject of taxation is fraught with moral import. Even relatively anodyne questions about taxes provoked my interviewees to make bold statements about responsibility, patriotism, and the duties of a citizen. Daniel is a former Marine. He talks about the “cost of being American.” Alicia works for a national department store chain. She says “social responsibility” would be the most important chapter in her book on taxes. Roy is a retired letter carrier. He talks about taxation as a “civic duty.” Rather than merely being a payment in exchange for services, or a requirement of the law, taxpaying is widely understood as an ethical act. This chapter investigates how Americans think about the responsibility of taxpaying, and why they think taxpaying is a responsibility at all. In surveys Americans share a near-consensus view of taxpaying as a civic obligation. In interviews Americans have a lot to say on the subject of their fiscal citizenship, and they describe their responsibility in terms of their sense of shared interest, of fellowship with other Americans. Almost all of my interviewees justify taxpaying by noting that their lives are tied to the broader society, and therefore they must contribute their tax dollars to the wider social good.

[ 27 ]

chapter 1 But this social commitment is limited. When my respondents do not feel close bonds with other members of the community—as is often the case when it comes to recent immigrants—they see taxpaying as an unfair burden. Predictably, these comments carry strong racial undertones, and sometimes are accompanied by explicitly racist remarks. Thus support for taxpaying extends only to the borders of one’s own sense of community. When taxpayers believe the political community is too inclusive, their attitudes about taxes tend to become more negative.

Taxpaying Is a Civic and Moral Responsibility, Americans Agree While tax policy has become a highly controversial issue in recent decades, the idea that one has an obligation to pay one’s taxes remains Americans’ consensus view.1 Figure 1.1 presents some of the more commonly asked survey questions about the responsibility of taxpaying, across multiple wordings of a question, survey firms, and decades. All of these questions produce quite similar results; around four in five Americans, give or take a few percentage points, see taxpaying as a moral responsibility and tax evasion as morally wrong. This is a belief that is particularly strong in the United States; compared to residents of fourteen European countries, Americans are the most likely to say that cheating on your taxes is “never justified.”2 And the level of agreement becomes even stronger when the question is framed in civic terms. Over 90 percent of Americans agree with the statement, “It is every American’s civic duty to pay their fair share of taxes.”3

[ 28 ]

p ride and prej udice and ta x e s 100

dddddd c

Percent of Respondents

80

G

g

w

w

c

n n

60

40

20

0

n c w g G d

'Not reporting all income on your taxes' is 'morally wrong' (Pew) 'Cheating' on your taxes is 'morally wrong' (CNN, Time) 'Wrong' for a taxpayer to 'not report all of his income' (GSS) 'Not so wrong to cheat a little' since 'government spends too much.' Disagree. (ABC/WaPo) 'Spending is out of control,' so 'nothing wrong with holding back a little bit on taxes.' Disagree. (Time) Paying a fair share is 'every American's civic duty.' (IRS)

1980

1990

2000

2010

Figure 1.1. Consistent Agreement on the Responsibility of Taxpaying

It is important to recognize exactly how unusual it is to get this level of accord on a survey question. By way of comparison, the percentage of people who say it is wrong to cheat on your income taxes is higher than the percentage of Americans who report liking Elvis Presley (79 percent), or who describe astronaut Neil Armstrong as a hero (75 percent).4 The percentage of Americans who deny that taxpaying is a civic duty is approximately equivalent to the percentage of Americans who report believing that there is a chance that Elvis Presley is still alive (7 percent) or that the moon landing was faked (6 percent).5 When asked about the

[ 29 ]

2020

chapter 1 duty of taxpaying, Americans are about as close to consensus as they ever get. Moreover, Americans’ “tax morale” (as scholars call this strong social norm of tax compliance) is more or less impervious to the question of government waste. When Americans are encouraged to think about wasteful government spending as an excuse for tax avoidance, they reject this argument. This was true even in the early eighties, when public estimates of government waste were at their peak and many states were rushing to pass new tax caps. In 1983, 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.” The question implies that Americans are buying a product that is not worth the price—surely that should reduce Americans’ willingness to foot the bill. And yet, 80 percent of respondents disagreed, approximately the same percentage that typically describes tax avoidance as wrong.6 The public commitment to taxpaying also transcends political partisanship. Though contemporary Republican elites are unified behind an anti-tax platform, Republican voters are more likely than Democrats to see taxpaying as a moral obligation. In 2013 the Pew Research Center asked, “Do you personally believe that not reporting all income on your taxes is morally acceptable, morally wrong, or is it not a moral issue?” A large majority, 73 percent of Americans, described tax evasion as morally wrong. Looking at this poll more closely, one finds that Republicans were more likely to oppose tax evasion on moral grounds. Seventy-eight percent

[ 30 ]

p ride and prej udice and ta x e s of Republicans saw avoiding one’s taxes as morally wrong, compared to only 71 percent of Democrats. Of course, Democrats and Republicans are different in a number of ways, and one might think that these other characteristics are skewing this result. For instance, one might think that Republicans are more likely to describe tax evasion in moral terms because of the preponderance of evangelical Christians among the Republican base. But even taking account of the respondents’ religiosity, we find that Republicans are still more likely than Democrats to oppose underreporting one’s taxable income.7 Republicans believe strongly in paying taxes. What should we take from this widely held commitment to taxpaying? It is possible, of course, that survey takers are simply responding to an attractive- sounding platitude. It might be socially desirable to agree with statements that make moral claims rather than risk being seen as immoral or unpatriotic. Perhaps these surveys are just cheap talk. But when it comes to taxpaying, Americans put their money where their mouths are. The United States has one of the highest rates of tax compliance in the world.8 One might think to credit the IRS with making unhappy taxpayers foot their bills, and certainly our system of tax withholding and reporting is crucial to ensuring that tax money is collected. But studies have shown that the levels of tax compliance in the United States cannot be explained exclusively by enforcement.9 (In fact, some economists assessing the actual risks of being audited and fined have concluded that a rational person would evade their taxes entirely!) Instead, more than 140 million households file their taxes every year, and

[ 31 ]

chapter 1 about 83 percent of the total tax liability is paid to the IRS on time. Social scientists studying tax compliance explain the paradox by saying that Americans have a culture of high “tax morale.” For my interviewees, moreover, seeing taxpaying as a civic duty or moral responsibility—what some scholars call “fiscal citizenship”—is not just a pretty phrase. Instead, it is an interpretation of the world that many defend strongly.

Looking Deeper: Taxpaying and the Meaning of Responsibility Interviews offer a venue to explore what Americans mean by saying that taxpaying is a civic duty or that tax evasion is morally unacceptable. All but four interviewees agreed that taxpaying is a responsibility, a result in keeping with the national survey data presented earlier in the chapter. When I asked the interviewees to explain what this responsibility entailed, the strength and consistency of their views was remarkable. Interviewees sometimes adopted patriotic language, talking about taxes as a way of supporting the country, and at other times used a more communitarian terminology—talking about “us,” “the people” or “the community.” Many used the metaphor of “the good neighbor” to illustrate the responsibilities of the taxpayer. All of these analogies share a common core of fellowship: a sense of connection to a broader group upon which each individual depends. Interviewees commonly adopt patriotic language to describe the responsibility of taxpaying. At the beginning of

[ 32 ]

p ride and prej udice and ta x e s this chapter, I quoted Daniel, a former Marine; his comment that taxpaying is “the cost of being an American” came in response to my very first question. Roy, the retired letter carrier for the U.S. Post Office, says that taxpaying is a responsibility to “ourselves, really, and to the United States.” Aaron is a 33-year-old Democrat working in retail in northern Alabama. He sees taxpaying as “doing your part as a citizen.” Jason is a high school teacher, a 26-year-old Republican from Ohio. He sees taxpaying as a responsibility to “the founding fathers” and to “your country.” In total, twenty-seven interviewees talked about the responsibility of taxpaying as a bond with the nation as a whole. Other interviewees saw taxation in a communitarian light: as a responsibility one has to other people. Jessica, a mental health therapist living outside Atlanta, Georgia, sees taxpaying as a responsibility “to the group as a member of the group.” Alicia is a 30-year-old woman from Tampa, Florida, working in regional sales for a national department store chain. She says taxpaying is a responsibility to “society as a whole, to our community.” Craig is originally from Syracuse, New York, and works in software in Tallahassee, Florida. He says taxes are “a responsibility to each other, that’s the original reason why taxes were created.” Rhonda, a Republican pharmacy technician, believes taxpaying is a responsibility “to all of us and everyone.”10 Thirteen interviewees used only communitarian language to describe the responsibility of taxpaying, while twelve described taxpaying as a responsibility both to other people and to the country. In talking about the responsibility of taxpaying, some interviewees drew, consciously or unconsciously, from the Ten

[ 33 ]

chapter 1 Commandments. Alicia from Florida connects taxpaying to “basic considerations” for other people. “Don’t steal,” she says. “Don’t kill your neighbor.” Others use more legalistic language. Matthew, an army helicopter pilot stationed in Washington state, equates tax evasion with “sticking up a bank” or “petty theft.” Taxpaying falls into a category of very basic responsibilities to avoid hurting others. Whether respondents adopted a civic rhetoric or spoke in more communitarian terms, the interviewees imagined themselves as members of a larger entity without which they could not succeed or even survive, and so to whom they were indebted. The interviewees themselves used a variety of different rhetorical frames to express this sentiment. Some imagined a world without public goods, and noted that an individual could not flourish in such an environment. Some described their own personal success and happiness as a result of their status as Americans. Others explicitly claimed to benefit from goods that accrued to other people. Finally, a few interviewees responded in more abstract terms, expressly stating that helping the country is a way of helping oneself. In each case, however, the rationale is the same: one pays taxes because one’s fate is bound with that of the larger community. Among my interviewees, a common way of thinking about taxes was to imagine what life would be like without a functioning government. “If I want to go live in my shack in the mountains, I shouldn’t have to pay anything. Nobody’s helping me,” says Joe, a retiree in California. But in modern, complex society, Joe believes, “you can’t expect some guy like me, who’s an individual, to do everything on his own.”

[ 34 ]

p ride and prej udice and ta x e s Members of modern society owe something to one another, and so must pay taxes. Lawrence and Eileen make the same point, with reference to contemporary regions without a functioning state and civil society. Lawrence, a hair stylist from Michigan, says taxes prevent someone from “throwing me out of my house in the middle of the night and setting up a base camp of Al-Qaeda or whatever.” Eileen, a 59-year-old former mill worker, says that responsibilities like taxpaying are what keep the United States from being a “Somalia type of place.” Without the larger community, there is only chaos and insecurity for the individual. Several interviewees explicitly make the point that caring for the community is in one’s self-interest. “To take care of your country is taking care of yourself,” says 67-year-old Donna, from the Gulf Coast of Texas. “Taking care of your city, your neighborhood, your house is taking care of yourself.” Jessica, a therapist in Georgia, makes a similar point; because an individual is a “member of the group,” taxpaying is “a responsibility to everyone else and also to yourself.” Tracy, who works at the University of Alabama, uses a more concrete example. “If you don’t pay for people to be decently educated then they’re going to be drug addicts or they’re going to come and break into your home,” she says. While Tracy’s explanation is somewhat bleaker, she, Donna, and Jessica agree that even entirely self-interested persons have the incentive to care for those around them. Or, as Alicia puts it, “You know, no man is an island. We are all in this together.” By contrast, only one interviewee explained the taxpaying obligation as a kind of obedience. Bonnie, an antique store owner from Dallas, Texas, quotes the biblical parable

[ 35 ]

chapter 1 in which Jesus tells his followers to give “unto Caesar the things which are Caesar’s.” What Bonnie takes from this story is a conviction that “people in authority are in place because God put them there,” and so their laws should be followed. Bonnie seems to see taxpaying not so much as a civic or patriotic duty, but rather a simple compliance with the law. No other interviewee justified taxpaying in this way. In fact, respondents tended to respond harshly to both legal tax avoidance and illegal tax evasion. Bridget is a private investigator living in rural Pennsylvania. She says, “I don’t think people should be exempt” from paying their fair share of taxes just because “they can find a loophole around it.” It is not merely the law that creates the obligation of taxpaying—which makes sense, given (as I noted earlier in the chapter) that tax compliance is higher than makes sense if it were merely a response to enforcement. That my interviewees were so focused on the community, rather than their individual benefits, was especially surprising because our discussion of responsibility usually followed my question about whether an interviewee felt he or she had personally benefited from tax dollars. This line of questioning could have put individualized rewards (or the lack thereof) at the forefront of the interviewees’ minds. But only a handful of interviewees explain the responsibility of taxpaying in terms of the benefits received. Ralph, a drug addiction counselor from central New York state, is one of these exceptions. Using the metaphor of paying for a hospital stay, he concludes, “You get the service, you pay for it.” Denise is a 30-year-old woman from Connecticut. At one point she talks about taxation as a kind of insurance plan.

[ 36 ]

p ride and prej udice and ta x e s “You never know when . . . you might need assistance,” she says. But mostly, Denise talks about obligations we have as a community. Taxes pay for “the benefits of living in society,” she says. “It’s just a common goal.” Again, her logic is one of shared interest. The interviewees usually think about taxation not as an individual cost calculation, but as a shared cost of the commons. The “taxpayer,” then, is not just someone who pays bills on time, but someone who enriches his or her community. Pushed to explain the abstract notions they had offered like “civic duty” or “responsibility to society,” about a quarter of the interviewees reached for a single metaphor: the good neighbor. A good neighbor, these interviewees believe, offers assistance to others, especially to those unable to care for themselves. Luis, 24, works for a construction company in Lowell, Massachusetts. He describes helping a neighbor move into an apartment. Michael, 51, is from Ohio and works in IT. He talks about keeping an eye on the street and “calling the police when there’s a problem.” Lawrence mentions looking out for his elderly neighbors during the snowy Michigan winters. “If the water starts getting too high, run across the street and grab your neighbor off the porch and take her into your house,” says Donna, from the Gulf Coast of Texas. Part of helping others is being self- sufficient; a good neighbor also cares for his or her own property. Marshall, from North Carolina, mentions the obligation of “maintaining your property so it looks decent.” Alexa, 23, is a mother of two in Mississippi. She says that taxpaying is like keeping “your stuff maintained, your car and your house. For lack of a better cliché term, keep America beautiful.” As the

[ 37 ]

chapter 1 neighbor cares for his home and his street, so the taxpayer cares for his country. The capacity to do one’s part for the community and the country is a source of some significant pride. As Jacqueline, from central Massachusetts, says, “it feels fine” to be a taxpayer, because even though she doesn’t love “paying extra,” she does like “being connected with the larger whole of what it contributes to.” “It feels good to be able to contribute,” says Gabriel, a 28-year-old from Utah, “and to know that you’re part of the reason why there’s an infrastructure in place.” Wilma, a 57-year-old woman from Florida, agrees. “I feel like it’s a contribution to society and for the future,” she says. “When I’m gone, maybe my little bit of money that I’m putting in is paying somebody else’s Social Security or Medicare or whatever.” Perhaps Roy makes the point most simply: when this 61-year-old Republican is doing his income taxes, he says, “I feel like I’m doing my part.” In sum, survey data show the breadth of American commitment to the civic and moral responsibility of taxpaying. The interviews reveal the logic that underlies the commitment to this ideal. Though they reach for many different metaphors, the interviewees are largely united in believing that the responsibility of taxpaying stems from the shared fate faced by the American people. Each individual’s success, the interviewees argue, is not something entirely under their personal control. As a result, each individual owes a debt to the community—a debt to be repaid with tax dollars. Those fulfilling that obligation can take pride in their contribution to the public good, the interviewees believe.

[ 38 ]

p ride and prej udice and ta x e s

The Limits of Community Up to this point, the idea of fellowship has been rather a rosy one—Americans expressing a strong sense of civic duty and connection to the other members of their community. But one’s community extends only so far. By definition, neighborliness is a local responsibility; the metaphor implies an exclusion of those too distant to qualify for one’s assistance. The example of Bridget, the private investigator living in Pennsylvania, is instructive. She accepts that taxpaying is a responsibility only to the extent that “government’s made it our responsibility.” Where the other interviewees see themselves as indebted to the broader community, Bridget largely rejects these ties of obligation. Like other interviewees who were most negative about taxation, Bridget focused on the ways in which she was personally responsible for her successes. She is a self-described “workaholic”: You work, you save for what you want. You don’t take it from anybody. You want it, you save, you work your butt off for it. And that’s what I did. But Bridget does not subscribe entirely to a libertarian vision of “every man for himself.” Bridget feels a sense of debt to her old neighborhood and to the local families who helped her in a time of crisis. It is this experience that she draws upon when she imagines how things could be if the current tax system, which she detests, were done away with.

[ 39 ]

chapter 1 If we didn’t have a tax system in place, one of these things would happen. Either everybody would be on their own and people who needed the help couldn’t get the help and they would die or whatever, or the communities would band together like the neighborhood that I grew up in. When something happened to one person, it happened to you all. . . . We had our house burn down when I was in fourth grade. And, our neighbors—we had several workers in our neighborhood. We had a mason person, we had a contractor. . . . The contractor, our neighbor, let us live in his basement for three months for free while they built us a basement. They built us our basement and then my parents saved and got the equity from their basement, and the land that they bought, to build our house, the house that I grew up in. So, that’s what I would like to think would happen is that America would get back to its roots and realize what’s important is that you need to have a community. Bridget sees no role of the government in her family’s redemption, only the charitable impulses of those closest to her. She does not perceive a deep obligation to the broader public, because she does not believe her success is tied to that larger group. For her, the good neighbor is not a metaphor for a broader set of ties to the country as a whole. It is the actual limits of the group to whom she feels her fate connected. While Bridget was exceptional in her level of antipathy to taxes and the strength of her conviction that her success was

[ 40 ]

p ride and prej udice and ta x e s due to her own efforts, many Americans draw a distinction between the people in America to whom they feel a sense of shared obligation and those who fall outside of their selfdefined community. In particular, immigrants are commonly perceived as outsiders and non-taxpayers.

Taxpayers versus Outsiders: The Perception of Immigrants as Non-Taxpayers Aaron, 33, Democrat from Alabama: There are people like immigrants who don’t pay taxes. They’re paid cash for menial labor like landscaping or whatever. ★ ★ ★

Bonnie, 56, Republican from Texas: One problem I have is we’re down here on the Mexico border and I’m half Spanish, by the way. We have a lot of illegal aliens come in and use our medical system, which is also part of what my taxes pay for. And, they don’t pay any taxes and then it’s like, gosh, this doesn’t seem fair. ★ ★ ★

How does it feel to be a taxpayer? 40-year-old man from Virginia:11 Like I am a normal citizen not some immigrant that our president wants to let in our country and keep up because they can’t work and cant speak english and cant do anything but are tax exempt if they do find any work and our president wants us to keep up the million of illegal aliens in our country or at least keep their kids here and feed them and keep them up with tax payers

[ 41 ]

chapter 1 money that should be used to pay our country debts but is instead used to keep up Obama’s cousins^

Many of my interviewees and survey respondents raised the question of immigration and asserted that immigrants do not pay their fair share of taxes. Excluded legally from full participation in American society, unauthorized immigrants in particular are presumed not to be taxpayers. A woman from Virginia is angry that “illegals” receive help though they “haven’t paid any taxes in.” But all immigrants, no matter their legal status, are often perceived as participating in a zero-sum game with native-born Americans; any benefits these noncitizens receive are perceived as a loss for the broader community. As a matter of fact, unauthorized immigrants do pay a considerable amount in taxes.12 Nonetheless, the sentiment that immigrants are not paying their share and are benefiting unfairly from government services is widely and intensely held, as national survey data makes clear. Asked if immigrants “are a burden on social services,” 39 percent of Americans strongly agree, and an additional 24 percent agree somewhat.13 The prevalence of this belief varies by partisanship. Eighty-two percent of Republicans, compared to 56 percent of Democrats, agree with the statement that “people who have immigrated from other countries in the last ten years” are “a burden on American taxpayers.”14 Similarly, about four in five Republicans think that immigrants “benefit more from health and welfare services than they contribute in taxes.” About two-thirds of Democrats think that immigrants cost more than they pay in.15 Republicans

[ 42 ]

p ride and prej udice and ta x e s are particularly likely to see immigrants as contributing inadequately to the public purse, but most Democrats feel that way as well.16 The subject of immigrants’ taxpaying is often framed in terms of the legal status of the immigrant, with comments from my survey respondents aimed specifically at “illegal immigrants” or “illegals.” But these lines are blurry, as in the case of the survey respondent who is angry about “imagrents illegals poeple not ctizans.”^ There is also a tendency to group immigrants with foreigners. A woman from Maryland writes that she is angry about benefits accruing to “foreign people” while “Americans have to beg.” Another respondent says, “I love my country. But there is to may outsiders here.”^ The ease with which people slip from “illegal immigrants” to immigrants in general implies that legal status is probably not the central motivation underlying these attitudes; rather, unauthorized entry into the United States seems to serve as a useful symbol to express a lack of fellowship between native-born Americans and newcomers by emphasizing how some newcomers remain outside the legal boundaries of the nation. Some Americans’ comments about immigrants are explicitly racist. A woman from Georgia opposes tax money going to “sorry ass niggeres and white trash mexicans.”^ Another respondent says, “I get pretty bitter sometimes, especially when I see our money going to fund Muslims.” Other minority groups are also targeted, as in the case of a 52-year-old man from Illinois who is upset that his tax money is funding “Mexicans” and “lesbians.” Thus my survey respondents’ negative attitudes about immigrants bleed into a more

[ 43 ]

chapter 1 general animus toward minorities of all sorts—racial, ethnic, religious, and sexual. These explicitly bigoted remarks were rare, made by only about 1 percent of my respondents. But racial and ethnic stereotypes have been shown to motivate immigration attitudes in general; when people, in both the United States and Europe, talk about “immigrants” they usually are implying that those immigrants are of an ethnic minority.17 My research serves to confirm a long-established truth: for many Americans, immigrants (and particularly unauthorized immigrants) are not a part of “us.” Many of my respondents actively police the boundaries of their political community, noting precisely whose welfare they see as uncoupled from their own. Particularly but not exclusively among conservatives, the perception that immigrants are benefiting from tax dollars is a source of great anger. These attitudes are closely linked to racial resentments and, in some cases, are expressed with explicitly racist remarks. Not seen as part of the community, immigrants are deemed unworthy of the benefits of taxation—and are presumed not to be taxpayers themselves.

Conclusion Americans almost universally agree that taxpaying is a civic duty. Asked to explain what they mean by this responsibility, my interviewees describe the taxpaying obligation as a consequence of a sense of shared interest, a belief in their fellowship with others in the community. To be a taxpayer is therefore a source of pride because it is evidence that one is an upstanding, contributing member of the community.

[ 44 ]

p ride and prej udice and ta x e s Inversely, those who are seen as outsiders, like immigrants, are assumed not to be paying taxes. But it is not only immigrants who are wrongly seen as non-taxpayers. As we will see in the following chapter, many Americans believe that low-income people are not paying their fair share of taxes—or indeed, paying any taxes at all.

[ 45 ]

2 How the Taxpaying Experience Obscures Low-Income Taxpayers

How do you feel about being a taxpayer? Roy, 61, Republican from Ohio: Well, I feel like I’m contributing to the economy and the growth of our economy. I like the fact that I am contributing in that way because there are so many who aren’t. ★ ★ ★

If you were going to imagine a taxpayer, what comes to mind? Lawrence, 40, Democrat from Michigan: If I imagine a taxpayer? [Yes.] Lawrence: Well, they’re middle class or lower—but not the lower end, because in my perception, they don’t really pay a lot. So it’s the working people. They’re the taxpayers. ★ ★ ★

Do you think of yourself as a taxpayer? Eileen, 59, Democrat from Washington: Do I think of myself. . . . [W]ell, I do, I mean, not on the same level as other people, because, you know, I’m not paying federal income tax, but I do pay taxes, so . . . I do think of myself as sort of a taxpayer.

[ 46 ]

taxp aying and low- income ta x pay e r s Nearly every American adult pays some taxes, whether at the local, state or federal level.1 And yet, many Americans are convinced that a large percentage of the public does not pay taxes. In my Q14 survey of one thousand U.S. adults, 88.0 percent of respondents answered “yes” to the question “Are you a taxpayer?” But these same respondents estimated, on average, that only 66.5 percent of adults in the United States are taxpayers. There is a twenty-plus point “taxpayer gap.” People see themselves as taxpayers, but doubt the taxpaying status of others. Anger at these supposed non-taxpayers is rampant. Asked how she feels about being a taxpayer, a Republican survey respondent from Alabama writes, “I am barely taking care of myself and having to take care of those who don’t pay taxes.” A South Carolina independent’s very first thought about taxes is about “stupid people who don’t pay any.” A Democrat from California writes that he doesn’t mind paying his fair share, but “I don’t like the idea that others don’t pay their share.” Who are these purported non-taxpayers? As we’ve seen, immigrants are often perceived as evading the tax

Taxpayers, Self-Described Taxpayers, Perceived

Taxpayer Gap 0

20

40

60

80

Percentage

Figure 2.1. The Taxpayer Gap

Note: On average, Americans estimate 66.5 percent of U.S. adults pay taxes, but 88 percent of U.S. adults describe themselves as taxpayers.

[ 47 ]

100

chapter 2 responsibilities carried by other Americans. But poor people, even native-born Americans, are also presumed to be non-taxpayers or near non-taxpayers. This is not a view held only by the comparatively wealthy; poor and working-class people discount their own tax contributions. As Eileen says at the beginning of this chapter, her taxpaying is “not on the same level” as other people because she does not earn enough money to pay federal income tax. The tax contributions of the poor are underestimated for two reasons. First, the sales taxes and payroll taxes that are expensive for working-class people are “low effort”: predictable, incremental, and automatic. Because their calculation and payment are less of a hassle than figuring out income taxes, these taxes get less attention. So the taxpaying process reduces awareness of certain types of taxes and, therefore, certain types of taxpayers: lower-income people. Second, public rhetoric emphasizes the income tax over other duties. As I noted in the preface and introduction, the income tax plays an outsized role in contemporary Republican political thinking. Particularly in conservative circles, a distinction is often drawn between taxpayers and a presumed class of non-taxpayers. This rhetoric echoed in the thoughts of my interviewees, including those who describe themselves as liberal. Grace, a college student in the Bay Area, slightly overstates GOP presidential candidate Mitt Romney’s claims about the “47 percent”: “I think Romney said something about more than half the population not paying taxes.” Accordingly, though Democrats and Republicans both underestimate the cost of low-hassle taxes, Republicans

[ 48 ]

taxp aying and low- income ta x pay e r s are especially likely to focus on the income tax—even when other taxes are more expensive to them personally. They are also especially prone to seeing low-income Americans as non-taxpayers. But not all Republicans experience this blind spot to the same extent. It is Republicans who say they often seek out political news who most underestimate the breadth of the taxpaying population. The information one receives from the taxpaying process interacts with the public narrative about taxation to disguise the substantial tax contributions of low-income people.

Poor People Are Not Seen as Taxpayers To be a “taxpayer” implies a certain economic status. Interviewees often describe taxpayers using signifiers of wealth. Many of my low-income interviewees and survey respondents doubted whether they “really” qualified as taxpayers. Thus to be a taxpayer is not simply to pay taxes; it is to be of relatively high economic standing. Asked to describe “a taxpayer,” interviewees tend to imagine a working person or someone who owns property. Amber, a 40-year-old woman from Mississippi, says a taxpayer is “a person that works and has a job.” Tiffany, a stay-at-home mother in Texas, describes an “Average Joe working and paying taxes from their paycheck.”2 The interviewees mostly talk about taxpayers in terms of employment, but some do mention property ownership as a criterion. When asked to describe a taxpayer, Steve, a retired military officer living in upstate New York, sees a “homeowner.” Those who are not employed or propertied

[ 49 ]

chapter 2 often do not think of themselves as taxpayers. Erick, from Michigan, is among the long-term unemployed. He is not a taxpayer “right now,” he says. “But in the past and in the future I will be again.” For Erick, to be a taxpayer is to be a working person. The same definition is held by my Q14 survey respondents: taxpayers are property owners and working people. When I asked my survey respondents “Are you a taxpayer?,” respondents working outside the home were 16 percent more likely to describe themselves as taxpayers. Similarly, those who own a home were 18 percent more likely to see themselves as taxpayers. But owning a home and having a job are not enough to ensure that a person believes him- or herself to be a taxpayer. Lower-income survey respondents, even when they own their homes and work for a living, still tend to doubt that they qualify as taxpayers. A person with a household income over $60,000 a year is 4 percent more likely to call him- or herself a taxpayer than a person making less than $60,000 a year—even when both of those respondents are working people who own their home.3 The interviewees agree: one must earn not only an income but an income of a certain level before one really qualifies as a taxpayer. Asked to describe a taxpayer, Sharlene, a project manager for a media company, says he or she must make “a decent salary.” Jessica, a mental health therapist from Georgia, imagines an “accountant.” Bonnie, an antiques dealer in Texas, pictures a “guy in a suit with a briefcase, and he’s walking to his job in downtown Dallas somewhere.” As Lawrence says, taxpayers are not at “the lower end” of the

[ 50 ]

taxp aying and low- income ta x pay e r s economic spectrum, “because in my perception, [poor people] don’t really pay a lot.” Thus the interviewees explicitly or implicitly exclude the poor from their definition of the taxpaying class. My lower-income interviewees put caveats on their own taxpaying status. Jacqueline is self-employed, but says that she is not a taxpayer “in the same way that I would think of someone who’s got an $80,000 salary and a lot of larger material possessions.” A college student, Grace works and considers herself a taxpayer, but adds, “I don’t really pay that much in taxes.” Marjorie is a disabled woman, living on an extremely restricted income. She also qualifies her status as a taxpayer. “I’ve never been rich to the point where I pay a lot like some people,” she says, “but I still pay taxes.” As the interviewees consider what it means to be a taxpayer, it becomes clear that the federal income tax holds a privileged place in their minds. The federal income tax is the only tax that clearly qualifies one for “taxpayer” status; those who pay other kinds of taxes are quick to downgrade their status to quasi-taxpayer, or deny being a taxpayer at all, even when their taxes impose a sizable financial cost. A stay-at-home dad, Kyle at first says he doesn’t see himself as a taxpayer “because I’m taking care of my child.” But as he considers the question, he changes his mind. But I’ve paid taxes many years. I’m 39 years old and pretty much worked since the time I was sixteen and paid taxes. Well, you know, I do pay taxes! I pay sales tax every time I make a purchase or something. I’m being taxed that way.

[ 51 ]

chapter 2 Kyle is typical in that he, at first, thinks of “taxes” only as the income tax. As a result, he hesitates to describe himself as a taxpayer—until he recalls the many other taxes he does pay. Like Kyle, many other interviewees and survey respondents see being a “taxpayer” as a socioeconomic status associated primarily with earning a large enough income to pay a substantial amount in income taxes. Other taxes—the taxes that fall heavily on low-income people—are simply less prominent in the thinking of most Americans.

How the Taxpaying Process Obscures Poor People’s Taxes It makes sense that the income tax would be a prominent part of Americans’ thinking about taxes, because it is the tax that is, by far, the biggest hassle. In fact, my interviewees and survey respondents systematically discounted the economic costs associated with easy-to-pay taxes.4 But the taxes that require effort to pay loomed large in their minds, even when the economic costs were small. In particular, Americans underestimate their payroll taxes, fail to recognize the cost of the sales tax for poor people, and overestimate their income taxes. In both the survey and the interview, I asked an openended question: “What kind of tax makes up the biggest part of your family’s budget?” Three-quarters of respondents named one of four types of taxes: income taxes, sales and excise taxes, property taxes, or payroll taxes. The most commonly mentioned tax was the income tax, named by 38 percent of survey respondents. A 33-year-old woman from

[ 52 ]

taxp aying and low- income ta x pay e r s Florida writes, “Income taxes, my husband works 80+ hours a week for them to take almost 1/4 of it away.” Seventeen percent of survey respondents mention the sales tax, including a 62-year-old unemployed man who describes “sales taxes on taxable purchases” as his largest tax expense. Nineteen percent of respondents refer to property taxes (occasionally described as “school taxes”) as the tax that cost them the most money.5 Finally, the mere 5 percent of respondents who speak specifically about payroll taxes refer to those taxes in a number of different ways. A 50-year-old from Tennessee thinks that the “FICA taxes” are her largest expense, while a 31-year-old from Florida names “payroll taxes.” Others refer to “Social Security” and “Medicare” taxes. How accurate are these assessments? To answer this question, I combined the data about survey respondents’ economic and family life with academic tools for estimating Americans’ taxes.6 I brought this data together to compute how much each respondent paid each year in federal and state income tax, in payroll tax, in sales tax, and in property tax, and compared these results to their own assessments of their largest tax responsibilities. I conducted the same calculations for my interviewees.7 Figure 2.2 compares the survey respondents’ perceptions to my estimates of their taxes. The table includes 660 of the one thousand respondents who both provided enough demographic information for me to estimate their taxes and definitively named one of the four big tax types in answer to the “biggest tax” question.8 The rows of the table represent what respondents thought was their biggest tax; the columns represent my estimate of their actual largest tax.

[ 53 ]

chapter 2

INCOME

SALES

PROPERTY

PAYROLL

INCOME

68%

25%

36%

39%

SALES

10%

49%

20%

17%

PROPERTY

17%

22%

42%

30%

PAYROLL

Biggest Perceived Tax (perceived by respondents)

Biggest Estimated Tax (based on respondents’ economic and demographic traits)

5%

4%

2%

13%

100%

100%

100%

100%

Figure 2.2. Perceived versus Estimated Taxes

For example, where row 1, “Income,” intersects with column 2, “Sales,” we find people who perceived the income tax as their largest tax but likely pay more in sales tax. Respondents included in the shaded boxes along the diagonal were “right” about their biggest tax; their perceptions were confirmed by my calculations. Those outside of the shaded diagonal were “wrong”; according to my estimates,

[ 54 ]

taxp aying and low- income ta x pay e r s a different tax was actually costing them more money. In each box, I note the percentage of people in that column who perceived a given tax as biggest; the percentages in bold represent the plurality perception in each column. In the top left box, for example, we can see that 68 percent of people who I estimate pay most in income tax correctly perceive the income tax as their biggest tax. By contrast, looking at the bottom right square, we find that only 13 percent of people who I estimate pay most in payroll taxes thought the payroll tax cost them the most. People who pay most in payroll taxes most commonly perceive the income tax as their largest tax. There are several items worth noting in figure 2.2. First, and reassuringly, a large percentage of people fall in the shaded squares: many respondents were correct in their assessment of the biggest tax they pay. Overall, 54 percent of respondents accurately named their most expensive tax, by my calculations, and more educated people were more likely to answer this question correctly. These results suggest a relatively high level of public understanding of their tax costs— especially considering that some of the error is in my own estimates. But the table also reveals several significant misperceptions. Perhaps most obviously, the number in the bottom right shaded square is comparatively small: only 13 percent. This means that only a small fraction of people who pay most in Social Security and Medicare taxes correctly recognize the cost of this tax. A closer look at the interviews and survey responses helps explain why the cost of the payroll tax is underestimated.

[ 55 ]

chapter 2

the paradoxical payroll tax: familiar, yet invisible The payroll tax affects almost every wage earner in the United States and funds two of America’s most well-known social programs: Social Security and Medicare. Nonetheless, the tax escapes the notice of many of my interviewees and survey respondents, including those for whom it is likely the largest tax they pay. When I asked people directly about the taxes on their paystubs, most respondents recalled their payroll taxes, and interviewees were very willing to discuss the programs funded by these taxes—but they had very little to say about the taxes themselves. The design of the payroll tax makes it at once familiar and invisible. One simple reason people might underrate their payroll tax is because half of the payroll tax is paid by the employer. Employees never see this part of the payroll tax, though this component likely lowers wages, and so is also “paid” by the employee. But to provide a fairer test for the respondents, who perhaps might not reasonably be expected to know about the incidence of the employer contribution, I took into account in my estimates of the “biggest tax” only the part of the payroll tax that is visibly removed from the employee’s paycheck. Public underestimation of the cost of the payroll tax is not limited to the employer component. Alternatively, perhaps people see payroll taxes as a kind of income tax—after all, both are removed from one’s paycheck. This may explain part of the misperception. About fifty people gave answers to the “biggest tax” question that encompassed both the income and payroll components, as

[ 56 ]

taxp aying and low- income ta x pay e r s was the case with a 42-year-old respondent from Missouri who wrote, “the taxes that come out of my husband’s check.” These respondents were removed from the analysis, so they are not skewing figure 2.2. But it may be that some people use the phrase “income tax” to mean all the taxes that come out of their paycheck. This potential confusion of terminology does not mean that the federal income tax and the Social Security and Medicare taxes are indistinguishable to the taxpayers, however. Asked what taxes appear on their paystub, 69 percent of survey respondents explicitly named their payroll taxes, a result comparable to the 73 percent of respondents who listed the income tax. And interviews confirmed that the Social Security and Medicare taxes are no mystery to taxpayers. I asked twenty-two of the interviewees about the taxes on their paystub; nineteen not only recalled the payroll taxes as separate from the income tax, but named Social Security or Medicare as the purpose of the payroll components.9 That there are specific taxes that pay for Social Security and Medicare is widely recognized. But the visibility of these benefits coincided with an invisibility of the associated costs. When I asked the interviewees directly about the payroll tax, I heard plenty of opinions about the Social Security and Medicare programs, but almost nothing about the tax itself. People had very few opinions about the payroll tax rate, structure, cost, or payment process. The gas tax is a useful point of comparison. Interviewees would often mention that gas taxes were used to maintain the highways, and shared their opinions of the quality of local roads. But they would also talk about the gas tax

[ 57 ]

chapter 2 directly—saying, for instance, that they thought it was too high, or that they did not like that it was folded into the price of gasoline. Amber commented that the gas tax falls especially heavily on certain people, which is unfair when “it’s their job if they drive a truck or something.” The gas tax was discussed in terms of both its use and its collection. But almost no one talked about how or from whom the payroll tax is collected. One of the very few exceptions is Patsy, a registered nurse from California. She is a strong Democrat who says she has only recently become interested in politics and has been “doing a lot of reading.” She argues in favor of raising the cap of Social Security contributions for high earners.10 But for most people, the structure and rules of the payroll tax are simply invisible. As Tracy puts it, “I haven’t really thought about that one as much.” The design of the payroll tax is something of an engineering marvel—it draws attention to benefits and away from costs. Elements of the taxing process itself appear to reduce the visibility of the cost of payroll taxes. First, the taxes appear on one’s paystub but are often below the eye-catching federal income tax. For some people, the income tax may appear to be a larger expense than it is, since refunds at the end of the year will reduce their tax liability. Angel is a 20-year-old college student living near Santa Barbara, California, working his way through school at a local discount store. He is one of the interviewees for whom the payroll tax is likely his largest tax. Asked about the taxes on his paycheck, he remembers the state and federal, and then says, “The other ones are a little smaller though. So, they’re kind of negligible to me other than the big ones.”

[ 58 ]

taxp aying and low- income ta x pay e r s In addition, most people do not have to take any active steps to pay their payroll taxes, a process that might draw greater attention to the cost. The one interviewee for whom the Social Security tax is a major issue is Tom, a consultant who had until recently been working as an independent contractor. Unlike most wage-earners, independent contractors must calculate and pay their own Social Security and Medicare taxes. Tom is very aware of this extra hassle. He talks about the Social Security tax vastly more than any other interviewee, raising the issue five times over the course of his interview. The only other person to talk about the Social Security tax on more than two occasions is Stacy, another independent contractor, who works as a transcriptionist in New Hampshire. For everyone else, these taxes are largely out of sight and out of mind. The taxes that pay for Social Security and Medicare seem to fly below the radar for most Americans. But the payroll tax is not the only tax whose visibility is reduced by the process by which it is paid. Though the interviewees are more aware of the sales tax than the payroll tax, the regressive implications of the sales tax are largely invisible to my respondents. In fact, many interviewees who approve of the sales tax do so because they wrongly perceive it as a progressive tax.

the sales tax: wrongly understood as progressive The sales tax falls very heavily on the poor, and they tend to be aware of its costs. Nationally, the poorest 20 percent of Americans spend an average of 7 percent of their income on

[ 59 ]

chapter 2 sales and excise taxes; those in the top 1 percent spend less than 1 percent of their income on these taxes.11 My research suggests that low-income people are very aware of this expense; figure 2.2 shows that 49 percent of respondents who pay most in sales tax correctly identify this tax as the biggest one they pay. These respondents are much poorer than the other respondents; their average estimated household income is only about $20,000 annually. The interviews demonstrate how much stress very poor people experience when making everyday purchases. Asked the biggest tax she pays, Marjorie, who describes herself as “poverty- stricken,” says, “I would say it’s sales tax. When I go to the store, I’m pinching pennies all the time because we never have enough food and everything.” Rosemary, a disabled woman in California, says, “I’m keenly aware if I go buy food. It’s bad enough that I’m trying to buy a value meal and paying 99 cents here for this and 99 cents here for that and then I have 50 cents for tax. I’m aware of that.” Several low-income interviewees speak knowledgeably about which items are subject to sales tax, and which are not. “In Texas you don’t have to pay tax on food unless it’s served,” explains Donna. Alexa lives in Mississippi, where groceries are subject to sales tax. Her family was once on food stamps, but they are earning a little more these days since her husband got a new job. The sting of the grocery tax is still fresh in her mind. “When I go visit my parents in Dallas, I’ll still go grocery shop,” she says. “Anything that I can load in the back of my car and bring home with me to not have to pay an extra 8 percent when I get back home.”12

[ 60 ]

taxp aying and low- income ta x pay e r s When every penny counts, respondents remember the pennies that go to the sales tax. But the impact of the sales tax on the poor is all but invisible to those making a comfortable living. Middle-class interviewees mostly see the cost of the sales tax as “nominal,” as Dawn, a 46-year-old from Chicago, puts it. Amber, a 40-year-old from eastern Mississippi, says, “You just pay it every time you go to the store and you’re expecting to pay so it doesn’t hurt as badly.” The cost of the tax also gets diluted by the pleasure of a new purchase. Ralph says, “I would probably say that maybe the best tax is if I go into a store, let’s say, and I buy a physical product and I pay a tax, at least I’m getting something out of it.” As they make their day-to-day purchases, most people do not think much about the sales tax. But the cost of the sales tax pops into focus for my middleclass interviewees when the purchase is large. Early in the interview, I ask people to describe an experience with taxation that made them think about taxes. Eleven people talk about the surprise of the sales tax on a large purchase. Angel, the college student in the Santa Barbara area, says, I bought some shoes and they were, maybe, one fifty, and then the price just jumped up to like—, I forget what the tax was, like one-seventy or one something like that. So, usually on big purchases is where I see like, tax come into play. Shoes costing $150 are expensive for Angel, who is working in retail to pay for school, and he readily recalls the extra he

[ 61 ]

chapter 2 paid in taxes. Gabriel from Utah has a similar recollection when he made a significant purchase: When I bought a car, you know, I guess you don’t realize how much taxes really are until it’s a big purchase like that, and the difference ends up being a couple thousand dollars. . . . that’s probably when I realized that sales taxes actually make a difference, and if I were to look at all of my purchases for the year and how much I paid in sales tax, that that’s actually a pretty good chunk of change and not just, you know, the extra dollar with groceries. For most interviewees, then, the sales tax appears to  be a small and reasonable amount, except when a purchase is very expensive.  The salience of the sales tax on large purchases misleads people about the impact of the tax on the poor. Though many people refer to their own surprise at the cost of the sales tax when they were purchasing something large, few make the leap to imagine the effect of the tax on people whose budget is small. Instead, they think the sales tax to be especially expensive for those at the top of the income spectrum—the people who regularly buy big-ticket items. “I guess the rich will buy heck of more luxury stuff or whatever that they’ll get taxed on,” says Grace, the student in San Francisco, “whereas I won’t buy an expensive TV set or an expensive computer.” Lawrence, the hairdresser in Michigan, says, “If you’re buying a $2,000 Louis Vuitton bag to match every outfit, that’s more than my sister’s purse from

[ 62 ]

taxp aying and low- income ta x pay e r s the Gap.” The interviewees focus on the effect of the sales tax on conspicuous consumption, rather than the daily increment taken from necessities. This impression of the sales tax led many strong proponents of progressivity to endorse one of America’s most regressive taxes. Asked which tax he thinks is best, Kyle, the stay-at-home dad, says, I think I’m going to go with sales tax, and the reason why is because I think the sales tax is an equalizer in the sense that you can’t afford to buy a lot of things, you’re not being burdened with a lot of taxes. Whereas if you have wealth and the means to make large purchases, you’re going to pay a large amount of taxes, so it keeps things equal. Michael feels the same way. He says, “as far as the regular income tax goes,” he believes in a progressive tax. But if we had a national sales tax instead of an income tax, he believes, progressivity would not “be an issue” because “the people who bought more would end up paying more.” The explanation for this misperception is not—or at least, not entirely—a failure to grasp the idea of progressivity. Most interviewees clearly distinguish a flat tax from a progressive tax and support progressive taxation in principle, a finding confirmed by survey research on this question.13 Gloria from Kansas considers the cost of a flat tax: “10 percent of $100 is a lot more hardship than 10 percent of a million dollars.” Only a very few of my interviewees, mostly at the lowest end of the education spectrum, seem unable to make this distinction.

[ 63 ]

chapter 2 Even those interviewees who wrongly see the sales tax as progressive were clear on the mathematical difference between a flat and a progressive tax. Michael, the 51-year-old from Ohio, is a good example. Despite his claim that a national sales tax would fall heavily on the rich, he very clearly understands what a progressive tax is in principle. He discusses the different brackets under the federal income tax system and worries that these brackets might not be “granular” enough.14 It is not that Michael does not understand the difference between a bigger amount and a bigger percentage. What Michael fails to recognize is simply the fact that the poor spend nearly all of their income, while the rich have enough money to save. Or, as Daniel puts it, “If you go from making $30,000 a year to $150,000 a year . . . you might eat more fancy,” but that “doesn’t make it so that your grocery bill is five times as great.” Daniel is one of the only interviewees to recognize that consumption does not scale with income. For other middle-class interviewees, the sales tax seems to fall heavily on the rich because they notice the tax when they are making an expensive purchase—the kind of purchase they imagine wealthy people making frequently. The sales tax is not always invisible. In some instances, when one is very poor or when one is purchasing an expensive item, the sales tax increment no longer feels small and predictable. This differential visibility leads middle- and upper-income people to assume the sales tax costs little to the poor, and a lot to the rich. As with the payroll tax, the experience of paying sales tax leads people to underestimate the tax responsibilities of the poor and working class.

[ 64 ]

taxp aying and low- income ta x pay e r s

the income tax is obvious (including tax credits for working families) More than the sales tax and the payroll tax, the income tax is obvious to those for whom it is expensive. Returning to figure 2.2, we can see that 69 percent of survey respondents who likely pay the most in income taxes think the income tax is their biggest tax. These respondents are wealthier than other respondents, and probably have a higher level of financial literacy, on average. But at the same time, many people who do not pay that much in income tax overestimate their income tax responsibilities. All the numbers in the top row of figure 2.2 are large—that is to say, when people misidentify their biggest tax, it is usually because they think the income tax is larger. Indeed, the income tax was at the forefront of nearly every interviewee’s mind from the very start of the interviews. I began each interview by asking each of the interviewees, after they introduced themselves, to tell me what they first thought of when I said the word taxes. For most people, their first thoughts involved the taxes on their wages. Thirty-one interviewees explicitly mentioned taxes on their paychecks. When I asked my Q14 survey respondents the same question, the income tax was by far the most commonly cited tax; four times as many people referred to the income tax as to the sales tax. The income tax is a progressive tax, unlike the sales and payroll taxes, so a focus on this tax to the exclusion of other taxes already reduces the visibility of the taxes paid by the poor. But the fact that the poor pay little or nothing

[ 65 ]

chapter 2 in federal income tax is especially obvious to Americans because of widespread awareness of the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC). Lowincome workers, and especially low-income working families, benefit from these tax credits that can cut their taxes or even result in a refund larger than the amount paid in.15 Popular familiarity with this aspect of the tax filing process helps reinforce perceptions that the poor do not pay much in taxes. Scholars have traditionally argued that tax expenditures are an “invisible” part of the welfare state. Conducting redistribution via the tax code has become a popular strategy in conditions of gridlock, when direct spending is politically difficult. Tax expenditures are an approach to social spending that is sometimes more acceptable to Republicans than is direct spending.16 But disguising government action in this manner has some unintended consequences. Recipients of tax breaks do not see themselves as benefiting from government social programs, and some scholars have wondered whether this keeps beneficiaries from recognizing the ways in which government works for them.17 But tax credits are not operating entirely under the radar. Familiarity with the EITC and the CTC is high among my Q14 survey respondents. Thirty-eight percent of respondents believe that they had received one or both of the credits at one time,18 and 56 percent of respondents say they have had personal experience with the credits or know another household that has received them. Lower-income and employed people, and those with children, are all more likely to report that they have received one of these credits, as one would

[ 66 ]

taxp aying and low- income ta x pay e r s expect if people were correctly recalling the credits for which they qualified. And the remarks made by those familiar with the tax credits show a relatively high level of understanding of the policies’ effects. Among the survey respondents, recipients of the EITC and CTC not only recognize the credits for which they qualify, but often have strong recollections of the benefits they have received. “The EIC meant I paid less in taxes that year, which helped because I was only able to work part-time due to increased illness, and was struggling to keep up with bills,” comments a 45-year-old woman from North Carolina. A 61-year-old woman from Texas notes, “It really helped at the time to put groceries on the table when I had young children.” A West Virginia woman no longer qualifies for the benefit, she says, but when she did, she used the money “to catch up on utility bills from winter.” A 39-year-old man from Maryland put his tax credit toward future college expenses: “I put that money to my son’s 529 plan,” he says.19 Many nonrecipients are also aware of the policies’ basic outlines: an income support for working families with low wages. A 53-year-old woman from New Hampshire says, “For families that just barely get by I think it’s a great idea it gives them a little extra.” A 35-year-old from California says the EITC is “more useful” than “just doing welfare or some other programs.” A 45-year-old man from Florida is clearly aware that the credit is refundable—that is to say, that one can get money back even beyond what one has paid in income taxes: “It is not fair for you to give tax credits to people if they pay low income taxes or none at all.” Others object to the EITC’s higher-income limits for people with children. “I

[ 67 ]

chapter 2 think it is a good thing,” says a woman from Georgia, “but I also feel it should be open to people who make under 50,000 with or without a child.” Those claiming familiarity with the EITC and CTC were often very well informed about the policies’ specifics. Still, these comments came in response to the survey’s prompting. Perhaps people have opinions about the EITC and CTC when one asks directly, but would not recall these credits unprompted. In my interviews, however, I did not ask about tax credits, and yet many respondents volunteered their thoughts on these policies. Sixteen interviewees referred to some form of tax credit for low- and moderate-income people. They could not always recall the name of the relevant policy, but it was widely recognized that lower-income working people, particularly those with children, can get large amounts back from their income taxes—often more than they paid in. Alexa from Mississippi says, “So the past couple of years we got back everything, plus the child care credit, plus whatever that’s called, the work credit.” For Alexa’s family, the EITC functions like a “free savings account,” she says, one that allows them to make larger purchases that would otherwise be out of reach. “This year we’re buying a new dryer,” Alexa concludes. A few people spoke favorably about the credits without describing themselves as beneficiaries. Erick says, “I believe people that are in poverty shouldn’t pay anything or they should get that money back at the end of the year. They sort of do now, earned income credit, which I think is good.” But others who speak about tax credits are not receiving these credits personally, and several express strong displeasure with the policy. Lawrence from Michigan says,

[ 68 ]

taxp aying and low- income ta x pay e r s I had a cousin who had two part-time jobs and the people who hired her got paid by the state to hire her. She was at a gas station. It was no big amount of money and she had three kids. She didn’t make five grand and she got seven thousand dollars back at the end of the year. How’s that something that happens? Overall, the interviewees refer to tax credits about as often as many other programs targeted at low-income people. In fact, more interviewees talk about low-income tax credits than Medicaid and Social Security disability, and only slightly less than food stamps. Of course, I was conducting an interview explicitly about taxation, which surely brought tax policies to the fore. Had I framed the interviews as an exploration of “government spending,” or “government social programs,” the numbers would quite likely be different.20 Nonetheless, though I did not ask about low-income tax credits, they were familiar to many interviewees, and these interviewees do recognize the policies as government transfers to the working poor. While the EITC and CTC are actually comparatively visible, they also enjoy high levels of support among those who are familiar with the programs. Only 15 percent of the Q14 survey respondents make negative remarks about these policies, and 77 percent make positive remarks. The credits are even relatively popular among those who know about the policies but say they have not benefited from them; only 24 percent of these respondents make negative comments about the tax credits. Nonetheless, these policies do not transcend partisanship. Among my survey respondents, negative remarks about the

[ 69 ]

chapter 2 EITC and CTC are far more common among Republicans than Democrats; fully a third of Republicans surveyed had something negative to say about the EITC or the CTC, compared to merely 4 percent of Democrats. Those negative comments tend to resemble stereotypical antiwelfare rhetoric. Though the EITC requires recipients to have earned a salary during the year, opponents say that they do not work enough. A 33-year-old man from Iowa writes, “I think it is given too easily to people that choose to barely work for a living.” Several respondents applied longstanding stereotypes of the “lazy welfare queen” to EITC recipients. “There are 10 women abusing it for every one that really needs it,” writes a 39-year-old woman from Virginia. “Too many people lay around on drugs and have babies.” In particular, respondents objected to the refundability of the credit— that is, the fact that recipients can receive a tax credit larger than what they paid in taxes. “Originally, it was meant to help low income families,” writes a 59-year-old woman from North Carolina. Now, however, “It is not a tax refund, but an entitlement program when you receive back more than you pay in.” This kind of welfare-like rhetoric is not limited to the survey; several interviewees volunteer similar remarks. Stella, a strong Republican and military veteran living in Alabama, does not use the term “Earned Income Tax Credit,” but she clearly understands, and disapproves of, the program. For instance, when people get their refund checks. And it’s usually more than what they even put into it. And then they act like it’s—like they earned it. “Oh, I’m

[ 70 ]

taxp aying and low- income ta x pay e r s going to buy a car. Or, look at what I just bought.” What do you mean you bought a car?21 I’m thinking about some people that I do know. Like, wow, that must be nice. They can sit there and get a tax refund, it’s like five thousand or six. Specifically, I don’t know what people get back, but I think it’s quite a bit. Especially if you have children under a certain age and your income’s a little bit lower. Compare Stella’s comments to Bridget’s discussion of someone she knows who is receiving direct government aid: [She] is on government assistance and disability, but can raise two kids and wants to have another one, and they spend all their money on just doing things like going out and just buying frivolous things. And, she says she’s not capable of working, yet she can raise two kids and plan to have another one and do all these types of events.  .  .  . I’m personally offended by that because I feel like some of my money is going there to support her and her family and she can work. Both Bridget and Stella perceive that a low-income person with children is receiving a windfall they consider to be undeserved and spending the money in a way they deem frivolous. That Stella’s acquaintance has had to work to receive a tax credit has not, at least in this case, disguised the transfer of funds or improved her opinion of it. Instead, her awareness of the refundable tax credits aimed at low-income working families has actually shaded her perception of

[ 71 ]

chapter 2 taxpayers generally. Early in our interview, when she is asked to describe a taxpayer, Stella imagines “somebody that gets lots of credits and they don’t pay a lot!” Large transfers made through the tax code are not intrinsically invisible; progressive tax credits do not escape partisan opposition. Americans evince quite high levels of awareness of the tax credits available to lower-income working families. Though attitudes about these policies are largely positive, there is also a current of opposition, particularly to families receiving more in credits than they paid in taxes. For some, the EITC and CTC serve as additional evidence that the poor are not paying their share of taxes. And, as we will see in the following section, the fact that many Americans do not have a net federal income tax liability has become a partisan political talking point that leaves highly engaged Republicans especially misinformed about the breadth of the taxpaying population.

Partisanship and Income Tax Salience Opposition to the income tax, for the past several decades, has helped define the agenda of the Republican Party,22 while sales and payroll taxes are the subject of far less political controversy. In recent years, the thought of many American households having a zero or negative federal income tax rate has become a “core grievance” for Republicans.23 It has even become common for those on the far right to propose a federal income tax standard for voting rights. Former Congresswoman Michele Bachmann, for instance, asked on Twitter whether, “if 45% of Americans pay no federal income taxes, should they be allowed to vote?”

[ 72 ]

taxp aying and low- income ta x pay e r s The effect of this mobilization is very evident among my interviewees and my survey respondents. Politically engaged Republicans tend to guess that about 50 percent of Americans pay taxes. Democrats and less politically engaged Republicans think a much larger percentage of Americans pay taxes. Republicans’ focus on the income tax is so strong that they often fail to recall the other taxes they themselves pay, even when those taxes are personally expensive. Partisans have very different ideas about who pays taxes. As we saw in figure 2.1, respondents in my Q14 survey of one thousand U.S. adults thought that about 66.5 percent of American adults are taxpayers, on average. But that overall average disguises a notable partisan divide. Democrats estimate that 71 percent of U.S. adults are taxpayers, on average, while Republicans estimate that only 62 percent of U.S. adults are taxpayers.24 Republican respondents estimate the taxpaying population to be nine percentage points smaller than Democrats do. Figure 2.3 offers some suggestive evidence about why Democrats and Republicans have different views of who pays taxes. Again, survey respondents estimated what percentage of U.S. adults were taxpayers, so their answers necessarily fall between 0 and 100. Figure 2.3 breaks down those answers into ranges: respondents who think 0–10 percent of Americans are taxpayers, respondents who think 11–20 percent of Americans are taxpayers, and so on. The dark bars show how many Republicans choose an estimate in a particular range, while the light bars count the Democrats. Looking at the Republicans, one can see an apparent effect of elite rhetoric about non-taxpayers. The dark bars

[ 73 ]

chapter 2 80

Democrats Republicans

Frequency

60

40

20

0

0-10%

11-20% 21-30% 31-40% 41-50% 51-60% 61-70% 71-80% 81-90% 91-100%

Figure 2.3. Partisan Estimates of the Taxpaying Population

spike noticeably at 41–50 percent. About a third of Republicans put the estimate of the taxpaying population at between 40 and 60 percent, while only a fifth of Democrats pick an estimate in that range. Ironically, Republicans who most frequently seek out political information are the most inclined to underestimate the percentage of Americans who pay taxes. The Q14 survey respondents are asked whether they seek political news “frequently,” “somewhat frequently,” “infrequently,” or “never.” On average, a Republican who frequently seeks political news believes about 51 percent of U.S. adults pay taxes. Republicans who do not follow political news as much estimate the taxpaying population at about 66 percent. (Democrats, whether they sought a lot of political news or not, estimated the taxpaying population at about 70 percent.) It

[ 74 ]

taxp aying and low- income ta x pay e r s is Republican “news junkies” who most underestimate the taxpaying population.25 This misperception of who pays taxes is closely aligned with a tendency among Republicans to focus on the income tax to the exclusion of other taxes. At the beginning of my interviews, I ask my interviewees what the word taxes makes them think about. Many interviewees talk about the income tax in this context. But Democrats, unlike Republicans, also recall other kinds of taxes. Republicans, by contrast, are far more likely to think of taxes uniquely in terms of the income tax. In all, 38 percent of Democrats I spoke to mention more than one kind of tax off the top of their heads; only 9 percent of Republicans do. In fact, my Republican interviewees often forget that they personally are paying non-income taxes—even when those other taxes were very costly to themselves personally. Before mentioning any kind of tax by name, I ask the interviewees to recall the last time they paid “any kind of tax at all.” In most cases, that tax should be a sales or excise tax, since most people make purchases on a regular basis. Angel, 20, remembers that he “just went to 7-Eleven two hours ago, paid the sales tax.” Daniel says, “I think I put gas in my car the other day.” But this relatively straightforward recollection is heavily shaped by partisanship. My Democratic interviewees are more likely to think of the sales tax when asked what tax they paid most recently. Republicans are much more likely to forget about the sales and gas taxes, and think instead about taxes on their income or property. Marjorie and Stella say they last paid any kind of tax “last year” when

[ 75 ]

chapter 2 they filed their income taxes, while Steve says the last tax he paid was “land tax” in “January,” several months prior to his interview.26 One might think that Democrats recall taxes like the sales tax because they are, on average, poorer than Republicans. Turning to the Q14 survey, we can confirm that it is political orientation, rather than socioeconomic status, that is driving who thinks about the income tax. As with my interviews, I begin my survey by asking respondents to describe the first thing they think about when they hear to word taxes. In response, Republicans are more likely to talk about the income tax than Democrats are. About 30 percent of Republicans talk about the income tax, compared to 24 percent of Democrats. The significance of partisanship persists even when one controls for household income and employment; it is not working people or the wealthy who are especially likely to think about the income tax, it is Republicans. The difference is even bigger, however, between self-described “liberals” and self-described “conservatives.” Only 13 percent of liberals think first of the income tax, compared to 31 percent of conservatives.27 Republicans, and especially conservatives, have the income tax at the forefront of their minds. Focused on the income tax, many conservatives believe that the poor are not paying enough in taxes. Bridget, a Republican from Pennsylvania, says people in “lower-paying jobs” are paying less than they should, while Craig, a Republican in Florida, argues that “people who don’t work” are not paying their share. “And I don’t mean stay-at-home moms,” he clarifies. The conservative belief that the poor do not pay enough is evident in national survey data. In a 2003

[ 76 ]

taxp aying and low- income ta x pay e r s poll, a Republican was twice as likely as a Democrat to say low-income families are paying too little in taxes.28 The belief that poor people do not pay taxes is even held by Republicans who are themselves poor. As I noted earlier in the chapter, wealthier people are more likely to describe themselves as taxpayers, even controlling for employment and homeownership. But the impact of income is twice as large for Republicans. All else being equal, the richest Republicans are more than twenty percentage points more likely than the poorest Republicans to describe themselves as taxpayers. Among Democrats, income is less correlated with self-identification as a taxpayer. Compared to the poorest Democrats, the richest Democrats are only ten percentage points more likely to say they are taxpayers.29 Poor Republicans are especially likely to doubt their status as taxpayers. Perhaps the most striking comments about being a taxpayer come from Gloria, who is both very poor and strongly Republican. When I ask Gloria, who is active in her local Tea Party group and living in Section 8 housing, she says she is “not really” a taxpayer. “I know I pay like the food sales and other taxes on items,” she continues. “But no, I benefit from taxpayers.” Later, when I ask if she thinks there are people who do not pay “any kind of tax at all,” she says, “People like me. The very poor and disabled.” Gloria had earlier expressed how much grocery and utility taxes strained her tiny budget; she tells me how in Kansas, where she lives, groceries are taxed and the credit that used to offset those costs was recently eliminated. When I remind her of this discussion she says, “Yeah, but I mean like income taxes. I was thinking income tax.” In this way, Gloria is typical of other

[ 77 ]

chapter 2 low-income Republicans. No matter the costs she faces, the income tax is the only tax that counts.

Conclusion When Americans think about taxes, they think primarily of the income tax, not the sales and payroll taxes that are actually more expensive for most families. Moreover, the tax credits available to low- and middle-income people are more salient than previous research would lead one to believe. The net result is a tendency, across party lines, to underestimate the taxes paid by working-class people. Part of the misunderstanding stems from the taxpaying process: payroll taxes and sales taxes are easy to pay, and therefore easy to underestimate. Income taxes are a hassle, and so are prominent in Americans’ thinking about taxes even when they are not expensive. Partisan rhetoric has also had a measurable impact on Americans’ tax attitudes. As Republican politicians have focused on the “47 percent,” rank-and-file party members (and particularly Republicans who follow politics closely) are especially likely to underestimate the taxpaying population. This misperception of taxpaying by the poor has a powerful effect not just on opinions about tax policy, but also on attitudes about government spending. The belief that poor people do not pay taxes shapes Americans’ attitudes about who has a right to benefit from tax dollars—as we will see in the following chapter.

[ 78 ]

3 Where Should Tax Money Go?

What are you glad that your tax dollars pay for? Eileen, 59, Democrat from Washington: What am I glad they pay for? [Yes.] The schools, you know, I always vote for the levies, even though I don’t have kids in school anymore, I know a lot of old people, “I don’t have any kids, why should I pay for it?” But, it’s about being a collective citizen, a society too. ★ ★ ★

Brandon, 28, Republican from Pennsylvania: I’m glad that it pays for the roads and I’m glad that it pays for unemployment even though some people—I’m glad that it pays for the people that use it to get ahead in life, to get to a better place in life, but I’m upset about the people that take advantage of it, basically. ★ ★ ★

James, 35, Republican from Michigan: I’m glad they go towards the school that my children go to. I like any taxes that go towards our community around here. So it’s kind of a poor community around here so I like our money to stay here instead of going out somewhere else.

[ 79 ]

chapter 3 Despite the conventional wisdom that Americans are opposed to government spending, most people actually have a lot of good things to say about where their tax dollars go. Americans express philosophical support for the idea of small government but are “operational liberals” when it comes to the details. Ask Americans specifically about the major investment government makes in education, healthcare, aid to the poor, and so on, and you will find their attitudes are largely favorable.1 The level of Americans’ support for particular government programs is heavily shaped by their feelings of fellowship. That is to say, Americans like when their taxes clearly go to the people with whom they feel a strong sense of shared interest. Scholars describe this as Americans’ preference for spending that is “visible” and “proximate.”2 Americans express something close to consensus on the value of certain local public investments, like roads, schools, and public safety. When the object of spending seems distant (as in the case of foreign aid and corporate bailouts), support is low—and, without the stabilizing ballast of personal experience, partisanship plays a bigger role in Americans’ thinking. Between the almost universally popular public investments that most Americans experience firsthand and the least popular and least familiar programs are the major elements of the social safety net: spending on the sick, the elderly, and the poor. Attitudes about these programs are shaped by perceptions of whether they are “earned”— that is, whether beneficiaries are taxpayers who have paid into the programs. As the previous chapter demonstrated,

[ 80 ]

where should tax money g o ? Republicans are especially likely to underestimate the tax contributions of the poor—a sentiment that coincides with a strong opposition to spending on a social safety net. But this is not just a story about partisanship. Even taking partisanship and conservative ideology into account, those with lower estimates of the taxpaying population are more likely to be angry about welfare. Americans think that those who have a right to make claims on government are those who are chipping in for government’s costs.

Approval and Salience of Government Spending: An Overview I asked both the forty-nine interviewees and the one thousand survey respondents what they were glad tax dollars paid for, and what upset them about where tax dollars were spent. I offered no list of programs to choose from. The answers, then, are not a compendium of all the respondents’ attitudes about public investment. By finding what is prominent, as well as what is popular, about government investment, I show how attitudes about taxes are shaped not just by their policy preferences, but also by what Americans think of when they think about government spending. People recalled more specific investments that they liked than ones they disliked. My interviewees mention three items they were glad to pay for, and between one and two items they are upset about. My survey respondents name slightly fewer items, but again, significantly more good than bad. Interestingly, there is no partisan divide in the number of programs survey respondents said they liked: Democrats

[ 81 ]

chapter 3 and Republicans alike name an average of 1.8 things they are glad taxes paid for. But Republicans mention more things they dislike, averaging 1.6 disapproved-of items, higher than Democrats’ 1.2 items. Figure 3.1 provides an overview of the public investments that the Q14 survey respondents discuss. The figure categorizes all the kinds of spending that are mentioned by at least 3 percent of respondents. The x-axis reports the salience of each type of spending, measured as the percentage of respondents who mention that kind of spending. For example, about 42 percent of respondents mention aid for the poor, such as “welfare” or “food stamps.” This is the most salient kind of government spending. By contrast, only about 4 percent of respondents mention public sanitation (including water, sewer, and trash services). The y-axis represents the level of approval received by each of these types of spending, which I measure as the percentage of comments that are positive. One can see that about 90 percent of comments about Social Security were positive, while literally no comments made about corporate aid (like tax breaks or bailouts) were positive. The dotted and dashed lines denote the mean levels of salience and approval across categories; programs in the upper-right quadrant are relatively high- salience, high-approval, and programs in the lower-left quadrant are low-salience, low-approval. Republicans and Democrats have relatively similar views on most of these kinds of spending. Only four of the categories listed in figure 3.1 show a significant partisan divide in approval. Republicans are more likely to approve of military spending, while Democrats are more likely to approve

[ 82 ]

where should tax money g o ?

100

parks

fire police

sanitation

social security health

80

Approval (%)

roads education

military

60

science

40

poor

20 type of spending mean salience mean approval

foreign aid corporate

0 0

10

20

30

40

Salience (%)

Figure 3.1. Approval and Salience of Major Public Investments Note: Salience = % of respondents mentioning item Approval = % of comments that were positive

of spending on healthcare, on the poor, and on scientific research. Figure 3.2 shows the extent of partisan disagreement on these four forms of government investment. On five other issues, Democrats and Republicans differ not in their approval for a particular type of spending, but simply in the frequency with which that kind of spending comes to mind. Republicans are more likely to mention roads and

[ 83 ]

50

chapter 3 100 health

military

80 health

Approval (%)

science 60

poor

40

military

science

20

poor Democrats Republicans

0 0

10

20

30

40

50

Salience (%)

Figure 3.2. Approval and Salience of Major Public Investments, by Party

Note: Salience = % of respondents mentioning item Approval = % of comments that were positive

the police. Democrats are more likely to mention education and Social Security, as well as spending on aid to corporate interests. Taking into account these partisan divides, we can organize American attitudes about domestic spending into three categories. First, there are local investments that have extremely

[ 84 ]

60

where should tax money g o ? high, almost consensus-level approval: roads, schools, parks, public safety, and sanitation. These visible and proximate investments are extremely popular with both Democrats and Republicans. Second, there are “distant” investments that few Americans have direct information about: corporate subsidies and scientific research. These investments are only salient to a small percentage of people and tend to be assessed through the lens of partisanship. Finally, there are the major federal investments in a social safety net: healthcare, welfare, and Social Security. These programs receive support when they are seen as going to people who have “earned” their benefits via taxpaying. On the question of spending overseas, either via the military or in foreign aid, one can see the same “us versus them” dynamic that helps explain support and opposition to domestic spending. Americans approve of money that is understood to have a benefit at home (such as caring for American service members or providing for the common defense). But money that is seen as benefiting foreigners is deeply suspect. Interestingly, many Americans do not draw a sharp distinction between recent military and humanitarian interventions, a fact that helps explain why the foreign aid budget is so often overestimated.

Praise for Local Benefits If taxpayers’ rationale for paying taxes is their feeling of connection with their community, they should be pleased with the taxes spent close to home—and the evidence indicates that they are indeed happiest with those investments. The

[ 85 ]

chapter 3 kinds of spending that are extremely popular are those with which many people have direct experience. The first highly salient and highly popular category of government spending is infrastructure: roads, bridges, and highways. This kind of spending receives near-consensus support, with 97 percent of comments recorded as positive, at very high levels of salience: over a third of survey respondents mention transportation infrastructure among the kinds of government spending they are supportive of. “The roads,” writes a 32-year-old woman from Florida, when asked what she’s glad to pay for. “We like to travel and see the country.” The interviewees are also in favor of transportation spending. Without government investment, “God only knows what the roads would be,” says Craig. There is some griping about the quality of local roads, but many see the problem as evidence that spending on transportation needs to be increased, not reduced. “My mom still lives in Washington state and we saw another interstate bridge collapse,” says Daniel. “We should be paying to maintain our infrastructure better.” From rural Alabama, Aaron comments, “We are severely lacking in public transportation,” something he would like to see more funding for. The other kind of government spending with support and approval similar to that received by roads is education, including schools, college, and libraries. Education receives 93 percent approval among the survey respondents, and equivalent popularity with the interviewees. “Education is the most important thing,” says Angel, the college student in the Santa Barbara area. “I don’t think enough money goes towards education. More of our taxes should

[ 86 ]

where should tax money g o ? go there. I mean, that’s basically our future.” James, an appliance repairman and father of five, says, “I’m glad [taxes] go towards the school that my children go to,” though he is upset about recent budget cuts that have laid off teachers and eliminated music and art programs. Among survey respondents, those with children under 18 are especially likely to endorse spending for the schools. Some childless adults, and people with grown children, express irritation about the cost of schools. As one survey respondent from Virginia puts it, “I have no children, so I get no direct benefit from the schools.” But support for education is still extremely high, on average; among survey respondents without a child in the home, 82 percent of comments about education are positive. Several childless interviewees, particularly women, used the phrase “our children” to evoke their sense of responsibility beyond their own families. Others, like Lawrence, the hairdresser in his forties who is single, are more sardonic: “I’m glad that someone’s sitting these monsters in my neighborhood down in front of a chalkboard.” Another kind of infrastructure spending that is less salient, but about as popular, is public parks. About 5 percent of survey respondents mention this kind of spending, including a retiree from Illinois who writes, “Over 100 National Parks in the United States. National forests. Parks in cities.” Six interviewees also mention their support for parks and other green spaces. Kimberly works as a veterinary technician in the Florida Panhandle. She says that “the parks give people a place to go and gives children a place to play somewhere safe.” Green spaces are less commonly recalled than

[ 87 ]

chapter 3 roads, but those who think of parks have positive things to say about this public investment. In addition to education and infrastructure, three other kinds of public investments come in for particular approval: sanitation, police, and fire departments. Though 89 percent of comments about water, sewer, and trash services were positive, people do not dwell on the value of sanitation; only 4 percent of survey respondents think of these services. The interviewees also have relatively little to say about public sanitation. Adam is a 26-year-old from Indiana. As he points out, sanitation services are “really necessary to have,” because they ensure that you have a “clean city.” Respondents are also in favor of spending on public safety, with 96 percent of their comments about the police and 100 percent of comments about the fire department recorded as positive. More so than with schools or sanitation, the interviewees and survey respondents often think about the specific people who perform these services. Jacqueline, who lives in central Massachusetts, recalls two firefighters who had died the previous day putting out an apartment fire. “With what just happened in Boston yesterday  .  .  . my goodness. I feel really good about taxes going to people who do these kinds of jobs.” Thus the most salient and most popular forms of government spending are both visible and proximate to the interviewees. Part of the appeal is that these benefits accrue to the people with whom one feels most closely tied. But local services are also simply more obvious than other kinds of government investment. As Ralph from upstate New York puts it, “When I think of taxes  .  .  . it’s massive!” This immense, incomprehensible entity makes sense to him only as

[ 88 ]

where should tax money g o ? long as it is spent on “something tangible, where I can just look at it.” It is the highways, the police on the street, and the teachers in the classrooms who are solid evidence of tax dollars at work in one’s own community. When government benefits are visible and available to one’s closest fellows, they are highly salient and receive nearly universal support.

Partisan Bugbears: Mediated Information and Government Spending Some parts of government make almost no appearance in most people’s daily life, yet they enjoy a robust presence in the media. In particular, though both corporate tax breaks and investments in scientific research represent important federal outlays, these expenditures do not have the kind of obvious or immediate effect on the average American that local road repairs do. It is the media that informs people about these distant, invisible investments, which means that partisans receive very different information. These kinds of spending are subject to highly partisan recollection—and highly negative opinions. As figure 3.2 makes evident, attitudes about the government funding of science are highly partisan. Among responses from Democratic survey respondents, 71 percent of comments about research funding are positive, compared to only 20 percent among Republicans. Asked what he is glad to pay for, a 49-year-old Democrat from Pennsylvania lists “NASA” first, followed by “science grants.” By contrast, many Republicans express anger about government-funded research they believe to be “nonsensical,” “ridiculous,”

[ 89 ]

chapter 3 “irrelevant,” and “stupid.” As the vigor of these adjectives would imply, Republicans are significantly more worked up about science spending than Democrats. Only 5 percent of Democrats surveyed mention scientific research, compared to 11 percent of Republicans. A Texan writes that he is angry about “the study of the effects of a back massage on rabbits or the effects of sunlight on goldfish,” while a man from Idaho believes tax money has been wasted studying “shrimp on a treadmill.”3 A Republican interviewee hits a similar note: Amber asked, rhetorically, why one would “need $1 million dollars to study the anatomy of fish or something.” Several of these comments are close variations on critiques of real studies often made by conservative politicians. In 2013, Sen. Tom Coburn (R-OK) objected to studies of “sheep counting,” while Sen. John McCain (R-AZ) has repeatedly opposed a study of bear genetics.4 On the subject of corporate aid, the partisan divide can be found, not in the tone of the comments, but rather in the salience of the issue. No respondents, neither from the survey nor in interviews, have anything positive to say about tax breaks or bailouts for major corporations. Bonnie, a Republican from Texas, complains about “Monsanto,” while Denise, a Democrat from Connecticut, is angry with “GE” and “Walmart.” Angel, the 20-year-old Democrat from the Santa Barbara area, speaks in general terms about tax dollars to “bail out all those companies and banks.” But Democrats are far more likely to raise this concern: 13 percent of Democrats in the Q14 survey say they are upset about corporate tax breaks and bailouts, compared to only 7 percent of Republicans.

[ 90 ]

where should tax money g o ? Public spending on corporate aid and science are both examples of government investment with which most Americans have little or no direct contact, and that are therefore understood almost exclusively through mediated information. Partisanship shapes Americans’ attitudes about and awareness of these distant issues.5

Defense Spending and the “Paradox” of Foreign Aid Returning to figure 3.1, there remains one form of spending as unpopular as corporate tax breaks: foreign aid. Foreign aid spending falls outside the experience of most Americans, explaining its relatively low salience. But attitudes about foreign aid should be understood in the context of foreign military engagements. Americans express strong approval for military service members and for the principle of a powerful defense. But they are not entirely confident that the vast sums being spent overseas are worthy uses of American tax dollars. Doubts about America’s foreign military engagements, however, are often expressed in terms of “foreign aid”—a fact that helps explain Americans’ tendency to overestimate the foreign aid budget. The principle of military spending receives widespread approval. Roy, the retired mailman who says he sees little by way of personal benefits from taxation, nonetheless says, “I do think it’s necessary that our taxes pay for our national defense, like the army, navy, air force, and that. I know that that is a big chunk of our taxes. I feel that that’s necessary.” Support for the military often came down to the obvious shared interest in a defense against attack. “With

[ 91 ]

chapter 3 the military, I think there are certain things that protect the nation, that’s self-evident,” says Kenneth, an attorney in Illinois. Lawrence, the hairstylist from Michigan, is somewhat more tongue-in-cheek, but also sincerely believes in spending for national defense. “The Russians are not landing in Poughkeepsie any time soon,” he notes. “So that’s a good thing. I don’t mind giving [the government] money for that.” A common defense is perhaps the most obvious of shared interests, and Americans, unsurprisingly, agree that this is a worthy use of tax dollars. Support for the principle of military readiness exists alongside anger about “foreign aid,” a term that many interviewees and survey respondents use to discuss overseas military spending as well as humanitarian assistance. A 44-year-old woman from Alabama opposes “foreign aid of all sorts (including weapons, fighter jets) sent to our enemies,” while a 67-year-old man from Florida is upset that his tax dollars are [g]iving aid to our sworn enemies, giving aid to foreign countries that hate us and will never pay the aid back. Selling out to China. And yet we are still the greatest debtor nation of all time, and still the world’s policeman. This respondent, a political independent, lumps together humanitarian aid, military spending, and (presumably) trade policy with China. The interviewees make comparable connections. Erick opposes money going to foreign countries, “like money to Israel I don’t like. We send money to Egypt.

[ 92 ]

where should tax money g o ? And the wars that are going on over there still.” Steve, the former military officer, also sees foreign humanitarian assistance as an aspect of defense spending: To me everybody says, “Well, the defense costs too much.” What costs us so much is all the money we have to pay to support the growing number of, I would say, unfortunate people in this world. . . . In the military, I’ve been to all of these countries. We give to the Somalis and we can’t even feed our own people. Many interviewees and survey respondents conflate foreign aid with military investments that have been rationalized by policymakers in humanitarian terms. The respondents’ comments about foreign aid have two important implications. First, their responses suggest that we should reconsider the widely reported statistic that Americans overestimate the foreign aid budget. Second, we should understand attitudes about foreign aid in terms of whether Americans feel a sense of shared interest with aid beneficiaries.

Estimates of Foreign Aid Include Military Spending Taking into account what people actually mean by “foreign aid” provides crucial context for their estimates of foreign aid spending. Journalists commonly use public overestimates of the foreign aid budget as an opportunity to bemoan Americans’ ignorance about government, an argument often bearing strongly antidemocratic implications. A 2012 column

[ 93 ]

chapter 3 in USA Today even used the example of foreign aid overestimation to make the case that “not everyone should” vote.6 But overestimates of foreign aid can be explained, at least in part, by the tendency of Americans to think of foreign aid in military terms. Those who describe “foreign aid” as including military spending have substantially higher estimates of the foreign aid budget. Part of the confusion likely stems from the reality that some foreign aid is indeed military spending. In addition to humanitarian assistance (0.9 percent of the federal budget in 2012), official definitions of foreign aid usually include what is called military or security aid (0.5 percent of the federal budget in 2012). This includes some money that goes to Israel and Egypt, originally instituted as a part of the 1979 Camp David Accords, and money intended to combat drug trafficking in Latin America.7 Many of the countries that receive military and economic foreign aid also have an American military presence. The number-one recipient of American foreign aid in 2012 was Afghanistan; number three was Iraq. For the casual observer, what counts as foreign aid spending and what counts as defense spending is far from obvious. Moreover, American military interventions are often described in terms that sound a lot like foreign aid. On the eve of the U.S. invasion of Iraq, President George W. Bush spoke directly to the Iraqi people: “As our coalition takes away their power, we will deliver the food and medicine you need.” In his speech on the rise of the Islamic State, President Obama described 2014 air strikes in Syria as saving the lives “of thousands of innocent men, women, and children,” and later talked of providing aid to refugees. When public

[ 94 ]

where should tax money g o ? officials blur the line between military and humanitarian obligations, it should come as no surprise that members of the public do likewise. Several interviewees who are angry about foreign aid are aware that their impressions of spending levels didn’t seem to match the data. Erick says, “If you look at a pie chart, foreign aid is, like, a sliver” of the federal budget. Marjorie agrees: “Foreign aid. They say that it’s only 1 percent of the budget or something like that, but like I said, it seems like we’re giving billions of dollars to people in Afghanistan.” It is true that the cost of foreign aid spending in Afghanistan is in fact in the billions of dollars. But a much larger investment of resources has been made in the country through spending that technically falls within the military budget. If they are working with a broader definition of foreign aid, it is no wonder Marjorie and Erick cannot make sense of the budget numbers they have seen. If one considers the military presence in Afghanistan in the same category as earthquake relief in Haiti and food aid to Africa, the interviewees are quite correct to think of foreign aid as a major expense. Survey data show that thinking of foreign aid as military spending is very common and coincides with significantly higher estimates of the foreign aid budget. A 2012 study by the Kaiser Family Foundation asked respondents an openended question: Just your best guess, what percentage of the federal budget is spent on foreign aid? Half of the survey respondents were later asked an open-ended question: Thinking about U.S. spending on foreign aid, what types of things do you think this money is spent on? More than a quarter of respondents mentioned military spending as one of the things they consider as foreign

[ 95 ]

chapter 3 aid.8 More respondents thought of foreign aid as military spending than disaster relief, education, and economic development combined. Only food aid and healthcare were as common a response as military spending when it came to respondents’ thoughts about foreign aid. All else being equal, a person who thinks of foreign aid as military spending picked an estimate of foreign aid that is 55 percent higher than the estimate of someone who thought of other uses for foreign aid.9 Those who pick higher estimates of foreign aid are defining the term more broadly than policymakers do. Much of the anger at “foreign aid” is actually a critique of U.S. military interventions.

overseas spending and the limits of fellowship The public frustration with foreign aid is not simply due to an overestimation of costs. Money spent in other countries does not provide benefits to the American people, many respondents argue. And for some, spending overseas is even at odds with our national interests. For most, opposition to foreign aid is really just a matter of prioritizing limited resources; foreign aid is less beneficial to Americans than domestic spending, my respondents believe. Rosemary usually approves of foreign aid, she says, but it is her “number-one pet peeve at the moment,” because “we’re falling apart and we’re not taking care of our own. We need to take care of our own.” By contrast, spending overseas provides little benefit for Americans, many survey respondents and interviewees believe. Grace says the wars

[ 96 ]

where should tax money g o ? that the United States has engaged in are about things “that really shouldn’t concern us.” Steve agrees. “We give too much money away to people,” he says, “and we don’t get anything in return.” For this reason, Americans prioritize domestic spending, even when they agree with the principle of foreign aid.10 As James says, “We’ve got to worry more about what’s happening over here in our own country.” But some people go further, and claim that foreign aid actually harms American interests. A retiree in Maine, who says she leans toward the Democratic Party, opposes “fighting wars for other countries, especially in the Middle East, while they stand around criticizing us. They think we’re fools and we ARE.”^ It is noteworthy that she defines these wars as being fought for other countries, rather than simply in those countries. For this respondent, wars are a form of foreign assistance provided to people who are not adequately grateful for our efforts. Foreign aid is, she concludes, a source of humiliation on the international stage. Marjorie, a disabled woman from Ohio, goes further: It makes me mad when I read things like the fact that the university overseas—I forget which country it was in—where the 9/11 hijackers had gone was supported by U.S. taxpayer money.11 Marjorie sees U.S. tax dollars spent overseas as not merely a waste of money, but as an investment that has helped those who wish to do America harm. In sum, though people believe in the principle of national defense, spending overseas is often seen as unhelpful or

[ 97 ]

chapter 3 even damaging to American interests.12 The logic of American opinions about defense spending is similar to the logic for domestic spending—Americans like when taxes provide clear benefits close to home.

Social Spending and the Limits of Fellowship Americans prefer domestic spending to aid sent overseas, but not everyone in America is seen as equally deserving of government benefits. The major domestic components of the federal budget—funding for the poor, the elderly, and the sick—are highly salient but do not receive the kind of consensus approval that local public services do. Instead, there is broad but half-hearted support for social services, with exceptionally strong opposition from a sizable minority. Why? Because Americans worry that these benefits go to “outsiders” and “non-taxpayers.” Though this belief is held most commonly by Republicans, many Democrats also express this concern. In fact, one’s perception that the poor do not pay enough in taxes predicts opposition to welfare spending even taking account of party and conservative ideology.

broad but tepid support for spending on the poor Asked to think about what their taxes pay for, Americans will most often mention spending on the poor. Though aid to low-income Americans makes up perhaps 10 to 20 percent of the federal budget (depending how you define it),13 “welfare” plays an outsized role in Americans’ vision of what

[ 98 ]

where should tax money g o ? government does. Programs for the poor were more salient to my survey respondents than any other kind of spending, including the roads and schools that Americans see every day, and the military that receives more than half of the discretionary federal budget.14 Some respondents speak about “welfare” in general terms, but many refer to programs by name, including food stamps, Medicaid, Temporary Assistance for Needy Families, disability benefits, unemployment, workers’ compensation, and the supplemental food assistance for women, infants, and children known as WIC.15 For simplicity, I follow the respondents’ lead and use “welfare” to mean any income supplement program for low-income or unemployed people, including food assistance but excluding Social Security retirement benefits, education grants, and tax credits. There is, on the one hand, real support for social spending. Patsy says she’s glad to pay for “welfare, food stamps,” and “programs that help homeless people transition.” Several interviewees talk about Americans’ responsibility to children who are living in poverty. “We have kids living in cars now,” says Rosemary. “I’m talking about children who go to school, but are homeless and living in cars. This country is too great for that crap to be going on.” It is mostly Democrats who have positive things to say about social safety net spending, but not exclusively. When the Q14 survey respondents are asked what they are glad to pay for, 26 percent of Democrats and about 13 percent of Republicans mention some form of spending on the poor. More people mention their approval of antipoverty programs than say they favor sanitation, parks, or the fire department.

[ 99 ]

chapter 3 But, unlike when they talk about parks or the fire department, people who support social protections often do so grudgingly. About a quarter of survey respondents who have something positive to say about welfare spending also say something negative. A woman from Georgia says she is glad to pay taxes to support “people who need a helping hand” but is upset “to pay people benefits who do not work but could.” Most interviewees were also circumspect in their attitudes about welfare programs. Stella says, “I’m somewhat okay, to a certain point, with the food stamp program.” Alicia says she supports “helping people who don’t have as much” but believes that “a lot of people take advantage of the system.” The Q14 survey shows just how widely it is believed that people using welfare programs could be working and paying taxes, instead. Forty-seven percent of survey respondents who are upset about welfare spending explicitly refer to this issue. Asked what upsets him about where his tax dollars go, a 57-year-old survey respondent from Pennsylvania says, “lazy people unwilling to work,” while a 73-year-old from Virginia complains about “Medicare for welfare people and other things illegals get for free.”16 It is primarily but not exclusively Republicans who talk in these terms. Of the Republicans surveyed, 24 percent complain about noncontributing welfare beneficiaries, compared to only 8 percent of Democrats. While abuse of welfare programs is less of a prominent concern for Democrats, it does come up over the course of my interviews. Aaron, who works in retail in rural Alabama, is a strong Democrat. He believes welfare programs are necessary to help people “born into disadvantage” or “placed there by

[ 100 ]

where should tax money g o ? systematic discrimination”; he also thinks there are “some people who are lazy” and “just take advantage” of government services. Tom, who leans to the Democratic Party, says some people who receive “food stamps, welfare, unemployment and things like that . . . just kind of make a career out of it.” Even recipients have significant reservations about the programs from which they have benefited. On the one hand, interviewees who have used social services express gratitude for services that have benefited them in a time of need. Donna, 67, is thankful for her food stamps. “They gave them to me right away and they gave me the full amount. I said my God.” Stella’s comparatively positive attitude about food stamps seems at odds with her other, very conservative answers, until she mentions having received that benefit for three years when she was in school. Three other people— Erick, Jessica, and Patsy—also name food stamps among the programs they support and tell me later that they had, at one time, benefited from the program. But beneficiaries also expressed discomfort about their status as recipients of government aid. Alexa, from Mississippi, is deeply self-critical, saying, I got married when I was 20, I got pregnant when I was 21, and that wasn’t the smartest decision. We didn’t have the money for kids. So we had to be on WIC and food stamps and Medicaid and spend the government’s money because we made stupid decisions. Alexa says her family is no longer receiving food stamps, though their income is still very low: “We could still get

[ 101 ]

chapter 3 them if we wanted to, but that was a choice we made.” She is working two jobs to make ends meet, and major expenditures, like replacing the family’s clothes dryer, are purchases that must be delayed for months at a time. But still, Alexa prefers not to accept all the government aid she could receive. She says, I feel so, I don’t know, hypocritical I guess, but I was just raised differently. I was raised that you work and you pay your own bills and you live within your means. Like Alexa, several other respondents also report going to great lengths to avoid receiving benefits. Rosemary says, “I was going to put in my time and be hard and struggle until I was sixty-five.” It was only when she was in danger of losing her home that her sister insisted she look into getting disability benefits. Donna lives on the Gulf Coast of Texas, and was left destitute by Hurricane Rita. She reports losing “three clothes sizes” before finally applying for food stamps. “I am accustomed to doing for myself,” she says. Above all, these interviewees assert their independence in hard times. Eileen became disabled in her early fifties, when her right hand was crushed in a sawmill accident. Living in rural Washington state, she raises some of her own food to help keep her grocery bills low. “I had to learn how to write left-handed because I’m a right-handed person, but I still do okay,” she says. “I can still milk a goat.” For several of these aid recipients, the misuse of government funds by other beneficiaries is a source of severe frustration. “I’ve been out of my job for a while, but people, they’re

[ 102 ]

where should tax money g o ? not even looking for jobs and they get money, and it makes it harder on people that are looking for jobs,” says Chrystal, a single mother from Delaware. “It makes them look like they’re not doing anything.” Rosemary agrees. “They are giving a bad name to disability or workers’ comp,” she says. “It makes it that much tougher because people look at you and they just see crook now.” Gloria also takes to heart the critiques she hears of the antipoverty programs she relies on. Sometimes, though, I feel kind of bad when I hear someone say, “Those disabled bums. They’re just living off the rest of us.” Because I do feel that. I feel that I am able to live in this apartment because of the generosity of others. Gloria may be especially attuned to antiwelfare rhetoric, since she is an active member of her local Tea Party group. But in general, I found that recipients of social safety net spending are extremely aware of the rhetoric employed by welfare opponents. Rather than defend welfare receipt, most of my interviewees tried to distinguish themselves from other beneficiaries. Rare indeed are the views of Marjorie, who used to work in a grocery store but is now barely scraping by, receiving food stamps and living with her disabled daughter: People talk about how people take advantage of welfare and stuff like that. I don’t see it. I’ve seen some people who would come in with their food stamps and buy more expensive cuts of meat at the deli or something, but those people were poor. They didn’t have

[ 103 ]

chapter 3 nice clothes. They didn’t drive nice cars. They weren’t scamming the system and people seem to think that the people who are poor or who are getting all of these government benefits are somehow scamming the system and living happily. They’re not happy. They’d much rather have a job and make the money and have a nicer car and be able to work. Among my interviewees, Marjorie is unique in her fullthroated defense of welfare recipients. Other recipients of aid whom I interviewed often expressed shame at their receipt of government benefits and tried to distinguish themselves from the stereotype of the unworthy welfare beneficiary. Thus, though many people have positive things to say about the social safety net, more worry that beneficiaries are cheating the system. Even program beneficiaries rarely offer unalloyed approval for welfare spending.

extreme antiwelfare views Amid this tepid support for antipoverty programs, there is also fervent opposition. While many people express some concern about welfare fraud and abuse, a handful of interviewees feel exceptionally strongly about this issue. Most interviewees raise the issue of welfare abuse either not at all, or a single time—often when I ask specifically about whether some people are benefiting “more than their share” from tax dollars.17 But a handful of people, predominantly strong Republicans, return again and again to the theme of welfare abuse. In particular, Craig, Sharlene, Roy, and Steve raise

[ 104 ]

where should tax money g o ? the issue of welfare misuse more than five times apiece,18 and their thoughts about welfare appear to drive their opposition to taxation more generally. Almost as soon as his interview begins, Roy, the retired mailman, is angry about “people on welfare and those who are on government programs or they’re out of work.” He returns to this theme often, saying “I guess they’re smarter than me because they’ve figured the system out.” Steve, the military retiree, responds similarly, talking about “the welfare idiots” in the first few minutes of his interview, and later saying, “I know generations of welfare people, whose families have been on welfare for seventy years.”19 The most extreme antiwelfare views come from Sharlene, who talks of little else. On the subject of the “sense of entitlement” people have to government programs, her answers run to paragraphs: I don’t have to give you anything! And that’s why you’re getting so much push back. You want to take half of my money? . . . If you’re just giving it to them, you’re not telling them how they’re going to earn. They are going to be back in that pocket again. Because you did not do anything for that person. You did not grow that person. So every citizen should have a certain responsibility and they have to be responsible for themselves. They have to take back ownership of their healthcare and their welfare. For these few respondents, the idea that someone is cheating the welfare system is central to understanding their tax views.

[ 105 ]

chapter 3 Asked about what percentage of government spending goes to things she likes versus things she dislikes, Bridget thinks exclusively about welfare. I’m going to say 80 percent goes to what I don’t like and 20 percent goes to what I like because I think it’s a small factor, that 20 percent of people who are indigent or people who are on welfare, that really do need the assistance. Bridget’s calculation about what she likes and does not like about government is narrowed exclusively to welfare spending; she takes no account of any other use of public money.20 Strong welfare opponents have little positive to say about government spending and do not see themselves as having benefited much personally. Asked what she is glad about, Bridget begins, “I really don’t see any impact in my community,” before admitting she is “somewhat” glad about roads. Though Bridget has a stepson, she does not even feel her property taxes are going to good use, since he lives with his mother in a different district. She also does not mention the salary she received during her years as a police officer. Nor do Roy and Steve, two other people very angry about welfare abuse, who retired after a career in the U.S. Post Office and in the U.S. military, respectively. Even among the Republican interviewees, a small group seem to be especially motivated by the question of abuse of welfare benefits by non-taxpayers. There is no balancing force of interviewees strongly in favor of social services; supporters, and even beneficiaries, tend to have mixed feelings

[ 106 ]

where should tax money g o ? about these programs amid concerns about people benefiting unfairly.

welfare opposition and the taxpaying gap As I reported in chapter 2, Americans tend to think of themselves as taxpayers, but doubt the taxpaying status of other people and particularly the poor. I call this misperception the “taxpayer gap.” The taxpayer gap is meaningful, in and of itself, because it suggests a fundamental misunderstanding of a crucial public policy fact: who pays taxes in this country. But the taxpayer gap also has an important effect on attitudes about spending. Among the one thousand respondents to my Q14 survey, people who underestimate the taxpaying population are more likely to list a welfare program as a use of tax dollars that upsets them. Respondents who estimate that less than 60 percent of U.S. adults pay taxes have a one-in-three chance of complaining about welfare. Among those who think that more than 70 percent of U.S. adults pay taxes, the likelihood of objecting to a welfare program drops to less than one in four. In addition, those who describe themselves as taxpayers are more likely to be upset by welfare spending. Twenty-nine percent of self-described taxpayers list a welfare program among the kinds of government spending that upset them, compared to only 9 percent of people who say they are not taxpayers. But these correlations deserve closer scrutiny because one’s perception of the taxpaying gap is strongly influenced

[ 107 ]

chapter 3 by one’s political orientation. Republicans are more likely to underestimate the taxpaying population, and conservatives are more likely to think of themselves as taxpayers. At the same time, conservatives and Republicans are especially inclined to dislike spending on welfare. So maybe what seems at first glance an effect of one’s view of the tax system is actually explained more simply by partisanship and ideology. But the taxpayer gap matters for welfare attitudes even when you take account of partisanship and ideology.21 Figure 3.3 illustrates the relationship between the Q14 survey respondents’ perception of the taxpaying population and their attitudes about welfare. The x-axis shows respondents’ estimates of the taxpaying population as a fraction from 0 to 1. The y-axis shows the likelihood that a respondent mentioned a social safety net program as a kind of government spending they were upset about. The solid line shows the result for all respondents; the dotted line presents the same information for liberal Democrats; and the dashed line, for conservative Republicans. Unsurprisingly, the conservative Republican line is higher than the others, because they are on average more likely to be upset about welfare spending. The liberal Democrats’ line is lower, because they are less likely to oppose spending on the poor. In each case, the lines on the graph slope downward: the more people you think pay taxes, the less likely you are to complain about welfare. The change is especially marked for conservative Republicans, since this is the group most likely to object to welfare spending as a general rule. All

[ 108 ]

Predicted Probability of Opposing Welfare Spending

where should tax money g o ? 0.8

Conservative Republicans All Respondents Liberal Democrats

0.6

0.4

0.2

0.0 0.0

0.2

0.4

0.6

0.8

Estimate of the Taxpaying Population

1.0

Figure 3.3. Lower Estimates of the Taxpaying Population, More Welfare Opposition

else being equal, conservative Republicans who imagine that only a third of U.S. adults qualify as taxpayers had a 60 percent chance of mentioning a social safety net program among the uses of tax dollars that upset them. Of those who thought 90 percent of U.S. adults were taxpayers, only 40 percent objected to welfare spending.22 A twenty percentage point drop in antiwelfare attitudes is a remarkable difference. Conservative Republicans are far less likely to oppose welfare spending if they think of most potential beneficiaries as taxpayers.

[ 109 ]

chapter 3

social security and healthcare: are beneficiaries taxpayers? A similar “taxpayer versus moocher” dynamic plays out when it comes to the more popular aspects of the social safety net: Social Security and healthcare. Social Security receives levels of approval nearly as high as the most popular local investments. Ninety percent of respondents who mention Social Security say they are glad to pay for this program. Healthcare also shows very high levels of support: 83 percent of respondents who mention healthcare say they are glad to pay for it.23 When these programs face objections, however, it is primarily because respondents do not think that beneficiaries have paid into the programs. As other scholars have shown, there are multiple aspects of the Social Security program design that have led to its longevity and popularity.24 One important component is the fact that Social Security is available to those who pay in. With a clearly labeled tax on everyone’s wages, it is comparatively easy for workers to recognize that their benefits are linked to their tax contributions.25 Thus Social Security mostly sidesteps the “non-taxpayer” complaint that welfare programs face. Nonetheless, the interviewees express anxiety about the long-term viability of the program, a concern that bleeds into suspicions about whether current beneficiaries have actually paid their share. About half of Americans doubt that Social Security will be there when they retire.26 My interviewees share these doubts: eighteen interviewees either fully expect Social Security to become insolvent or worry enough about Social Security to raise

[ 110 ]

where should tax money g o ? the solvency question. “We’ve already been told that all that money that we pay into Social Security won’t really come to us in the end,” says Tiffany, a 32-year-old stay-at-home mom in Texas. Luis, 24, says he has heard that “it might get taken away from my generation maybe in the future or something like that.” It isn’t only young people with this worry. “There isn’t going to be a dime in it for me,” says Sharlene, a 53-year-old. Michael, 51, wonders “if I’m ever going to see any of that. Is Social Security still going to be around when I’m ready for it?” Some people express hope about Social Security, but not confidence. “I have some faith that the government will do what’s necessary to keep the system going,” says Kyle. The nature of the problem with Social Security is not universally agreed upon, and few of my respondents offer solutions. Some, like Marjorie, believe the government to have misused the money in the Social Security fund. Others, like Donna, who describes Social Security as a “Ponzi scheme,” thinks demographic changes over time, longer life expectancies, or the retirement of the baby boomers are what have threatened the program. Only two people, both highly engaged Democrats, think solutions to a Social Security shortfall are relatively simple: Kenneth, an attorney from Illinois, and Tom, a consultant living in Michigan, mention raising the cap on contributions.27 One solution that five interviewees proposed was privatization. Angel, 20, would prefer to save for himself and had this to say about the current system: I know that the system is set up so every generation pays for the next generation or something like that, but

[ 111 ]

chapter 3 I think it’s complete garbage. It just makes it seem like that we’re not responsible enough to actually take care of ourselves when we’re older. Angel objects to the feeling that responsibility is being forced upon people who should be able to look after themselves. For others, privatization is a possible solution because the current system has failed. James, an appliance repairman who lives in Michigan, says, “I’m never going to get back in Social Security if I ever retire anyway. So, I wish they would just let me have that money or force me into putting it into my own retirement plan and just do away with the government part of it.” Bonnie from Texas feels the same but is also worried that people would need a great deal of “financial education” for the new system to work. One corollary of the belief that the system is not selfsustaining seems to be increasing doubts that current recipients have actually paid in enough to earn the benefits they are receiving. That one has worked to receive benefits is well known among Social Security recipients, of course. As I noted earlier, Rosemary, 56, resisted seeking out Social Security benefits; in fact, it was only when she faced the threat of foreclosure that she, prompted by her sister, finally filed for disability. She recounts her experience at the Social Security office, where she was shown what she had contributed to the system: I was, again, in this real quiet and down mental place at the time, and we were at the Social Security office, and my sister was saying something about how bad I

[ 112 ]

where should tax money g o ? felt or whatever. I remember the lady saying, “Hey, this is what we do. This is what we put your money into. You worked all those years.” She already had my history that I put on it. She said, “That’s what you put your money in for. Don’t feel bad about it.” I remember that. That’s probably the one thing that I really remember from that very traumatic time of when I was getting on disability. It was that lady making that comment, and saying, “This is why you’ve paid into that all that time. You have nothing to feel guilty about or sorry about or whatever. This is what you paid for.” For Rosemary, being able to think of herself as a taxpayer, as someone receiving a benefit she had earned through years of work, gave her dignity in a time of great personal trauma. It is crucially important for her that people understand that Social Security benefits are the result of taxpaying. But for other interviewees less personally familiar with the program, confusion about Social Security’s three components—retirement benefits, disability benefits, and supplemental security income—appears to have created suspicion about whether Social Security is an earned benefit at all. As Sharlene says, “A lot of disabled people and people who have never worked are pulling Social Security checks.”28 Donna agrees that today’s beneficiaries are “getting more and more out of [the system] that they did not put in it.” Social Security disability benefits were commonly seen by my interviewees as a form of welfare, and this misunderstanding appears to influence perceptions of the retirement program as well.

[ 113 ]

chapter 3 As with Social Security, perceptions of healthcare spending are largely positive, but are tainted with concerns about unworthy, non-taxpaying beneficiaries. On the one hand, the interviewees and survey respondents appreciate many different tax-funded aspects of the healthcare system. Luis’s answer shows some of the breadth of salient healthcare funding: Number one is definitely the health insurance and the Medicare stuff. I’m glad that the money goes towards that and hospitals and stuff like that. I’m glad that my money also goes towards research for cancer and just disease in general. On the other hand, opposition to government spending on healthcare is fed by concerns that noncontributors, and especially immigrants, are benefiting unfairly.29 Far too many people are receiving “free medical care,” Steve says. “We have a lot of illegal aliens come in and use our medical system, which is also part of what my taxes pay for,” says Bonnie, who lives in Texas. “And, they don’t pay any taxes and then it’s like, gosh, this doesn’t seem fair.”30 Healthcare, like spending on the poor, is seen as going to people who have not chipped in their share of taxes. Among the Q14 survey respondents, there is also a strong correlation between opposing immigration and opposing healthcare spending, as in the case of the 49-year-old man from New York who opposes “illegal alien medical care.” Quite a few respondents elide between welfare and

[ 114 ]

where should tax money g o ? healthcare benefits. “Illegal immigrants, healthcare, welfare, food stamps” are what upset a 61-year-old woman from Georgia. “No Job, NO EATEE, go to work even for a small wage,” she concludes. Again, the unworthiness of healthcare beneficiaries is tied to their work and taxpaying. A 60-yearold man from Texas says he is upset about “people that get foodstamps and health care that DON’T PAY TAXES.”^ The tendency to associate healthcare with unworthy, noncontributing beneficiaries likely helps explain why support for healthcare spending is lower among Republicans than Democrats. As figure 3.2 demonstrates, healthcare is one of the issues with a substantial partisan divide, though approval is quite high in both parties. Seventy-four percent of Republicans surveyed approve of healthcare spending, compared to 89 percent of Democrats. It is worth noting, however, that the partisan divide on healthcare may have been somewhat higher at the time of my interview than would otherwise have been the case. The Affordable Care Act, widely known as “Obamacare,” was in the process of a bumpy website launch when many of my interviewees spoke with me, and it remained a controversial issue throughout 2014. At least eight survey respondents specifically mentioned the Affordable Care Act as an example of government spending that upset them. Attitudes about social security and healthcare spending, like those about traditional means-tested programs for the poor, are intertwined with concerns about whether beneficiaries are taxpayers. When programs are seen as earned via tax contributions, they receive higher levels of support.

[ 115 ]

chapter 3

Conclusion Across the political spectrum, Americans approve of local and visible spending. Spending that is at a remove, like scientific research, foreign aid, and corporate subsidies, tends to be perceived more negatively. Between local popular programs and distant unpopular ones, there are the major components of the social safety net. Opposition to social spending on the poor coincides with a widespread belief, particularly among Republicans, that these recipients are not paying their share of taxes. For a handful of interviewees, anger at welfare spending is at the core of their tax attitudes, swamping other considerations. Other social safety net programs, like Social Security and healthcare, suffer less criticism, but opposition is still often framed in terms of whether beneficiaries have paid into the system. In sum, attitudes about government spending are shaped by, first, a preference for spending close to home, and, second, a conviction that benefits should not accrue to those who fail to chip in to pay for government services. The misperception that poorer people and immigrants do not pay taxes is a key factor in attitudes about social safety net spending. But, though a substantial number of Americans are concerned that poor people are not paying enough in taxes, most are much angrier at the thought that the rich aren’t paying their share. As we will see in the following chapters, this perception also has important effects on views of government as a whole.

[ 116 ]

4 How the Taxpaying Experience Shapes Attitudes about Progressivity

When it comes to the income tax, do you think that everyone should pay the same percentage of their income or should people with more money pay a higher percentage of their income? Aaron, 33, Democrat from Alabama: That’s a good question. It’s hard to say because if someone who’s very wealthy is paying the same percentage, they’re going to be paying a lot more money, but I think that the brackets should go up as you make more and more money. When you make outrageous amounts of money, with all the write-offs and exemptions that they can come up with and loopholes they find—yeah, I guess that people who make way more money than 99 percent of the population should be paying a higher percentage. ★ ★ ★

Eileen, 59, Democrat from Washington: I’m not sure. I know you’re referring to the flat tax, and I don’t really understand how that works. Personally, I think, that, you know, the people that make millions of dollars and benefit from, you know, a lot of the stuff the taxes pay for, maybe should pay more, but, you know, I’m not really sure.

[ 117 ]

chapter 4 ★ ★ ★

Bridget, 38, Republican from Pennsylvania: I think a flat tax across the board would be fair because if there’s people out there who are busting their butts and working to make their lives better and to make more money, then I don’t see why they should have to pay more.

In national surveys, most Americans favor progressive taxation. In 2008 the National Opinion Research Center asked Americans whether people with high incomes should pay a larger share of their incomes in taxes than those with low incomes, the same share, or a smaller share. Sixty percent of Americans said a larger share (including 19 percent of Americans who said a “much larger” share). Only 37 percent of Americans said “the same share.”1 What qualifies as “much larger” depends to some extent on how you ask the question, but the principle of progressive taxation receives the support of a consistent and comfortable majority of Americans.2 Indeed, Americans approve of progressivity even when it is framed in relatively forceful terms: 56 percent of Americans think the government should redistribute income by applying “heavy taxes on the rich.”3 My interviews shed light on what considerations Americans are bringing to bear in thinking about tax progressivity. Their answers reveal two internal debates. First, interviewees consider how to apply a bedrock commitment to civic equality given contemporary conditions of economic inequality in

[ 118 ]

attitudes about progres siv ity America. Aaron’s statement at the beginning of this chapter reveals that his support for progressive taxation stems from his concerns about large gaps between the vast majority of Americans (the “99 percent”) and those who are making “outrageous amounts of money.” Second, the interviewees consider the role of hard work in one’s economic fortunes. As Bridget argues, some people succeed because they have been “busting their butts.” Once again, a key question about taxes is, at its core, about one’s place in the community, and particularly whether success is due to one’s environment or one’s effort. As they wrestle with these considerations, many supporters and opponents of a graduated income tax are quick to qualify their views or say they are unsure of the best system. And while many people feel very strongly about whether the rich are paying enough in taxes, their attitudes about tax rates are remarkably muted. Eileen is a strong Democrat very angry about poverty and corporate power, but as her remarks at the beginning of this chapter reveal, she does not feel confident in her opinion about the flat tax. One reason the interviewees are uncertain about tax rates has to do with the lessons they draw from the experience of taxpaying. The process of filing one’s income taxes is complicated for many Americans, and, as they seek out their various credits and deductions, they draw conclusions about how wealthier people can evade their tax responsibilities. In particular, they discount the effect of progressive tax rates on the amount the wealthy pay. Some think the loopholes in the current system are so large that a flat tax, without loopholes, would actually raise taxes on the rich.

[ 119 ]

chapter 4

What Is an Equal Civic Commitment? Rates versus Hardship Because they see taxes as an obligation owed to the community, Americans tend to think everyone should chip in. James, an appliance repairman from Michigan, says taxpaying is a responsibility that applies to “everybody that lives here in America.” “Everybody needs to pay taxes of some kind,” agrees Patsy, a registered nurse from Sacramento, California. For some interviewees, a flat tax seems to accord with the principle of equality between citizens. But for many, this ideal-world solution quickly hits up against the reality of economic inequality. Given the reality of wealth and poverty, most interviewees adopt a principle of equal hardship, arguing in favor of taxation according to one’s ability to pay. Some of the emotional appeal of a flat tax is that seems to be based on a principle of equal civic commitment from all people. Army pilot Matthew argues for a flat-rate tax because “that way everyone’s on an even playing field.” Rosemary, 56, from California, puts forward an even more extreme definition of equality. She likes the idea of a poll tax—not just a flat rate, but a flat amount paid by every adult. For Rosemary, a poll tax would mean that “we’d all be equal.” The interviewees see taxation as a form of civic or community responsibility, one that ideally could be borne equally by all adults. But my interviewees’ support for the flat tax often founders on the reality of contemporary American income inequality. Bonnie from Texas is in favor of a flat tax, but as she

[ 120 ]

attitudes about progres siv ity explores how “it would work out, number-wise,” she is unhappy with the results, both for someone making $100,000 a year and someone making $20,000 a year. She concludes that it may not be the “best system” after all. Rosemary experiences similar doubts about her poll tax idea, when she considers what it might mean for people at different income levels. “$250 to Barack Obama is nothing,” she muses. “$250 to me is huge. . . . So you have to be careful. That’s why I say I don’t know if it’s realistic. You can’t come up with a number that really is fair to everybody.” What is appealing in principle might turn out to be unfair in practice, some interviewees conclude upon reflection. A few interviewees resolved the tension between a principle of civic equality and a reality of economic inequality by imagining a flat tax for most people, with an exception for people at the extremes. James would prefer a flat tax, except for the “extremely wealthy”—those making more than “a million dollars a year.” By contrast, Matthew would like a flat tax, except for its effect on those “trying to get up to a decent standard of living,” which he defines as those making less than “maybe $60,000 or $70,000 dollars a year.” These proponents of a flat tax move toward a somewhat progressive system as they considered the question more closely. Other interviewees state at the outset that the flat tax is only an option after income inequality is addressed. Patsy believes that the gulf between the rich and the poor would need to be “repaired,” as she puts it, “before they can do the kind of tax that I think would be fair, which is everybody paying a certain percent.” Similarly, some of the support

[ 121 ]

chapter 4 for progressive taxation comes from interviewees who wish to reduce economic inequality. Several left-leaning interviewees are familiar with some of the data on economic inequality and cite it when they defend progressive taxation. Adam, 26, says that the wealthy should “pay a higher income tax,” because “I mean, the top whatever percent—the top sixty-five earners in the world have half of the income or something like that.”4 Grace, the college student in San Francisco, favors progressive taxation specifically because it is a way to “narrow the income gap.” Republican Marjorie also bases her support for progressive taxation on the fact of economic inequality: “I think that taxes should be higher for people who are at a higher income level, but I really think that what we need to do is close the inequality gap.” If wages were “more even,” Marjorie concludes, “then everybody could pay more of an even tax and everybody would feel fair about it.” There is good evidence to suggest that if people knew more about how extreme economic inequality is, their support for progressive taxation would be even higher. Though Americans have expressed a significant and growing opposition to economic inequality since the late 1980s,5 Americans still dramatically underestimate how concentrated economic resources actually are in the United States. Americans imagine that CEOs make about thirty times as much as unskilled workers, and think these executives should make only seven times more than the lowest-paid workers. In reality, CEOs make over three hundred times more than unskilled workers.6 What qualifies as “very wealthy” in the minds of most Americans is not nearly as wealthy as very

[ 122 ]

attitudes about progres siv ity rich people actually are.7 As a result, surveys likely underestimate support for progressive taxation; when explicitly asked about very high incomes, Americans favor higher levels of progressivity.8 Even so, a majority of my interviewees, like a majority of Americans, opt for progressive taxation over a flat tax. The interviewees typically justify differential tax rates on the principle of equal hardship; progressive taxation is fair, supporters argue, because one’s taxes should be in line with one’s ability to pay.9 Higher-income people “can afford to pay more,” as Marshall, a military veteran from North Carolina says. Tom, the 63-year-old consultant living outside of Detroit, makes a similar comment. He says, “Bill Gates and Warren Buffett and people like that can certainly afford to pay a little bit more than people who are making $20,000 a year.” Luis works in construction in Lowell, Massachusetts. He emphasizes the relative comfort of the wealthy, even after paying comparatively high income tax rates: It’s not as if the government is taking away money that you can’t do anything without. If us poorer people, so to speak, or middle-class people can manage with what we have, then people who earn more should be able to manage with what they have after the government takes out their taxes. That a rich person still has, as Joe says, “a huge amount left over” after paying his or her taxes, serves as evidence that higher rates for the wealthy do not result in higher hardship and therefore that progressive taxation is fair.

[ 123 ]

chapter 4

Where Does Wealth Come From? Punishing Individual Effort versus Repaying Societal Debt Many interviewees, including both opponents and supporters of progressive taxation, worry about the possibility that progressive rates would punish hard workers for their effort.10 Gloria, the Tea Party activist from Kansas, thought that raising taxes on the rich would mean they were being “punished for producing and creating.” Denise, a strong Democrat, says that she does not “want to punish people for struggling” to get ahead and make a good living. When my interviewees see success as a result of individual effort, they tend to express concerns that progressive taxation might be unfair. The main counterargument that proponents of progressivity offer, as I have already noted, is that wealthy people are not punished by higher rates because they can afford it. But some take a different tack, discussing the role society plays in the creation of wealth. Some respondents minimize the importance of personal effort in an individual’s material success, insisting instead on how wealthy people have benefited from society. As Eileen says somewhat hesitantly at the beginning of the chapter, “the people that make millions of dollars” benefit from “a lot of the stuff the taxes pay for,” and so should perhaps pay a higher rate. For Kyle, the rich “obviously used the system to their advantage to become successful, and so paying more into the system that made them wealthy doesn’t seem too ridiculous to me.” Thus a small number of interviewees emphasize not the individual effort of wealthy people, but rather the benefits they have received from the society they live in.

[ 124 ]

attitudes about progres siv ity Interestingly, the leftist variation on this argument is almost entirely absent from the interviewees’ discussions: only one person went so far as to say that rich people are rich because they have unfairly extracted wealth from working people. Marjorie, who describes herself as a strong Republican and a fan of conservative Congressman Paul Ryan, is the only interviewee who makes this case,11 which she bases on her personal experience as a low-wage worker. I think that people with more money should pay a higher percentage. A lot of that is because it seems like people who make a lot of money do so at the expense of people who don’t. One of my biggest beefs is that for years, I worked in fast food industries. The top-level people, like the district managers and store managers and the franchise owners, all made good money. However, the people who worked there all day every day doing the dirty work didn’t make anything. They made bare minimum wage. Marjorie is defending the idea that rich people should pay more in taxes not simply because they can afford it, but because they have garnered their riches by exploiting those who work for them. She goes on to describe at length the unfair treatment she saw in the fast food industry: They want you to be able to work whatever shifts that they want you to work. They want you to be more available. If they work you full-time, then they’ll give you five days a week, but it’s only a six-hour shift, so it’s

[ 125 ]

chapter 4 only 30 hours a week. A lot of them don’t even get that 30 hours. A lot of them only get 20 or 24 hours. Then when they try to work two jobs to make up for it, it’s hard to work around two different schedules if both of them want you to be available at different times and stuff.  .  .  . The franchise owners are millionaires, but the people who are working for them and are actually there every day, cooking the food and washing the dishes and serving the customers, don’t even make enough money to pay their bills. I feel like this is just government-approved slavery. Marjorie’s anger about how the wealthy earn their money is striking in light of the far less militant arguments made by the interviewees who place themselves on the left of the political spectrum. Alicia describes herself as a “decidedly liberal, young, brown woman,” who thinks Fox News provides “blatantly biased” news for “conservative, old white men.” When I asked her about tax progressivity, she is a strong proponent of the graduated income tax. But compare her rationale to that of Marjorie’s. It really comes down to what people really need to get by and live comfortably and have the things that they want and need. . . . People who earn—you know, CEOs who earn multimillion dollars, multibillion dollars a year, that’s their income, that’s fine. They don’t need that. I mean, nobody needs that much money to be comfortable and live comfortably. It’s just like you’re collecting money for the sole purpose of collecting and

[ 126 ]

attitudes about progres siv ity earning interest on it. And, that’s all well and good, but there’s so many who need so much. I don’t see anything wrong with asking those people, or requiring those people, to give a higher percentage of what they make. Even as she describes it as “collecting money,” Alicia still describes the earnings of wealthy people, even extremely wealthy people, as “all well and good.” She simply claims that, because the rich can pay high taxes and still be comfortable, they should pay more than the people who could not afford high tax rates. She does not argue that the wealthy did not earn what they receive; instead, she explicitly defends their success but argues that taxation does not punish them for that success. The level of punishment that taxes are imagined to impose on work may be inflated by a misunderstanding of the graduated income tax system. As one goes up the tax brackets, the new, higher tax rate applies only to the income one earns over the previous bracket maximum. I did not ask people explicitly about marginal taxation, but passing comments suggest that many people do not understand this process. Michael says, The way they graduate via the tax brackets, but I don’t think it’s quite granular enough where you start making a few more dollars a year that could jump you up into the next bracket, and you might end up actually taking a lot less money after you pay taxes. In reality, if earning a few dollars more pushes you into the next tax bracket, it is only those few dollars that would

[ 127 ]

chapter 4 be taxed at the new rate. But like Michael, several of my otherwise-most-informed interviewees clearly imagine one’s top tax rate to be applied to one’s entire income. Joe says, When I was younger, the incremental tax rate was actually up to 90 percent. It was a real high bracket. Most of the people in that range must have had deductions. I don’t think anybody collected a salary of $1 million and paid $900,000 in taxes. Joe is very politically savvy, readily referring to a wide range of fiscal policy proposals and analyses, from the Reagan-era Grace Commission to Herman Cain’s “9-9-9” plan. Here, he calls the top tax rate “incremental,” perhaps suggesting an awareness of marginal taxation. But when he considers the impact of a very progressive tax system, he, like many less politically engaged interviewees, imagines that the top tax rate applies to every cent a wealthy person makes.12 To the extent that people believe the graduated rates can actually have the perverse effect of leaving you with less take-home pay than if you earned a lower wage, this misperception likely encourages concern that the tax system “punishes work.”

Uncertainty about Progressivity As they debate the competing implications of civic equality and economic inequality, and the relative role of society and individual in one’s success, many people who do state a preference for progressive or flat taxes also express doubts

[ 128 ]

attitudes about progres siv ity about their choice. Even those who have strong opinions about taxpaying by the rich can suddenly grow uncertain when asked about progressivity. Denise complains at length about corporations not paying their share in taxes. “I think it was GE who only paid like a penny last year,” she begins. Walmart, she notes, is “generating billions and billions of dollars” but “they’re getting tax breaks. Meanwhile their employees are basically becoming burdens because they have no choice but to go on state assistance.” Denise is a committed Democrat, and sounds like one here with her opposition to tax breaks for corporations. Asked specifically about progressivity, she does favor a “progressive percentage.” But she suddenly seems much less of a firebrand when she says, I don’t want it to be like people are getting punished for having decent income, because I don’t feel like it should be that either. I think some people get offended and say well I worked. I’m not saying that either because no, you deserve to enjoy the fruits of your labor. Denise, who seemed so sure that people at the top are not paying their share, suddenly considers specific wealthy people who might be unfairly affected. On the other end of the spectrum one finds Ralph, who worries a great deal about the “anti-rich mentality” he perceives in the contemporary United States. At the conclusion of our interview I ask, if he were writing a book on taxation, what the most important chapter would be. He imagines a chapter illustrated by a scene such as this:

[ 129 ]

chapter 4 Somebody in a big tuxedo or suit and he’s running and there’ll be poor people chasing him. They’re trying to steal everything he has. Ralph, one would assume, would be an ardent opponent of progressive taxation. Instead, when asked about flat or progressive tax rates, he says, Oh well, that’s something. Whenever I hear that in the news and I read about the flat tax, and what’s that other one, the, I don’t know, proportion. I can’t think of the name of it. This is really tough. I mean whenever I think of that, that really is tough. Even those who have strong opinions about whether the wealthy are paying too little or too much express uncertainty when asked directly about tax rates. How can people who have strong beliefs about taxes paid by the rich and the poor show such uncertainty when thinking about progressivity? As we will see in the following section, the interviewees’ hesitations about progressivity are heightened by the confusing experience of filing one’s income tax.

What Americans Learn from the Income-Tax Filing Process Americans are very concerned that rich people are getting an unfair break on their taxes. In 2011, when the Pew Research Center asked Americans what bothered them most about

[ 130 ]

attitudes about progres siv ity taxes, 57 percent said “the feeling that some wealthy people get away not paying their fair share.”13 In stark contrast, only 11 percent picked the “large amount” that they themselves paid as their top concern, and another 28 percent said the “complexity” of the income tax system. The most common frustration about the income tax, by far, is the conviction that the rich are not chipping in like other, middle-class Americans. This belief, my interviews reveal, is reinforced by an income-tax filing process that encourages people to imagine that the wealthy are getting a special deal, and in particular, to see loopholes (rather than historically low top marginal tax rates) as the reason why rich people can avoid paying much in taxes. The prominence of loopholes leads them to believe that the rich can evade a large portion of their tax responsibilities, no matter what nominal rate they are supposed to be paying. As a result, some of those who would like the rich to pay more are willing to trade higher rates for fewer loopholes, and those supporting a flat tax underestimate the magnitude of the policy change they are espousing.

looking for your loopholes Once a year, Americans suddenly receive a great deal of information about the deductions and credits in the income tax code. In the lead-up to Tax Day 2015, TurboTax warned on its blog about the “8 Most Missed Deductions.” H&R Block tweeted, “Vroom, vroom! That’s the sound of you driving to the bank with your vehicle deduction. Do

[ 131 ]

chapter 4 you qualify?” A working, low-income single mother must remember to apply for the Earned Income Tax Credit and Child Tax Credit. A college student might deduct the cost of books. Upper-income homeowners likely get a break for their mortgage. For rich and poor, the filing process is a hunt for loopholes.14 What the income-tax filing process does not require is any attention to one’s actual tax rate. Most people probably have their eye focused on whether or not they will be receiving a refund on the amount they have already paid. This is surely what an accountant will draw his or her clients’ attention to, and most tax preparation software shows a running tally of one’s refund throughout the filing process. But a taxpayer has no incentive to compare his or her refund to the overall amount he or she paid over the year. Even those taxpayers who still file their paperwork by hand, consulting the table of tax rates provided by the IRS, see only their top marginal rate—and only if they look closely. The income-tax filing process does not tell Americans much about the amount or the percentage they pay in income taxes. It follows, then, that Americans focus on loopholes rather than rates when they think about why one’s tax responsibilities go up or down. Indeed, deductions are a prominent part of my interviewees’ thinking about the income-tax filing process. Kimberly, a veterinary technician in Florida, says, “It’s stressful. I feel like even after it’s done and over, I’m thinking, What could I have added? What else could I have counted? What else could I have done?” Adam, a 26-year-old from Indiana, doesn’t mind filling out his income taxes, seeing it instead as “a little puzzle,” figuring out how to be as

[ 132 ]

attitudes about progres siv ity “innovative” as possible to find savings. Wilma, from Florida, recalls vividly the first year that she missed out on the Earned Income Tax Credit. “I think I made $5 too much so I couldn’t get it,” she says.15 Many interviewees make the mental leap from their own small deductions to the accounting tricks of the very wealthy. Rosemary talks first about herself going to “some kind of H&R Block expert,” and then notes that the wealthy can afford to hire a “hotshot accountant” to “hide” their money much more effectively than average people. Lawrence agrees. “I know that I’m probably paying too much because of how I get my taxes done. The H&R Block lady is probably not the best at finding loopholes. That’s probably not one of the classes that they attend.” The vexation of tax filing, therefore, carries with it a corollary that the tax code benefits the rich. The first minutes of my interview with Tracy shows how quickly her train of thought moves from the practical irritation of having to file her income taxes to the broader concern that she is paying while rich people are not: When I said the word “taxes” what did it make you think about? Tracy: Next month. And the fact that we put it off until next month. And the burden of it. Those are the main things I think of. And when you say “the burden,” what do you mean? Tracy: Well, I’m fairly middle class and the loopholes that—I’ve already said it right there. The tax codes that afford the wealthier people to pay a lot less percentage than we do.

[ 133 ]

chapter 4 For Tracy, the pain of coping with the arcana of the tax code is inextricable from a broader sense that rich people are benefiting unfairly. Kyle also makes the logical leap from the income-tax filing process to the belief that the wealthy are underpaying their taxes. Asked what he thought of the IRS, Kyle responds, Red tape and bureaucracy. And . . . I think that everything’s so convoluted that only people that are in very good financial situations are able to use the system to their advantage when it comes to the IRS and tax loopholes, that kind of thing. For Kyle, the complexity of income tax filing is evidence that many rich people are getting away with something. As Kyle’s and Tracy’s remarks indicate, the taxpaying process also influences how Americans believe the wealthy are escaping their tax responsibility: via “loopholes.” When I ask Grace who she thinks is paying too little in taxes, she responds, “The rich pay too little because of all the loopholes they have.” Michael, a 51-year-old IT technician, agrees. “I think the richest pays too little nowadays,” he says. “They’ve got their resources to exploit all the loopholes and they end up paying too little.” Even when people raise issues that are technically about tax rates, they still conceive of the problem in terms of loopholes. Tracy believes that the rich don’t pay enough because investments are taxed differently from regular wage income. “I don’t have money that I make money on,” she says. “All of my money is taxable.” Tracy is correct that investments

[ 134 ]

attitudes about progres siv ity are taxed at a lower rate. But she still sees this as a problem of “tax breaks and a lot of loopholes.” She does not describe this as a problem of tax rates being too low. Alexa, a young mother from Mississippi, is also drawn to deductions and credits, rather than rates, as the source of progressivity. She says she would prefer a flat tax, the same percentage for everybody. But, she quickly adds, “Now what people get back I think should be geared towards your income level.” Alexa imagines a progressive tax system with a flat rate; for her, it is exemptions, deductions, and credits taken into account at tax time that should allow poorer people to pay less than richer people. In my interviewees’ understanding, then, the word loophole includes a very wide array of policies and is applied even in instances that might otherwise be understood as evidence of a need to raise or lower the tax rate. In all, twenty-eight interviewees talk specifically about “loopholes”; only two interviewees, Kenneth and Joe, both highly educated Democrats, talk about income tax rates for the wealthy. Kenneth is a lawyer from Peoria, Illinois. He talks about tax rates on the wealthy being low, by historical standards. Joe, a retiree from California, says, “I don’t know why we can’t go back to the tax rates during the Clinton years.”16 But comments like these are extremely rare. People convinced that the rich currently escape their income taxes often believe a flat tax would be as or more progressive than the current system. Gabriel thinks a flat tax would hardly alter the amount rich people pay: “If the loopholes were closed and they were actually paying that percentage, as opposed to, you know, having the best lawyers and the best accountants that could find a way to not pay,

[ 135 ]

chapter 4 then I think they would be paying about the same.” Jessica goes further. “I think that, for example, a flat tax would wind up with the super-rich paying less but if there were no loopholes, I’m not sure,” she says. “They might end up paying more even if it were a lower percentage.” Thus the desire for wealthy people to pay more in taxes is focused on a preference for the closing of loopholes, rather than the raising of rates, to the point that some people who want the rich to pay more believe a flat tax might be the right policy solution. This misperception is not limited to my interviewees. A substantial percentage of people who support a flat tax wrongly believe that such a policy would raise taxes on the rich.17 One explanation for this widespread misunderstanding might be innumeracy; perhaps Americans simply do not understand how percentages work. But survey data show that Americans have a reasonably good handle on the difference between progressive and proportional taxation,18 a finding in keeping with my interview experience. The problem, instead, is that some Americans wrongly think that the income tax is more regressive than a flat tax—a conclusion reinforced by the experience of taxpaying.19

The Impact of Media Attention to Tax Avoidance by the Wealthy and Corporations Doubts about the progressivity of the income tax are compounded by widespread awareness that certain famous wealthy people, and especially corporations, are paying very little in federal taxes. A very large majority of Americans are concerned about corporate tax avoidance. In a 2015 poll

[ 136 ]

attitudes about progres siv ity conducted by the Pew Research Center, 82 percent of Americans said they were bothered “a lot” or “some” by the feeling that “some corporations don’t pay their fair share” in taxes. As we will see, however, issues of corporate tax avoidance and low tax rates on investment income are translated in the popular understanding into a belief that loopholes undermine the progressivity of the individual income tax. A few of the more politically engaged interviewees, on the left and the right, are aware of the claim made by billionaire investor Warren Buffet that he paid a lower tax rate than his employees. Joe, the highly engaged Democrat who is one of the few to talk about progressivity in terms of tax rates, lays out the “Buffett Rule”: He says that his secretary—who, once again, gets a salary that’s just cut and dry and the government knows about it right away and the tax is withheld and she has to declare all of that at income tax time—pays 30 percent. So Warren Buffet, being the big guy, so to speak, that he was, he actually said that he shouldn’t be paying less of a tax rate than his secretary. That’s the Warren Buffet rule. Several interviewees who could not name Warren Buffett also had his story in mind. Daniel appears to have confounded the Buffet Rule with news of presidential contender Mitt Romney’s low tax rates; he says that when Mitt Romney was running for office and they were breaking down how much he paid in taxes

[ 137 ]

chapter 4 compared to how much his secretary paid in taxes . . . as a percentage of his income he paid less than she did. Stories like that of Mitt Romney and Warren Buffett clearly reinforce the belief that the income tax is not actually a progressive tax, a misperception that buttresses some of my interviewees’ support for a flat tax. Bridget struggles to remember the name of “the guy who was on the news and he said that his secretary had to pay more taxes than what he did,” but she goes on to use this as a justification of the flat tax. Because of the tax deductions that he can take because of his wealth and where his secretary can’t take those and she ends up paying more. In those instances, I don’t think that’s fair. So, I think a flat tax across the board would be fair. Note once again that Bridget perceives the problem in terms of “deductions,” not the lower tax rate on investment income compared to wage income. Thus the news of Warren Buffett’s comparatively low tax obligations feeds into a more general impression that a flat tax might increase the amount the wealthy pay in income taxes. The flat tax also appears to garner some support as a result of how the interviewees think about corporate taxes. For corporate taxes, what one might reasonably deem “loopholes” do have a tremendous effect on overall liability,20 and interviewees are certainly aware of these accounting tricks, like the “Double Dutch sandwich,”21 which Grace recalls reading about. But the corporate income tax code is different from

[ 138 ]

attitudes about progres siv ity the tax code that applies to individuals and households. The interviewees, however, do not appear to make a distinction between the personal and the corporate income tax. So news about corporate tax avoidance has reinforced the conviction that loopholes undermine the progressivity of the individual income tax. The interviewees tend to think of taxes facing wealthy people and taxes facing corporations as a single set of policies whose impact comes primarily from loopholes. As Marjorie puts it, only “business owners or corporations” can find a legal way to avoid paying much in taxes, because they have accountants who know the “special discounts.” Jacqueline expresses anger at “the 1 percent and the people that we feel and corporations that we feel should be paying more and that kind of skirt around things and have the little loopholes.” Many interviewees volunteered a specific example of a corporation paying little or nothing in taxes, including several proponents of the flat tax. Lawrence notes, I heard one year—probably last year or maybe the year before—that General Electric really effectively paid no tax at all. I don’t even know if that’s true, but I remember that really standing out and thinking, “Hey, wait, how is that fair?” I probably would be more in favor of a flat tax. The thought that General Electric can avoid its taxes entirely leads Lawrence to the conclusion that a flat tax might be fairer. Bonnie, an antiques dealer in Texas, draws a similar conclusion:

[ 139 ]

chapter 4 Do you think that, on balance, wealthy people would be paying more, less, or the same under a flat tax? Bonnie: I wish I knew. I’ve heard of a lot of corporations that have a good enough lawyer where they don’t pay and there was some major names in the news recently, like six months ago, and I can’t recall the names, but they were household names. . . . 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. So, I’d like to see the loophole system go away. Bonnie later emailed me a link to an Associated Press article about the construction equipment company, Caterpillar, accused in 2014 of avoiding $2.4 billion in taxes by shifting its profits overseas. Public concern about the effect of tax loopholes is reinforced by media coverage of tax policy. Many of my interviewees are aware of reports of particular wealthy people paying a lower percentage than middle-class workers, as well as stories of corporations paying nothing at all in federal taxes. This knowledge compounds the sense that wealthy people pay a lower percentage than poorer people and encourages approval for a flat tax.

Conclusion Though most Americans, on balance, prefer a progressive tax system and believe that the rich are not paying their share, their attitudes about tax rates are subdued. Partially, this uncertainty is philosophical: Americans are uncertain about

[ 140 ]

attitudes about progres siv ity how to balance the ideal of civic equality with the reality of economic inequality, and weigh competing ideas about how wealth relates to work effort. But support for tax progressivity is also muted because of Americans’ experience of income tax filing. Many interviewees, drawing on their own experience of taxpaying, focused on loopholes, rather than rates, as the aspect of the tax code that changes how much people pay. The importance of loopholes is reinforced by news about corporations, and about a few very wealthy people, paying little or nothing in taxes. Thus the experience of taxpaying misleads some people about the tax policies that would achieve their preferred outcome: a higher share of taxes paid by the rich. But the complexity of the tax code does not just lead Americans astray about tax policy. It also reinforces an intense pessimism, even a cynicism, about the possibility that government can work in the public interest. As we will see in the following chapter, Americans view the complexity of the tax code as evidence that the government operates on behalf of special interests—an issue that they discuss using the language of “government waste.”

[ 141 ]

5 (How) Is Tax Money Wasted?

Are there things that upset you about where your tax dollars go? Jacqueline, forties, Democrat from Massachusetts: There’s nothing concrete that’s coming to mind. I just—I suppose I don’t like if there are any dishonest goings on with the people who have their hands on the money and deciding where to put what. It’s just kind of a vulnerable thing that you pay the taxes and you’re hoping for the best. ★ ★ ★

What are you upset about in terms of where your tax dollars go? Aaron, 33, Democrat from Alabama: Well, to start off with, I have just a general comment on the transparency, in terms of where tax dollars go. There’s a lot of waste and you don’t really know where a lot of it is going. There are programs that are paid for with taxes and that are helpful to, let’s say, corporations and businesses. ★ ★ ★

What are you upset that your tax dollars pay for? Bonnie, 56, Republican1 from Texas: I think I’m upset that there’s a—kind of system in place in Washington, especially, that feels impractical to me. And, you know, I’m not really a Democrat, I’m not really a Republican. I can tell you stuff I

[ 142 ]

( how) is tax money waste d? don’t like about both sides. And, it’s still like there’s a lot of things that don’t get done because there’s so much infight—, or not infighting, but pulling back and forth across the aisle. And then, I feel like there’s a lot of career politicians that are—, have been in Washington so long, they’ve lost touch with their constituents. So, I wonder if they’re really representing, and so—, and then they’re voting themselves pay raises while people are really struggling to find jobs. It feels like an elitist, insider, kind of thing has happened in our politics.

When asked what upsets them about government spending, more than a third of the forty-nine interviewees do not name any specific programs or policies. Correspondingly, over a third of my one thousand survey respondents raise concerns about political processes, not just particular programs. These interviewees and survey respondents talk in general terms about whether the government is representing people like themselves or is “elitist” (to use Bonnie’s phrase) and beholden to special interests. Many, like Aaron from Alabama, believe that tax dollars are being used, not in the public interest, but to help “corporations and businesses.” As Jacqueline puts it, to be a taxpayer is to be “vulnerable” to the possibility that those in power may violate the public trust. When we think about Americans’ attitudes about government, we must recognize that they care not just about the policy outcomes but also the processes by which those outcomes are decided.

[ 143 ]

chapter 5 These issues came to the forefront when I asked the interviewees and survey respondents about “government waste.” Respondents had a wider definition of government waste than policy experts; Americans think of inefficiency and of programs they dislike and of systemic failures of democracy. Many Americans think about waste in terms of “pork” and “perks”—that is to say, how special interests carve out privileges for themselves, and how politicians are elites who live at a remove from the citizens they are supposed to serve. The result is a profound sense of frustration and disempowerment.

Understanding What Americans Mean by Government Waste The idea of waste is central to the interviewees’ attitudes about taxes. Over the course of each interview, I asked only one question about waste, but interviewees talked about this subject a great deal. Almost two-thirds of the interviewees’ references to government waste came spontaneously, not in response to my explicit question. When I ask Gabriel about who pays too little or too much in taxes, he says, “[W]ell, I think everybody pays too much, because big government should be able to do more with what they currently get.” When I ask Marjorie to describe a taxpayer, she says, I think of how I try so hard to pinch pennies and to make a dollar stretch. It seems like the government does not do that at all. It seems like they waste so much of that money that we all pay.

[ 144 ]

( how) is tax money waste d? Like Marjorie, Ralph’s feelings about taxes are closely tied to his beliefs about government waste. Asked which tax is the worst, he says, “The worst tax is money that the government is getting and then wasting.” Waste is clearly a central idea to the interviewees’ thinking about taxes and shapes many of their other considerations of the subject. In particular, the interviewees’ sense of pride as taxpayers is often tainted by the thought that the money is wasted. “It feels good to be able to contribute,” says Gabriel. “But, then at the same time, there’s the element of the inefficiency.” Donna says taxpaying is a “two-headed sword.” A resident of the Gulf Coast who lost nearly everything in Hurricane Rita, Donna approves of what taxation is supposed to do: taxes are “supposed to pick us up off our roofs when the water gets too high.” But far too often, she believes, taxes go to “feed the bureaucracy.” As Marjorie says, “You probably wouldn’t feel so bad about it if you thought that they were really using it for good and they were being careful with it and everything.” Scholars have expressed astonishment at Americans’ estimates of government waste. While a 2013 Congressional hearing put waste, fraud, and abuse at 7 percent of the federal budget, public estimates of waste often approach 50 percent.2 My respondents are no more sanguine than the public at large; the mean estimate of government waste among my interviewees is forty-two cents per dollar, and among my survey respondents, fifty-three cents per dollar.3 These responses are usually deemed by scholars to be a “misperception,” a belief for which there is “little evidence.”4 When one considers what the general public means by waste, however, the magnitude of their estimates makes sense.

[ 145 ]

chapter 5 Gabriel was one of several interviewees who raised the ambiguity in the meaning of waste: And, then, this is just a personal opinion, but how much of every dollar do you think the government wastes? Gabriel: Thirty cents. And—go on— Gabriel: How do you define waste? That’s what I was going to ask you. Gabriel: Yeah, I guess, to me, waste would be any frivolous spending, even if it is, you know, going back to the military, even if it is going to something tangible, you know, I think that’s wasteful. But, even if they were to keep up everything that’s going on, I think a certain percentage of that is just falling through the cracks to inefficiency. If I had to define the things I disagree with as waste, then probably 30 percent, I would say. And, if you were just thinking about inefficiency, would you have a different number? Gabriel: Yeah, inefficiency, probably around 15 percent. Gabriel knows that military spending produces “tangible” results, but still sees this spending as wasteful, because he disagrees fundamentally with American military policy. Many other respondents also include programs they oppose in their definition of waste. Lucy, a 59-year-old living in Chicago, sees waste almost exclusively in terms of programs she dislikes. “Inefficiency,” she says when I inquire, “doesn’t even play into it.” Gloria is similarly focused on spending she disagrees with. She thinks the government wastes about

[ 146 ]

( how) is tax money waste d? 50 percent of the money it receives. Asked what comes to mind when she thinks about government waste, she says, “Giving money to the arts. Giving money to Planned Parenthood.”5 When asked explicitly about inefficiency, she takes a starkly different tone: I’m sure there is [some inefficiency]. I don’t know much about it, but I’m sure there is. Any big system like we have, it would probably be pretty hard not for there to be some waste. All the lawmakers are trying to help out their own area and states. Some of those things are important, though. Bear in mind that Gloria had previously claimed that half of tax money was wasted; inefficiency appears to play a small or even negligible role in that assessment. Survey respondents appear to think in a comparable way. After estimating how much of every tax dollar is wasted, respondents are asked to describe what they imagine when they think of waste. Their open-ended responses fall into five main categories: disliked programs, politicians’ perks, “pork” spending, overpayment, and inefficiency.6 Examining each of these categories in turn, it becomes clear that when most people talk about government waste, they are thinking of something very different from the official definition. Only a small percentage of survey respondents think about waste the way policymakers do. Eleven percent of respondents talk about inefficiency, such as government having “too many employees,” “slow processes,” and “duplicate services.” Seven percent of respondents refer to overpayment,

[ 147 ]

% of Respondents Mentioning Type of Waste

chapter 5 50 40 30 20 10 0

disliked programs

politicians' perks

'pork'

inefficiency

overpayment

Type of 'Waste'

Figure 5.1. What Americans Mean by Government Waste

or government administrators being overcharged when making purchases. Though these stories first made headlines nearly thirty years ago, thirteen survey respondents and eight interviewees cite the purchase of an overpriced hammer or toilet seat.7 “$7 screws and $300 toilet seats,” says one respondent. “Those things make no sense to anybody!” By far more common is respondents’ tendency to think of waste in terms of entire programs they do not like. A remarkable 40 percent of respondents explain waste this way. A 68-year-old independent from Illinois disapproves of “Afghanistan, Iraq, the UN, Medicaid,” and lists these as examples of government waste. Another respondent, from New York, sees “gay rights” and “abortion support” as wasteful. These results closely recapitulate the unpopular programs addressed in chapter 3, with defense spending, welfare,

[ 148 ]

( how) is tax money waste d? scientific research, breaks for corporations, and foreign aid coming in for the most criticism. Asking about government waste especially provokes respondents’ frustration with defense spending, however: fully one-fifth of respondents list some military spending as a kind of government waste.8 The next most common program described as waste is welfare spending, mentioned by only 9 percent of respondents. After disliked programs, the other common kinds of government waste named by my survey respondents are critiques of government processes. Seventeen percent of survey respondents referred to politicians’ perks, the rewards a politician receives for being in office, such as “big fancy dinners for politicians” and the “trips and vacations” these officials award themselves. The pensions, healthcare, and other benefits that accrue to members of Congress are also the subject of much criticism. A 32-year-old woman from Florida describes “pensions for government politicians” as waste, noting that these officials “do NOT deserve payment for life after a single term in office.”9 In addition, about 12 percent of respondents describe waste as “pork” spending directed to benefit politicians’ electoral or financial backers. A respondent from Oregon complains about “pork barrel projects by senators who pander to their constituents,” while another from Texas objects to “ridiculously special interest driven spending.” The most common specific example of this kind of waste is the “bridge to nowhere,” cited by eleven survey respondents.10 In all, most people simply do not think of “government waste” the way that experts do. Understanding what Americans mean by waste is important for two reasons. First, how

[ 149 ]

chapter 5 people think of government waste can help us understand why their estimates of waste are so high. Second, it draws attention to the substantive critique behind the numbers. There is a strong correlation between how one defines waste and the percentage of government spending one sees as wasteful. All else being equal, a person who thinks of waste as overpayment and inefficiency will on average estimate waste to be twenty-three percentage points lower than someone who thinks of waste in terms of programs they oppose.11 Thus the supposed overestimation of “government waste” can be in substantial part explained by the differing interpretations of the phrase itself. But if Americans use a relatively broad definition of government waste, does that necessarily show a deeper or better understanding of how government works? Take, for instance, the respondent from Texas who estimates that 82 percent of government money is wasted, and describes that waste as “big fancy dinners for politicians.” Does she really imagine that more than four-fifths of tax dollars are being spent in places like the Senate dining room? Or, alternatively, the respondent from New Jersey who says 40 percent of tax dollars are wasted, and imagines waste to be “bribes”? Perhaps my story is no more optimistic than the previous analyses of government waste, but merely shifts the locus of Americans’ misunderstanding from an overestimation of government incompetence to an exaggeration of politicians’ venality. I would argue otherwise. The interviewees’ descriptions of waste, taken together, form a meaningful critique of the political process. In the following section, I discuss what Americans mean by pork and perks, and show that these attitudes

[ 150 ]

( how) is tax money waste d? about how tax money is spent are, fundamentally, a way of expressing concerns about American democracy being controlled by elite interests.

Pork and Perks: Waste as a Shorthand for Plutocracy Two of the respondents’ most common examples of waste indicate strong doubts about whether American democracy represents the interests of most people. When Americans talk about perks, they evince real anger at the elitism among the governing class, and their complaints about pork reveal a widespread grievance about the power of special interests to redirect public funds to private ends. Thus Americans’ tax attitudes are shaped not only by their opinions about particular government investments, but by a more general sense that American governance is not functioning properly.

pork: corruption and corporate interest As I noted in the previous section, about 12 percent of respondents describing government waste talk about the power of corporations and other special interests to determine how tax money gets allocated. The most common turns of phrase for this phenomenon are pork and pet projects. One New Yorker’s idea of waste is “pork barrel spending that only benefits small areas.” A woman from Michigan thinks of waste as “pet projects that a congress person gets through because he voted for someone else’s pet project.” A man from Pennsylvania notes “pork programs that are traded for votes.” Unlike in the case of government waste, respondents

[ 151 ]

chapter 5 mostly use the word pork more or less as it is used in public policy: a line item expenditure benefiting a small number of people, led primarily by a single legislator, and added to legislation through earmarks, horse trading, or logrolling. The interviewees are similarly well versed in some of the most famous examples of local special-interest spending. Joe, a Democrat from California, recalls, You may remember that there was that Congressman Murtha who I think just died recently. This guy kind of learned the best way to get the most defense dollars spent in his district than anyone else. He just went nuts with things. Money was spent, a ton, and it helped the local economy, but a lot of that money just went for things that weren’t needed, like airports that were used by one plane a day and so forth. That is galling. It is widely recognized, then, that legislators win special favors for their own districts, and these expenditures are often seen as a kind of waste. In addition to bringing money to their local districts, politicians are understood to reward their wealthy friends and corporate campaign funders. Americans do not appear to draw a sharp distinction between legal and illegal activity when it comes to special-interest money in politics. Respondents tend to slip between talking about “pork” or “campaign contributions” and using phrases like “kickbacks” and “general theft.” The mental leap is especially clear in the interviews. “A lot of the government’s decisions are based

[ 152 ]

( how) is tax money waste d? on how it will affect corporations,” says Aaron, “because they get funding from corporations for their campaigns and maybe bribes.” Bonnie from Texas also uses the word bribery to describe corporate lobbying. “A large company like Monsanto Corporation can send up that lobbyist, wine and dine them, and, maybe, get their way,” she says.12 For her, the way that politicians are “swayed” is akin to “the bribery system in Mexico.” For these interviewees, lobbying and campaign spending are a form of corruption as corrosive to the political process as outright criminal activity. The idea that campaign finance is akin to vote buying is widespread. “You can’t even really run a political campaign anymore without getting some extreme financing,” says Denise. She recalls a recent election in her home state that featured spending in the tens of millions of dollars: I’m in Connecticut so I just got to witness Linda McMahon versus Chris Murphy,13 which was insane on its own. You’ve got to get at least $25 million to even have a chance. There’s people running for office in their pockets. So we felt that people are going to have to answer to corporate and big money interest. With corporations and wealthy people able to spend such immense sums, Denise does not see average Americans as having much of an opportunity to influence the political process. These comments are infused with a sense that the government operates for the few, rather than the people as a whole. Michael raises the issue of a revolving door between elected

[ 153 ]

chapter 5 office and corporate offices. “You could probably write a chapter or two on waste,” he tells me. “The whole system that’s been set up for politicians, the government contractors, and those contractors looking out for their politician friends when they leave office.” Survey respondents make similar remarks; though, as one could predict of anonymous commenters, they tend to express their opinions with less subtlety. “They bail out the rich and let the poor people die,” writes a 40-year-old woman from Texas, when asked to describe what qualifies as government waste. “sELF-serving carreer politicos that kiss the asses of lobby, union etc . . . ,”^ says a Californian, “we have the best gov. money can buy, and most gov. is bought by corporations and special interests.”^ Thus waste becomes shorthand for the ways in which government responds to elites at the expense of the majority of Americans.

the irs as a symbol of unchecked government As on the subject of government waste, a question about the Internal Revenue Service provoked my interviewees to express doubts about governmental accountability. The tax collection agency holds an odd place in the minds of Americans. On the one hand, people who have had direct experience with the IRS have a wide array of attitudes, from severe frustration to slight surprise at the organization’s efficiency and helpfulness. But the IRS also holds a symbolic significance for taxpayers that has little relation to any actual experience of the organization. The IRS is often

[ 154 ]

( how) is tax money waste d? described in extreme terms, as an illustration of government’s unaccountable power. A notable percentage of the interviewees describe the IRS as a symbol of a terrifying despotic government. Erick says he thinks the IRS is “kind of tyrannical.” Chrystal from Delaware says the organization is “a group of people that everyone’s afraid of.” Stacy imagines that the IRS “are not people whom I’d want to cross ever because they could take my apartment away.” No fewer than three interviewees make reference to the “Men in Black,” a movie franchise in which a mysterious government agency hides the existence of aliens from the general public. Brandon from Pennsylvania says that he imagines the IRS as operating from “some secret office,” like the Men in Black. Though he knows it is not “realistic,” Marshall from North Carolina uses the same metaphor. “What I imagine is the Men in Black, people walking around with black suits with the white shirt and black tie, and nobody’s smiling.” The IRS are “people dressed in black and black glasses coming after you if you don’t pay your bill for your taxes,” says Craig from Florida. “With baseball bats,” he concludes. Some of the interviewees seem aware that their mental image is perhaps a little overdrawn; an audit, says Daniel, is “like the adult version of the boogeyman.” Even so, the public image of the IRS is of a secretive, threatening, and unaccountable government. Most people who describe the IRS as draconian have had no personal experience with the agency at all. In national surveys, more than three-quarters of people say that they have been “very” or “somewhat” satisfied with their personal interactions with the IRS.14 Only eight interviewees report personal

[ 155 ]

chapter 5 contact with the IRS beyond simply submitting their returns, and these interviewees are not especially negative or positive. Craig, who imagined IRS agents wielding baseball bats, says he has personally been audited, which might have strengthened his opposition to the agency. But Lucy, who spent eight years paying off back taxes after accidentally claiming an extra exemption, says only that she imagines “a sort of inefficient government office similar to the DMV.” There is not an obvious relationship between direct experience of the IRS and negative attitudes about the agency. In fact, about half of the interviewees who offer scathing opinions of the IRS talk about their own tax filing experiences in neutral or positive terms.15 Gloria does not pay income taxes currently, but remembers that the process was “pretty simple,” because she had “a simple working-class type of job.” Asked about the IRS, however, she sums it up in a single word: greed. Chrystal, who said the IRS is an organization to be afraid of, says of filing her taxes, “I feel like I’m doing something good . . . like I’m doing something I’m supposed to be doing.” Perceptions of the IRS seem to be out of keeping with the interviewees’ lived experiences. We can understand Americans’ extreme rhetoric about the IRS in the context of their more general frustrations about government that are magnified by the arcane incometax filing system. As I noted in chapter 3, the tax code’s complexity itself serves as evidence for many of my interviewees that government operates on behalf of the very wealthy and corporate interests. But the tax code is not merely seen as a boon to the rich; it is also understood as proof that average people lack control over government.

[ 156 ]

( how) is tax money waste d? Thoughts about the incomprehensibility of the tax code bleed into more general considerations about a government unaccountable to average people. For Michael, that taxes are too complicated to “decipher,” that he has to “pay someone” to help figure out his taxes, is “just saying something about how out of control” the broader political process is. The “IRS guy,” according to Daniel, is part of “the big intimidating government . . . put into place by someone else and I have no control over that.” Ralph’s comments are typical; asked about his mental associations with the IRS, he says,  The picture that came into my mind was a huge building with many employees and that they’re trying to enforce regulations. They’re probably  .  .  . I just don’t know, my gut instinct is that this is probably inefficient. When I think of government like that, I’m just thinking, and I have no specific reasons to say this, but when I think of the IRS, I’m just thinking of waste . . . [and officials who are] out of touch with the average Americans.   Ralph transitions between the IRS and the government more broadly and sees the IRS as emblematic not only of inefficiency, but also of a distant and unresponsive government. Ralph’s view is not drawn from any personal interaction with the IRS; as he says, he has “no specific reasons” to think ill of the agency. Instead, asked about the IRS, he thinks about government more generally, and its lack of connection to the citizenry.

[ 157 ]

chapter 5

perks: complaints about politicians’ lifestyles It is not only IRS agents who are perceived as living lives apart from average Americans. When Americans are asked about government waste, politicians’ lifestyles come in for a remarkable amount of criticism, particularly among the conservative and the less educated. About 15 percent of people with only a high school education include politicians’ salaries and benefits in their definition of waste, compared to 10 percent of those with at least a four-year degree. Their anger encompasses not only symbolic evidence that politicians are living lavish lifestyles, but also benefits that many upper-middle-class workers take for granted, like health insurance and retirement benefits. Their comments are a critique of elitism, an expression of doubt that elected officials economically distant from their constituents can truly act as their representatives. Politicians are seen as benefiting from a range of goodies, including travel and entertainment, on the taxpayer dime. Respondents object to “junkets to Las Vegas for conferences,” “hotel stays,” and “parties.” When I ask Stacy what she means by government waste, she says, “how corrupt politicians use that money to go on vacations all the time.” Perhaps in part because politicians are paid with tax dollars, there appears to be some confusion over whether politicians are spending their own money on these privileges. James’s concerns about the government’s inability to “spend wisely” are closely linked to his assessment of the lifestyles of elected officials. “I remember years ago, Bill Clinton got a $400

[ 158 ]

( how) is tax money waste d? haircut on an airplane,” he says.16 “I know he didn’t come right out of the pocket with $400. I’m sure that came out of our tax dollars somewhere along the line.” An approximately equal number of respondents’ complaints are not about frivolities, but instead are directed at elected officials’ salary and benefits.17 Most commonly, respondents complain about politicians’ salaries, either simply for being too high, or because politicians were not perceived as doing enough work to have earned those salaries. More than twenty survey respondents list politicians’ salaries as their one and only example of government waste.18 A 72-year-old woman from Massachusetts describes waste as “the salaries and benefits paid to elected officials who haven’t been doing anything to help this country.” Politicians’ benefits, including healthcare and pension benefits, are also a source of anger. Many respondents angry about political perks incorrectly believe that elected officials receive lavish pensions as soon as their first term is over. Congressional health insurance is also seen as an unearned luxury, in part because people in Congress benefit from a healthcare plan different from that available to most Americans. “Why is it they think they deserve Free Healthcare?”^ asks a woman from Arkansas. “Who is it they are supposed to be working for?” Who are they working for? This question lies at the heart of complaints about politicians’ perks. Elected officials’ lofty economic status is seen as a violation of the terms of public service; one cannot represent the American people if one receives privileges unavailable to the average person, these respondents believe. As a man from Michigan puts it, “Their

[ 159 ]

chapter 5 wages are to high if they r for the people they don’t need that kind of money.”^ Other survey respondents make a similar case, arguing that representatives should not be living better than the people they are supposed to be serving. Politicians should instead “LIVE LIKE MOST AMERICANS,”^ writes a woman from Ohio. One interviewee in particular sheds light on the fundamentally democratic sentiment underlying complaints about political privileges. James, who earlier in our interview talked about Bill Clinton’s haircut, returns to his concerns about luxurious living by elected officials. I mean I know I’m not president or nothing, but if I was, whenever we’re having meetings or dinners or whatever, I would just make everybody chip in and I wouldn’t spend tax dollars on it. Everyone should bring a dish and we can have a potluck. You know? Make everybody drink out of orange juice cups or something, and recycle! Like Christmas time, they spent all that money decorating the White House and I’m probably never going to go there and see it. I mean just a lot of money that seems wasted to me. I don’t know why they just couldn’t find a tree, put it up outside the White House, wrap some lights around it and call it good. I don’t know why they have to get so extravagant with things. For James, Washington, D.C., feels impossibly far from his home in rural Michigan. Only 35 years old, he never expects to see the decorations at the White House. He sees the lives of the people who are supposed to represent him, with their

[ 160 ]

( how) is tax money waste d? catered events, as at an inestimable distance from his own, and this economic rift violates his ideals of how democracy should work. Public concern about politicians’ elitism is not new, of course; Congressional pay raises have resulted in political blowback since the earliest years of the Republic.19 In at least one qualitative way, however, these issues may be different than they would have been a few decades ago. The perception of politicians’ retirement plans and healthcare coverage as unfair luxuries hints at the decline in the economic security of average Americans; it is no surprise that less-educated people are more likely to object to politicians’ perceived luxuries. One can only speculate whether in periods when defined-benefit retirement plans were more widely available, the pensions provided to members of Congress were less stark evidence of their isolation from the average American experience.

where does the money go? Americans’ examples of government waste often imply a criticism of the quality of political representation in the United States. My respondents take the opportunity posed by my questions about taxation to criticize the powerful and, at the same time, express their own feelings of disenfranchisement—in particular, their sense that the actions of government cannot be tracked by the citizenry. This attitude is most commonly expressed as an admission that one does not know where tax dollars are spent. For some Americans, knowing relatively little about where their money goes is evidence enough that government is wasteful.

[ 161 ]

chapter 5 About 7 percent of all survey respondents say they are unsure where their tax money goes. Some of these respondents seem to believe that this uncertainty is a result of a concerted effort on the part of the government to be inscrutable. In answer to my survey question about waste, respondents talk about “special interests that are added to bills that people aren’t told about,” “projects not known to the general public,” and “the unknown spending.” A man from Ohio writes simply, “not sure, don’t know if any of us little people know for sure.” At least for some interviewees, feeling uninformed is itself evidence of a failure of governance. I quoted Aaron at the beginning of this chapter; when asked what he is upset about, he pauses, then says, “I have just a general comment on the transparency, in terms of where tax dollars go. There’s a lot of waste and you don’t really know where a lot of it is going.” Craig can’t think of an example of government waste, but knows that the government creates “bloated bills” that “they hide [so] that we can’t even see half of them.” Similarly, Jacqueline says she “doesn’t have a solid thing coming to mind,” but she worries about “things that the government isn’t completely transparent about. So we might not even know where the things are going and being wasted,” she says, “because it’s so complex. “ As Lawrence says, “It’s a shell game.” Several interviewees express a wish to know more about where their money goes. Bridget, the private investigator from Pennsylvania, says, I would love to sit down with whoever controls all this money, whoever—, whatever bank account it comes

[ 162 ]

( how) is tax money waste d? into, whatever accountant or person sits there and goes, “Okay, well this hundred grand’s going here and this fifteen hundred dollars is going here.” Because—I like to see how things work. Michael complains repeatedly about the lack of transparency in government, so I ask him if he would feel better about taxes if he knew they were set for one particular purpose. He says, “Yes, even if I might not agree fully with whatever it is they’re spending it on, at least I know where it’s being spent where it’s not just being dumped in the black hole.” When Americans discuss “government waste,” they call on a range of different ideas, including special-interest spending and the luxuries enjoyed by political elites. Though their examples vary, their answers share a sense that their democratic government does not operate on behalf of the people. Without confidence that government operates on behalf of the citizenry, their very lack of knowledge reinforces the belief that government is wasteful.

Conclusion Americans describe a huge percentage of tax money as “wasted.” At first glance, their estimates seem bafflingly high. But policymakers and members of the public have been speaking at cross-purposes. Americans have a much broader definition of waste than policy experts do. Many think of waste in terms of programs they disapprove of, and these respondents pick much higher estimates of waste than other Americans. Moreover, even putting aside Americans’

[ 163 ]

chapter 5 objections to specific programs, they do not think only of inefficiency. Asking about government waste provokes Americans to raise much broader criticisms about a government controlled by the elite few and unaccountable to the public as a whole—a sentiment reinforced by thoughts of the complicated, impenetrable tax system.

[ 164 ]

CONCLUSION So do you think there are people who benefit more than their share from government spending? Kenneth, early forties, Democrat from Illinois: . . . Well, I think all of us have, haven’t we?

It is often assumed that American tax attitudes fall somewhere between passive resentment and all-out rage. This is simply not the case. My interviewees and survey respondents described taxpaying as a moral responsibility to their community and their country and saw fulfilling that responsibility as a source of dignity and political standing. Talking to Americans about taxes, I heard the strong desire to be recognized as a contributing member of society, and a gentle pride in the parks, schools, and infrastructure that make up a local community. Particularly in light of the anti-tax rhetoric that has dominated public debate for decades, the strength of this civic commitment is striking. This is not to suggest that Americans are all whistling with good cheer as they examine the taxes on their paychecks and receipts. Of course not. Americans express willingness to pay taxes only to the extent they see themselves and their interests as tied to the wider community that benefits from tax dollars. And their civic commitment to taxpaying stands alongside widespread cynicism about the capacity of

[ 165 ]

conclusion government to work in the public interest. When communities see themselves as divided and their government as ineffectual, feelings of pride and purpose curdle into anger and resentment. Tax attitudes are not just a mirror of societal strife and political malfunction, however. Americans’ perceptions of the boundaries of the community and the functioning of government are themselves shaped by the tax system. There is a large “taxpayer gap” in the United States; Americans perceive themselves as taxpayers but imagine that many other people, and especially lower-income people, do not pay taxes. The belief that many Americans are getting government benefits without paying into the system encourages opposition to social safety net spending. At the same time, the complexity of the income-tax filing process promotes the belief that the government is beholden to wealthy special interests and unaccountable to average people. What Americans think about the tax system has ramifications far beyond their tax policy preferences. This chapter briefly reviews the major findings of the book and then examines the implications of these results. What do Americans’ attitudes about the current tax system tell us about the possibilities for tax reform? How should we understand the tremendous gap between the tenor of public opinion about taxes and the tone of national tax politics? And what does public information and misinformation about taxes suggest for democratic accountability? But before I turn to these questions, I want to be clear about the limitations of the research.

[ 166 ]

conclusion

Limitations and Caveats First and foremost, this is a book about the views Americans actually hold about the taxes they pay. Tax policy includes a lot of arcana, details of policy about which most Americans do not have a standing opinion. This is not to imply that Americans could not or should not have an opinion, only that a fair amount of tax policy is obscure. Many controversial aspects of taxation—for instance, the estate tax or proposals to limit the charitable deduction—are not a prominent part of this book because these are issues that most people do not think much about. It is certainly interesting and important to consider what views Americans would hold if they were mobilized to think about taxes in new ways. But this is not that book. This is a book about tax attitudes “in the wild.” Relatedly, my results are a snapshot of contemporary attitudes. Even in the time since my interviews, it is plausible that certain considerations have become more prominent for some of my interviewees. Xenophobic and even explicitly racist rhetoric played a prominent role in the 2016 presidential campaign; it is too soon to tell as of this writing, but it is certainly plausible that a sustained rise in popular antiimmigrant sentiment will result. As conditions change, one can expect attitudes about taxation to change as well. Finally, the book does not give equal attention to all different kinds of taxes. One subject for additional research are the so-called “sin” taxes applied to alcohol, cigarettes, and (in recent years) sugary sodas and marijuana. The respondents had relatively little to say on these subjects, and what they did say

[ 167 ]

conclusion mostly revealed their attitudes about the products in question—a fascinating subject of study, but somewhat tangential to the question of public finance. The other major tax I have not adequately examined here is the property tax. The challenge of studying attitudes about the property tax is that the experience of it varies so greatly. Property tax rates, and the rules governing rate increases, are dramatically different in different parts of the country. Homeowners and renters often have very different levels of information about the tax, and even among homeowners, there are meaningful differences in how the tax is paid, including whether it is lumped in with a mortgage payment. For all of these reasons, I did not find a clear pattern in my respondents’ attitudes to this tax. Instead, I heard echoes of the themes I develop here with regard to other taxes—appreciation for local services, irritation when a tax bill is unpredictable or a hassle to pay, and a lack of clarity about for whom a tax is expensive. But the impact of local variation in tax systems deserves much more study.1 In sum, taxation is an extremely broad and extremely detailed subject of study. Luckily, it is also a subject of renewed interest among social scientists; I hope this book contributes to this growing body of work. With its limitations in mind, I turn now to the implications that can be drawn from my research.

Taxpaying, Community, and Country Americans understand taxpaying as a responsibility to the community and the country. But they become angry about taxes when they see their taxes as benefiting outsiders, or

[ 168 ]

conclusion when they do not believe the government is acting in the public interest. For many Americans, recent immigrants are not seen as part of “us,” and so are deemed undeserving of the benefits of government. At the same time, deep doubts about the functioning of government leave many angry about their tax dollars being wasted. For a substantial percentage of the population, there is only a blurry line between immigrants and “illegals,” “foreigners,” or even “enemies.” Racism and xenophobia continue to limit Americans’ social solidarity. Hostility to immigrants was accompanied by an erroneous conviction that immigrants do not pay taxes; since taxpaying is evidence of one’s standing within a community, it seems outsiders and interlopers cannot be contributors. Perhaps the most important dynamic underlying my respondents’ tax attitudes is this division between “us” and “them.” It is an open question whether the false belief that undocumented immigrants do not pay taxes is a motivation for anti-immigrant attitudes or merely a rationalization. Certainly, anti-immigrant sentiment in the United States long predates the modern tax system.2 And in the real world, teasing out these very tightly related beliefs may simply not be possible; it seems likely that the idea that immigrants do not pay taxes is encountered in the context of other negative stereotypes about ethnic minorities and that these various ideas are interlinked and self-reinforcing. The other subject that provoked the level of rage and resentment directed at immigrants was the United States government, and particularly its perceived lack of accountability to average Americans. Asked about the waste of tax money,

[ 169 ]

conclusion many respondents responded with a critique of plutocracy. Some respondents focused on the extent to which elected officials are sheltered from the economic realities facing most Americans, while others discussed the power of moneyed interests over elections and the legislative process. But a strong thread through our discussion of taxes was keen disappointment with the elite dominance of the American political system. Thinking about how the U.S. government fails to live up to the democratic ideal subverts the instinctive pride Americans feel in taxpaying. In the course of our interview, Alexa from Mississippi considers the purpose of taxation. Taxes, she believes, are intended to keep the country a well-oiled machine, which, of course, right now it’s not. But, ideally, it’s your responsibility to your country. Ideally. If it were working right. Alexa’s answer reveals how tightly linked are the aspiration of civic duty and the disappointment of contemporary politics. Americans think they have a right to be proud to be taxpayers, to be able to provide for their community and support their country. But their idealism is derailed by a sense that the government—their government, the government they pay for—has let them down. My survey respondents evince a similar mixture of idealism and resentment. Asked how it feels to be a taxpayer, strongly positive remarks (from 31 percent of respondents) are almost as common as strongly negative comments (made by 33 percent of respondents). A 62-year-old man from

[ 170 ]

conclusion North Carolina writes, “It feels that I am being taken advantage of,” but a 52-year-old from Alabama says that it “feels good to be contributing to society.” Unsurprisingly, strongly positive remarks are more common among liberals than conservatives, and more common among Democrats than Republicans. About a quarter of Republicans have something strongly positive to say, compared to 36 percent of Democrats, and about 27 percent of Democrats have something strongly negative to say, compared to 42 percent of Republicans. But partisanship does not tell the whole story. To be a taxpayer is to “belong to the USA,” says a Republican from Oregon. For a Democrat in California, paying taxes is “TERRIBLE . . . THE GOVERMENT WANTS ALL OF YOUR MONEY, YOU OWE THEM!” And many people without strong partisanship still have firm feelings about taxes. “To be an American Taxpayer is a privilege,” writes one political independent from Michigan. Moreover, most respondents’ comments are neither exclusively positive nor purely negative. A Republican from Georgia says being a taxpayer makes him feel like he is “CONTRIBUTING TO THE U.S., I DO WISH THAT THERE WERE MORE ‘CONTRIBUTORS.’ ” A Democrat from Florida says being a taxpayer is “MY CIVIC RESPONSIBILITY WISH IT WERE FAIRER.” Pride is tinged by disappointment, with conflicting emotions often coexisting in a single sentence. It is no coincidence that the thought of wasted tax dollars provokes broad complaints about systemic government corruption and that anti-immigrant attitudes are expressed in the language of taxpaying. As I noted in the introduction,

[ 171 ]

conclusion taxation has long been a battleground for broader fights about limits of the community and the quality of representation. But the taxpaying experience itself shapes attitudes about government by influencing who is seen as a contributor to the cost of the commons and who is seen as the beneficiary of government largesse.

The Impact of Misperceptions of Tax Policy Public misperceptions of tax policy have very real consequences for Americans’ policy preferences. Many people, and especially Republicans, think the poor do not pay taxes, a sentiment that fosters opposition to welfare spending. In addition, a flat tax is more popular than it would otherwise be, due to the widespread belief that the progressivity of graduated income tax is sabotaged by loopholes. Taken together, these misunderstandings tilt American policy preferences rightward: away from progressive tax rates and against social protections for the poor. Of these two misapprehensions, I would argue that the invisibility of low-income taxpayers has more damaging implications. True, the reduction of progressive tax rates in the latter half of the twentieth century played a crucial role in the explosion of economic inequality.3 But, even though they underrate the importance of tax rates, a solid majority of Americans support progressive taxation. It is not public demand for flatter taxes that has driven the collapse of top marginal tax rates. One could argue that a better understanding of the windfall that wealthy people receive from tax rate reductions would have increased opposition to these tax

[ 172 ]

conclusion reforms. But, even granting this implausible interpretation of the influence of public preferences on the policymaking process, the effect of the “taxpayer gap” strikes me as at least equally worrying. Because taxpaying is seen as an emblem of civic worthiness, denying the poor the status of taxpayers has the effect of denying their political standing. Classing a large percentage of the populace as a kind of second-class citizenry is genuinely toxic for democratic norms. To erase the financial contributions of poor people is particularly unfortunate, because taxes paid by the poor are money that is not going to their basic needs. When Alexa talks about the effect of the sales tax on her food budget, or Gloria worries about how to cover the fees on her utility bill, you can hear the tension in their voices. When Donna or Marjorie list off the top of their heads the items in a grocery store subject to sales tax, it is not because they have made an abstract study of the tax code. It is because they are counting their pennies at the register. The dollar amounts might not mean much to a wealthier person, but they are an enormous sacrifice for people barely making ends meet.4 If one’s contributions to one’s country are measured in the hardship they impose, the poor are paying dearly. The invisibility of low-income taxpayers is profoundly corrosive to the social fabric. First, it calls into question the right of poorer people to receive public benefits, and leaves recipients of social spending bearing a tremendous stigma. With their eyes on the income tax, many people—and particularly conservatives—express anger at the benefits the poor receive, which appear to them unearned. But this is not just a partisan issue. The perception that poor people do not pay

[ 173 ]

conclusion taxes is strongly correlated with opposition to welfare spending, independent of party and ideology. Moreover, to say that these Americans are not taxpayers is to exclude them from a position that Americans agree merits respect, and thereby to diminish their public standing. Asked what responsibilities are like taxpaying, my interviewees rarely mention other legal mandates, like jury duty or drafted military service. Instead, they see a connection between taxpaying and political engagement. Taxpaying is “a duty, just like voting,” says Marjorie. “It’s part of being a citizen of a country.” Gloria, from Kansas, says that, in addition to taxpaying, citizens have a responsibility to “speak out on things.” Donna, from Texas, also connects taxation and representation. “Obeying the law is a responsibility,” she says. “If the law is unfair or unjust, then there is another responsibility: that of trying to overturn it or stop it.” Interviewees saw the obligation of taxpaying as linked to their political voice. Because to be a taxpayer is to be someone with a stake in political decision-making, those who are not taxpayers are seen as having less authority to make their views about government known. My poorer interviewees often worried that they are not the right persons to interview because they were not wealthy enough to count as real taxpayers. “I’m just not sure I’m the best one for this!” cries Gloria. “I’m probably the last person to be doing an interview about taxes,” says Eileen. And this feeling of disempowerment is not limited to a handful of interviewees. Among my survey respondents, those who doubt their status as taxpayers are less likely to see people like themselves as having a say in government.5

[ 174 ]

conclusion Just as suffragists defined themselves as taxpayers to make their case for representation, those who hesitate to describe themselves as taxpayers also tend to doubt their right to speak about what government does. This is not how the citizens of a democracy should be made to feel. Given the significant implications of public misperceptions of tax policy, it is easy to feel pessimistic about tax politics, and perhaps even politics in general. But, taking my research as a whole, there is good reason for hope. Yes, many people have come to some incorrect conclusions about how taxes work. But the problem is not a fundamental American incapacity to understand policy; the problem is a need for better information.

The Taxpaying Experience as a Source of Policy Information and Misinformation There is an active debate in political science about how informed Americans are about politics, and what would qualify as “well informed” in the first place. Perhaps most famously, pioneering public opinion scholar Philip Converse argued in the 1960s that many Americans are so inconsistent in their views as to hold “non-attitudes” on the major political issues of the day.6    More recent research has, to some extent, redeemed the American voter, identifying methodological limitations of Converse’s work7 and producing better measures of what the public knows.8 In addition, scholars are beginning to seriously confront a tendency within academia toward elitism when it comes to assessing what the public knows.9 In highly educated circles, it can be all too easy to slip from

[ 175 ]

conclusion facing the facts about Americans’ limited policy knowledge to indulging in cynicism and disdain for average people. Examining what people know about taxes seems like a fair way to assess public policy knowledge, since it is so evidently relevant to Americans’ daily lives. It also is a subject about which the major parties disagree, so it is politically relevant as well. With that in mind, what do my results suggest about Americans’ capacity to judge and respond to fiscal policy? At the conclusion of my research on tax attitudes, I maintain a cautious optimism. Though they did not agree with one another, my interviewees mostly considered complex questions of public finance with intelligence, compassion, and nuance. Their views are owed a respect they do not always receive, from either the scholars of public opinion or the political process that is supposed to represent them. Some of the most commonly cited instances of Americans’ ignorance of fiscal policy are in fact artifacts of survey design. When talking about “foreign aid” and “government waste,” Americans do not use the terms in the same way policymakers do, but they use them in meaningful ways. In addition, Americans know quite a bit about the taxes they pay on a regular basis. As I noted in the introduction, previous scholarship has emphasized American ignorance about taxation, but has also focused almost exclusively on controversial taxes that are paid primarily by the wealthy. Americans do not have much experience with, for example, the estate tax. It is no wonder, then, that misleading information from politicians has a powerful effect on public attitudes.10

[ 176 ]

conclusion In the course of my research, I found a number of situations in which most Americans have a relatively clear idea of the impact of tax policy. Asked which tax costs their household the most over the course of a year, most people know the answer. When asked to name the taxes that appeared on their paychecks, Americans distinguish the federal income tax from the taxes that fund Social Security and Medicare. Most Americans are also familiar with two of the major tax credits available to low- and middle-income people: the Earned Income Tax Credit and the Child Tax Credit. And, significantly, most Americans understand the principle of a flat tax, in which everyone pays the same percentage, and the principle of a progressive tax, where wealthier people pay a higher percentage than lower-income people. All of these results stem from survey research, and so I can state with some confidence that these results typify the American public more broadly. There were also some aspects of my interviews that I did not test quantitatively and so may not be representative of the broader public, but which were certainly reassuring to hear. First, most interviewees were aware of the sales tax rate in their locality and often volunteered specifics about the items to which sales tax is applied or about local variation in the sales tax rate. Many interviewees also spontaneously recalled details of the income tax credits and deductions for which they typically qualified. Though at other points in the interview, my interviewees often sounded uncertain about the facts, on these matters their tone changed to one of confidence. When tax information was personally relevant and visible on a regular basis, the interviewees were on comfortable ground.

[ 177 ]

conclusion By contrast, other aspects of tax policy are very obscure. My respondents rarely understood how tax policy affects people in different economic conditions. Many middle-class people underestimate the cost of the sales tax for the poor, and wrongly believe this tax falls heavily on the wealthy. Though people are aware of their payroll taxes, they underestimate this expense. In addition, many Americans imagine that “loopholes” undermine the graduated income tax to the point that a flat tax might raise taxes on the rich. Finally, a vanishingly small percentage of people appear to understand the principle of marginal taxation: the fact that a tax rate applies only to the income one earns over the previous bracket. But these important misunderstandings of tax policy largely stem from bad information, not fundamental innumeracy. The arduous income-tax filing process puts this tax at the forefront of my respondents’ minds, leaving many to overestimate the expense this tax imposes on them. By contrast, the largely hassle-free payroll tax appears to draw respondents’ attention away from its cost. Similarly, the sales tax is assumed to fall heavily on the rich because, for middle-class people, it feels expensive primarily when one buys a luxury item. It does not occur to most people that for the poor, every purchase is expensive. Thus taxpayers’ misinformation is often the result of a reasonable but wrong extrapolation from personal experience. Those interested in improving democratic responsiveness to fiscal policy should focus on improving the tax information Americans encounter in daily life. Interventions should be tested that put tax policy where one “trips over it” in the

[ 178 ]

conclusion course of going to the store or getting one’s paycheck, paying one’s mortgage or filing one’s income taxes. Americans are learning from their encounters with the tax system, and so putting better information at those intersections could help ensure that a wider swath of people, busy with their jobs and families, are getting what they need to be informed citizens. One promising effort in this regard was the creation of personal Social Security statements that alerted taxpayers to their own payroll tax contributions and explained how those taxes would translate into eventual benefits. A rigorous randomized trial showed that people who received these statements in the mail knew more about Social Security and had more confidence in the program.11 The lesson is clear: the effects of tax policies should not be made hidden, they should be made obvious. Even considering such an approach is likely to unnerve elected officials used to seeing taxation as a lightning rod for constituent anger and special-interest lobbying. But, rather than thinking of taxpayers merely as consumers to be quietly nudged in one direction or another via tax incentives, we need to remember that, in a democracy, the people are supposed to hold policymakers accountable. Lawmakers must give them the tools to do so. This requires a certain leap of faith, a trust that American voters can cope with the hard reality that desirable benefits have unavoidable costs, and immediate costs can have longterm benefits. American voters are clearly capable of making these judgments. They do not always demand something for nothing; they can and do vote for tax increases. And given

[ 179 ]

conclusion better tax information in daily life, Americans’ judgments of fiscal policy are likely to improve. An anchor of real-life experience can help brace Americans against the misinformation that is all too often promoted by politicians. Political leaders can help improve public understanding of tax policy by avoiding rhetoric that reinforces public misperceptions. Satisfying as it surely is to rail against “loopholes,” elected officials should recognize that this language draws public attention away from the crucial question of tax rates. In addition, public figures could explicitly refer to low-income people and immigrants as taxpayers in order to combat the public misperception that poor people do not contribute to public coffers. It is a long way, however, from public opinion to public policy—as my respondents are fully aware. There is, I would argue, a more immediate implication of the results I present here. The fact that Americans continue to see taxpaying as an emblem of civic virtue is, in itself, politically significant.

Taxation and the Resilience of the American Civic Commitment Talking to Americans about taxes, you hear a remarkable public spiritedness. Asked why they see taxpaying as a responsibility, my interviewees talk about their sense of interconnection and obligation in so many different ways that I have adopted my own term, fellowship, to encompass their thoughts. It is worth pausing for a moment to realize what this diversity of language means. These interviewees are not just parroting an oft-repeated phrase. They are seeking, individually, to put into

[ 180 ]

conclusion words a sentiment of their own, a sentiment of responsibility and solidarity that they are not often asked to express but that nonetheless lies just below the surface of their thoughts. The resilience of this commitment to fiscal citizenship is certainly noteworthy, and worthy of celebration. As I said at the beginning of this book, when I tell people I study Americans’ attitudes about taxes, they often intervene to inform me, as a fact, that Americans hate taxes. If the discussion continues, my conversation partners, with notable regularity, make what they believe to be an unusual admission. “I don’t mind paying my taxes!” they tell me, as though confessing to a preference for broccoli over cupcakes.12 And who can blame them for feeling themselves to be a lone voice in the wilderness? Little of the rhetoric from politicians or in the media would lead them to believe that they are anything but exceptional in their willingness to shoulder their civic obligations. It was not always so. Writing at the end of the nineteenth century, E.R.A. Seligman, the era’s foremost scholar of public finance, says simply, It is now generally agreed that we pay taxes not because the state protects us, or because we get any benefits from the state, but simply because the state is a part of us.13 For Seligman, taxpaying is fundamentally a civic activity. We pay taxes to the government because that government is our government, in which we participate and which shapes our shared society. It is “a part of us.” This rationale

[ 181 ]

conclusion for taxpaying was apparently obvious a century ago, since Seligman can confidently deem it “generally agreed upon.” One can hardly imagine a public figure making such an assertion today. Perhaps they should. Among my interviewees and survey respondents, this attitude certainly persists. For most Americans, taxpaying is by far their most regular participation in political life. We are all taxpayers, even those who cannot, or cannot yet, describe themselves as citizens or as voters. Especially in the context of a professional military and increasingly rare jury service, taxpaying allows us to demonstrate our commitment to the community and to the country. It is the investment of a people in the shared task of self-governance. By these lights, it is no wonder that so many Americans see it as a badge of pride.

[ 182 ]

APPENDIX A The U.S. Tax System: A Brief Introduction

Public investments in the United States are financed by an often-confusing array of taxes and fees collected at the different levels of government. Given the many different kinds of taxes, almost literally every adult in the United States is a taxpayer. One common measure of tax policies is whether they are regressive, proportional, or progressive. Regressive taxes fall more heavily on the poor than the rich; low-income people pay a higher percentage of their income in these taxes than high-income people do. For example, fees that are set at a single amount are regressive; a thirty-dollar charge for a poor person is a bigger bite out of their income than thirty dollars is for a rich person. A proportional or flat tax takes an equal percentage of the income of each person; wealthy people pay more, in absolute terms, but everyone is paying the same share.1 Finally, progressive taxes take a higher percentage from rich people than poor people. A graduated income tax, with higher rates for higher earnings, is a progressive tax. Taking all the taxes together, the poorest 20 percent

[ 183 ]

appendix a of Americans pay about one-fifth of their income in taxes, the middle 20 percent pays about one-fourth, and the top 20 percent pays about one-third. But at the very, very top, tax rates are not progressive: the very wealthiest households pay on average a somewhat lower percentage in taxes than the merely well off, and some pay much less than that.

Federal Income and Payroll Taxes The modern income tax dates to the ratification of the Sixteenth Amendment in 1913.2 Originally, the tax reached only top earners, but the tax was extended to the middle class to help fund the American war effort during World War II. Today, income taxes on individuals are the largest source of revenue for the federal government’s general fund. The federal income tax rates are progressive, rising from 10 percent on taxable wage income below $9,275 to a maximum bracket rate of 39.6 percent on wage income over $415,050.3 Less than 1 percent of tax filers are affected by the top tax rate.4 The 39.6 percent rate is lower than it was for most of the twentieth century. The top marginal rate reached over 90 percent during World War II and remained at or over 70 percent until the 1980s.5 Focusing on top marginal rates can be misleading. A neglected truth of the tax system is that each higher rate is charged only on the income above the previous bracket. A simple example, ignoring credits and deductions, illustrates this point. If a single taxpayer had $10,000 in taxable income in 2016, she would pay 10 percent on the first $9,275 (the top of the lowest tax bracket) and 15 percent on the

[ 184 ]

u.s. tax system remaining $725. She would not pay 15 percent on her entire earnings. Similarly, those “in the top bracket” are not paying 39.6 percent on their whole income; they are paying 39.6 percent only for the income above $415,050. Even a billionaire pays only 10 percent on his or her first $9,275 of taxable salary income. This means that a pay raise that lifts someone into a higher tax bracket cannot result in less take-home pay for that worker.6 What is more, the problem of “bracket creep” has been resolved. When brackets were set at a given number, inflation pushed people into higher brackets over time. Today, brackets are adjusted each year, so only real increases in income raise one’s tax rates. The brackets barely scratch the surface of the extremely complicated income tax system. First of all, not all income is taxed equally. Investment income is usually taxed at a lower rate than income from wages. If you buy stocks and then sell them a year later at a profit, you will be taxed at a maximum of 15 percent, even if you made millions of dollars on your investment. The vast majority of Americans are not playing the stock market,7 and so do not benefit from the preferential treatment for long-term capital gains income. There are also tax credits and deductions that can lower a taxpayer’s tax responsibilities. Tax deductions mostly accrue to high earners. For example, the income tax code allows taxpayers to deduct their home mortgage interest; 77 percent of those tax benefits go to people earning more than $100,000 a year.8 One reason tax deductions are often regressive is simple math—when your income is taxed at a higher rate, a deduction is worth more.9 But the tendency of tax expenditures to accrue to wealthier people is compounded

[ 185 ]

appendix a because lower-income people mostly do not itemize their taxes. Less than a fifth of those earning less than $50,000 a year itemize their taxes, compared to over 90 percent of those earning over $200,000 a year.10 In spite of all the loopholes, the federal income tax is a progressive tax; it falls much more heavily on the rich than the poor. In fact, the federal income tax is not a major expense to the vast majority of lower-income Americans. About half of U.S. households pay no federal income tax or have a negative federal income tax rate, largely because of the Earned Income Tax Credit, or EITC, for low-income workers. The tax credit is “refundable,” which means that you can get more back in EITC than you paid in income taxes. For a family with children, the average EITC was about $3,000. In 2012, twenty-seven million taxpayers benefited from the EITC, and the policy lifted 6.6 million people out of poverty.11 The biggest chunk of federal revenue, 46 percent, comes from the individual income tax; another 11 percent comes from the corporate income tax. As with the individual income tax, there are many breaks and deductions in the corporate tax code. But in the corporate income tax, one might reasonably describe loopholes as undermining the system of rates. Though the statutory tax rate for corporations is high (35 percent) compared to that of other countries, the effective tax rate, or the rate companies actually pay, is much lower: only 13 percent.12 The corporate tax rate rises to 17 percent if one takes account of foreign, state, and local taxes.13 Corporate taxes are not especially high in the United States and have made up a declining percentage of federal revenues in recent decades.14

[ 186 ]

u.s. tax system The other major federal tax is the payroll tax that supports Social Security and Medicare; this makes up 34 percent of federal tax revenue. Payroll taxes are charged at a flat rate of 12.4 percent for Social Security and 2.9 percent for Medicare. Social Security taxes are capped for high earners; these taxes are charged only on wage income below $118,500, and so very high earners actually pay a lower percentage in Social Security taxes than lower-income people.15 Though the level of one’s Social Security benefits is linked to one’s work history and Social Security contributions, the system is “pay as you go”—money collected in payroll taxes today goes to current retirees, and current workers’ benefits will be paid by the following generation of workers. Technically, payroll taxes are split evenly between the employer and the employee share, so workers see only half the cost of these taxes on their paystubs. But economists believe that costs like these are typically shifted onto the employee in the form of lower wages.16 The payroll tax is therefore a very real cost, particularly for lower-wage workers. Finally, there is the estate tax, which applies when people leave very large amounts of wealth to their heirs. Because it applies only to estates worth over $5.45 million (or $10.90 million for a couple), only about 0.2 percent of estates are affected by the estate tax. The tax raises about 0.6 percent of total federal receipts.17 It might seem, given the relative small amount of money it raises, that there is an outsized share of political attention given to the estate tax. But the estate tax plays an important role in the overall progressivity of the tax system.18

[ 187 ]

appendix a

State and Local Taxes The majority of state revenue comes from income or sales taxes, or, most commonly, a mix of the two. Seven states have no income tax, and five states have no sales tax.19 State sales taxes range from 2.9 percent in Colorado to 7.5 percent in California.20 State income tax rates are lower than the federal income tax; the average across states and brackets is 5 percent. The highest top-income tax rate is in California, at 13.3 percent for income over a million dollars a year.21 Localities generally fund their activities primarily with a mix of property and sales taxes (along with revenue received from the state and federal government). In most counties, homes are taxed at between 0.5 and 1 percent of their value, with the highest rates mostly in the Northeast and parts of the Midwest.22 The localities with the highest combined state and local sales taxes are mostly located in the South, a region with a history of strong property-tax caps.23 Local governments also use fees and fines in the place of traditional tax revenue: 23 percent of local government revenue now comes from charges and fees, compared to 15 percent in 1977.24 Fees and fines are typically a set dollar amount, an extremely regressive form of fundraising. Some localities have become exceptionally reliant on fines, which can create perverse incentives for law enforcement. In their investigation of the Ferguson, Missouri, police department, the U.S. Department of Justice’s Civil Rights Division concluded,

[ 188 ]

u.s. tax system The City’s emphasis on revenue generation has had a profound effect. . . . Many officers appear to see some residents, especially those who live in Ferguson’s predominantly African-American neighborhoods, less as constituents to be protected than as potential offenders and sources of revenue.25 In places where politicians are loath to raise taxes, fines can serve to shift government’s cost onto poor and marginalized communities.

Other Taxes In addition to income, payroll, sales, and property taxes, there are federal and state excise taxes on cigarettes, gasoline, and alcohol. The federal gas tax is 18.4 cents per gallon and supports the Highway Trust Fund. States vary in their gas taxes, from 12.25 cents in Alaska to 51.6 cents in New York. While most sales taxes are charged based on the price of the good, the federal gas tax and most state gas taxes are charged by volume. As a result, an increase in gas prices does not increase tax revenue; in fact, if high prices drive down demand, the government will receive less tax revenue when prices go up.26 Similarly, alcohol and cigarette taxes tend to be fixed to the unit of sale, not the price. Federal cigarette taxes are currently about one dollar per pack; state taxes vary widely, from 17 cents in Missouri to $4.35 in New York.27 Because cigarettes and alcohol make up a larger percentage of the budget of low-income people, these taxes tend to be regressive in their immediate effect, though their health benefits may outweigh these costs.28

[ 189 ]

appendix a

Who Pays? Taking into account all of the taxes in the U.S. tax system, it becomes obvious that almost literally every adult in the United States qualifies as a taxpayer.29 Overall, the tax system is moderately progressive: rich people pay a higher percentage than poor people, but almost everyone pays substantial amounts in taxes, including undocumented immigrants. At the very, very top of the income spectrum, however, taxes stop being progressive. The super-rich pay a lower percentage than the rich, and the super-super rich pay a lower percentage than even the upper-middle class. The stereotype of undocumented immigrants working primarily in an underground, cash-based economy suggests that it would be easy for them to avoid income and payroll taxes.30 In fact, unauthorized immigrants are estimated to pay approximately 8 percent of their income in state and local taxes, a higher percentage than wealthier people pay (because state and local taxes are on the whole regressive).31 Unauthorized immigrants are also paying federal taxes. The IRS has estimated that about six million unauthorized immigrants file income taxes each year.32 About three million undocumented immigrants are also paying an estimated $15 billion in Social Security taxes, though immigrants without legal status are not eligible for Social Security benefits. Without these contributions, “Social Security would have entered persistent shortfall of tax revenue to cover payouts starting in 2009,” according to Stephen Goss, chief actuary of the Social Security Administration. 33 Undocumented immigrants pay taxes at the local, state, and federal levels.

[ 190 ]

u.s. tax system Looking more broadly, the tax system as a whole is moderately progressive. That is to say, richer people pay a higher percentage in taxes than poorer people, but almost everyone pays a substantial amount.34 The exact percentages depend on how you measure income, but the overall trend is incontrovertible. The poorest 20 percent of American households have an annual income of about $15,000; that’s about how much you make if you work full-time at the federal minimum wage. These poorest Americans pay almost a fifth of their income in federal, state, and local taxes, on average. Households in the middle of the income spectrum make around $49,000 a year; that’s a fairly typical salary for a teacher or carpenter. Those households pay a little more than a quarter of their income in taxes. Someone in the top 20 percent of earners might be a doctor or a lawyer; they are making on average several hundred thousand dollars a year. These households pay almost a third of their income in taxes. The approximation is easy to remember: the poorest people pay a fifth, the middle pays a quarter, the top pays a third. Until you get to the very top, the proportion of taxes a group pays very closely tracks the amount of the total national income they receive. The bottom 20 percent of earners make about 3 percent of the money and pay about 2 percent of the taxes. The top 1 percent, who receive 22 percent of all the income, pay about 24 percent of all the taxes. Once you reach the extremely wealthy, however, the tax rate stops being progressive. The top 1 percent has an average income much higher than most doctors and lawyers: around 1.5 million dollars a year. But they are paying, on average, about the same percentage in taxes as the doctors

[ 191 ]

appendix a and the lawyers, just under a third of their income. Once you reach the top 0.1%, taxes actually start going down. Each of the top 1,300 richest households in America made more than $62 million in 2012, but they pay a lower percentage in federal income taxes than a doctor or lawyer does.35

[ 192 ]

APPENDIX B Meet the Interviewees Aaron Aaron is 33 years old, an assistant manager at a large retail chain in northern Alabama, near the Tennessee border. He is a white man living with his long-time partner and describes himself as a strong Democrat. Aaron speaks with the slow drawl of a native Southerner, but he gives the impression that he feels out of place in his home state, noting that “it’s really Republican down here.” Aaron is also upfront about his own progressive views; he worries that cigarette taxes hurt the poor, he talks about the “99 percent,” and he is quick to defend social services as a way of helping both those “born into disadvantage” and those “placed there by systematic discrimination.” Even so, his support for the progressive income tax is limited; he believes the wealthy pay less in taxes than the poor because of loopholes, and therefore thinks that a flat tax would be fairer. Despite owing “several thousand additional” tax dollars this year, Aaron describes the filing process as not “too much of a big deal.” He’s more concerned that tax money is “being wasted where it wasn’t needed and  .  .  . ignored in places where it was needed.”

[ 193 ]

appendix b

Adam Adam, a 26-year-old white man living in Columbus, Indiana, is an independent who leans toward the Democratic Party. After dropping out of college, Adam has been piecing together part-time work while living at home with his parents. Adam describes himself as “apathetic” about taxes, and is not familiar with the different taxes that appear on a paystub. Income inequality is a major issue for Adam, however, which undergirds his support for the principle of progressive taxation. He says that he saw high rates of waste when he worked for the U.S. Census, but does not seem terribly concerned by this experience. Adam’s opinions are strongest on environmental issues: he likes the gas tax as a disincentive for fossil fuel use and opposes any government spending on “fracking,” an environmentally hazardous form of oil and gas extraction.

Alexa Alexa is a 23-year-old married white mother of two, a strong Republican from Mississippi. Alexa balances two part-time jobs with raising her two boys and sometimes supplements the family income with babysitting money. Other than that she knows “people with a lot of money don’t pay enough,” Alexa says she doesn’t know much about tax policy or tax politics. She isn’t sure what different taxes pay for, or even if different taxes, like the gas tax and the sales tax, go to different things. She knows that she pays for

[ 194 ]

meet the interviewees Social Security, but later volunteers that “our FICA is high, really high . . . I’d have to Google that to even know what FICA is.” Alexa is also unsure of where the parties stand on tax policy. Though she knows relatively little about political matters, Alexa is more comfortable with mathematical calculations than many other interviewees, and very budget-conscious. Like other low-income people, Alexa is aware of her Mississippi grocery taxes, buying as much as possible when she visits her family in Texas. Even so, when she considers how much she pays in sales tax in a year, she is surprised by the total. Alexa argues for a flat tax, but believes that what one gets back at the end of the year should, “possibly,” be based on income. Alexa is herself a beneficiary of the Earned Income Tax Credit, worth about $7,000 a year to her family, by Alexa’s estimate, “almost like a free savings account.” Alexa also has personal experience with welfare programs. She thinks WIC is a better program than food stamps because it is more tightly controlled by the government—an opinion she laughingly describes as “communist.”

Alicia Alicia is a 30-year-old Hispanic woman from Tampa, Florida, who says she leans toward the Democratic Party. She has a master’s degree and works for a national department store chain in regional sales; in the long run, she hopes to become a physician’s assistant. Asked if she had ever had a conversation about taxes, Alicia describes a time she defended the progressive income tax

[ 195 ]

appendix b over a flat tax. She thinks people who have much more than they need to be “comfortable,” those earning over $200,000 a year, “have enough” and can afford to pay more. Overall, Alicia doesn’t have a problem with most taxes, except perhaps the tax on cigarettes and alcohol. A casual smoker, she thinks cigarette taxes try to legislate morality and are almost “discriminatory.” Asked where she gets her news, Alicia says she tries to avoid “blatantly biased” sources like Fox News, which she considers news for “conservative old white men,” not a “decidedly liberal, young, brown woman” like herself. Asked to summarize the most important aspect of her views on taxation, she says, I would think social responsibility. Things we all owe each other as members of a functioning society. We’re not—you know, no man is an island. We are all in this together.

Amber Amber is a 40-year-old single white woman, a Republican from a very small town in eastern Mississippi. She is primarily concerned with her taxes being wasted—as she describes it, “When you hear about some of the pork things that get added onto bills and you’re like, what do you need $1 million dollars to study the anatomy of fish or something for?” Amber agrees that the income tax should be progressive, and opposes the gas tax on the grounds that it hurts people trying to make a living. She believes it is unfair that parents

[ 196 ]

meet the interviewees get very large tax credits for which she does not qualify. She imagines IRS employees to be “hard-nosed” but feels pretty good about paying her taxes, as long as she is getting a refund.

Angel Angel is a 20-year-old college student, studying economics, living near Santa Barbara, California. He is Hispanic, leans Democratic, and is working in a discount store to pay his way through school. Angel is primarily upset about the amount of money that is taken out of his paycheck each week; he is uncertain about where that money goes. He’s pretty sure some of it goes to retirement, a system he thinks is “complete garbage,” because it “makes it seem like that we’re not responsible enough to actually take care of ourselves.” As for the rest, he thinks money is wasted because “Congress, they spend a lot of time doing nothing.” At the same time, Angel is a strong proponent of the progressive income tax, and thinks corporations should pay more. The current system is “unbalanced,” he says. “If I made millions of dollars, I wouldn’t mind paying taxes for the betterment of society.”

Bonnie Bonnie is a 56-year-old woman in Dallas, Texas. She never married, has no children, and says she is closer to the Republican Party. Bonnie runs an antique store that used to belong

[ 197 ]

appendix b to her mother, and most of her income is from capital gains from her mother’s estate. Bonnie is supportive of a flat tax, despite some conflicting considerations. She raises the idea several times during the interview, each time praising the flat tax as simple and difficult to cheat, but also expressing limited concern that some poor people might end up paying more than they can afford. Bonnie is also angry about the property tax: she knows that in California, she would be paying much less. She holds conflicting ideas about whether it is fair to link the property tax to school funding; on the one hand, many people with children aren’t paying property taxes, but on the other hand, “I love children and I don’t mind that.” In the interview, Bonnie describes herself as “halfSpanish,” though she did not describe herself as “Hispanic” on her survey. Her attitudes about property taxes relate to her views of immigration; she would like to see a “path to citizenship” in part because it might increase taxpaying. “We have a lot of illegal aliens come in and use our medical system which is also part of what my taxes pay for. And, they don’t pay any taxes and then it’s like, gosh, this doesn’t seem fair.”

Brandon Brandon is a 28-year-old white man from outside Wilkes Barre, Pennsylvania, who describes himself as closer to the Republican Party. He works in a warehouse for a national home improvement chain.

[ 198 ]

meet the interviewees Brandon’s opinions about taxation mostly revolve around changes in his biweekly wages. When asked when he last paid taxes, he does not think of the state sales tax. Brandon has noticed that his own taxes are higher when he works overtime, and he remembers a number of the different taxes that usually appear on his pay stub. Later in the interview, Brandon finds an old paycheck to make sure he has named them all correctly. Brandon is somewhat concerned that he doesn’t know where his taxes are going, or how he is benefiting from government spending. When asked his impressions of the IRS, he describes them as “the Men in Black” in “some secret office.” Brandon has received unemployment benefits, but he worries that some people take advantage of what are basically good programs: “you know, you see people on the news about maybe somebody using food stamps to buy lobster and a filet mignon or something.” Nonetheless, Brandon is relatively sanguine about taxation, content with a progressive tax system. He comments that, when it comes to taxes, “you just get so used to paying them over your life and you don’t think about them too much.”

Bridget Bridget is a 38-year-old white woman living in rural Pennsylvania, about an hour outside Pittsburgh. She is married with a stepson. A former police officer, she now works in fraud investigation. Bridget is the only interviewee to mention having served in elected office; she was a state constable.

[ 199 ]

appendix b Bridget has an especially negative view of taxes, a view that is closely wrapped up in her feelings about work. “I’m one of those workaholics. I’ve always held two or three jobs,” Bridget says. “Those are just family values for me . . . you just save for what you want. You don’t take it from anybody.” Asked early in the interview about whether she’s ever had a conversation with someone about taxes, she says yes, but that she is “reserved” on the subject at family events, because a relative of hers is receiving disability. “I’m personally offended,” says Bridget, because “some of my money is going there to support her and her family and she can work.” Bridget thinks that the tax system has replaced an earlier form of social responsibility, like she remembers from her neighborhood growing up. When her house was destroyed in a fire, it was local residents who pitched in to help her family get back on their feet. Without a tax system, “America would get back to its roots and realize what’s important is that you need to have a community.”

Chrystal Chrystal is a single mother of an 8-year-old son, from Delaware. She is African American, a Democrat, and currently looking for a job. She says she has a “neutral opinion” on taxes because they can be “good or bad depending on what it’s used for.” Chrystal says she has not paid any kind of tax since 2007. She is a beneficiary of the Earned Income Tax Credit, which she sees as “a good thing.” She believes wealthy people should pay more in taxes than poorer people, and probably

[ 200 ]

meet the interviewees are paying too little now, while people who are “just trying to make it” are paying too much. She’s glad about government spending on education, disability, and healthcare, but she’s also angered by people who “cheat the system” with food stamps, or people receiving unemployment who are not looking for jobs. “It makes it harder on people that are looking for jobs and they don’t have a job but it makes them look like they’re not doing anything.”

Craig Craig is a 46-year-old white man, a software trainer who leans toward the Republican Party. Originally from Syracuse, New York, Craig is currently living in Tallahassee, Florida, but says, “I can’t wait to get out of here.” He and his wife are separated, and he is planning to move to North Carolina, where “the job market’s a lot better.” Craig was himself on disability for several years after an accident, but the most important thing about taxation, the idea to which he returns repeatedly, is the idea that some people, particularly those benefiting from welfare, aren’t paying their share. Asked who is paying too little in taxes, Craig says, “To me, people that don’t work. That are not contributing to our society. And I don’t mean stay-at-home moms. I mean people that choose not to work and live off collecting on my taxes instead of actually getting a job and contributing.” Craig believes in a flat tax, and when asked what would be the most important chapter in a book on taxation, he says, “Reaganomics. It worked.” Asked to elaborate, he continues,

[ 201 ]

appendix b When Reagan was in office . . . he’d build businesses and lower taxes and he got out of debt. Unemployment was low. Reaganomics worked. And there weren’t that many people on welfare and all that other fun stuff.

Daniel Daniel is a 35-year-old married white father of two living in California. Daniel describes himself as an independent who does not lean toward either party. A former Marine now working as a contractor for a federal scientific agency, he expresses strong approval for both social spending and American military spending. He sees taxes as “the cost of being an American.” Daniel is highly informed about tax matters, and economics more generally. He notes that spending on groceries makes up a bigger portion of a poor person’s budget than a rich person. He directly considers the benefit principle of taxation against tax policy based on the ability to pay: “And I know that a lot of people would disagree with me there. Their enjoying the benefit of driving on the road costs the same. I just don’t see it that way.” Though his views about government spending are among the most positive of the interviewees, Daniel does express real frustration with the complexity of the tax system; he dislikes worrying that he hasn’t done his taxes correctly, and connects the experience of tax filing with an undemocratic power dynamic between himself, a citizen, and his government.

[ 202 ]

meet the interviewees

Dawn Dawn is a 46-year-old single white woman living in the far northern Chicago suburbs, the youngest of six children. She works for a major multinational company. Despite describing herself as a strong Democrat, she describes taxpaying as “giving away my money” and repeatedly mentions welfare recipients as people who benefit unfairly from the system. She is uncertain about where tax money is going and feels better about those taxes whose use is something she is more certain of, including the property tax that funds schools, and payroll taxes that she knows fund Social Security and Medicare. She has voted in favor of local measures to increase property taxes for schools. “Even though I don’t have children, I still think that those things are important.”

Denise Denise is a 30-year-old African American woman from Connecticut. She is a strong Democrat working in a successful career in sales but planning to go back to school. Denise is extremely concerned that corporations aren’t paying their fair share and mentions by name several corporations that she believes had little or no tax liability despite their large profits. Though Denise is highly motivated by her anger about corporate tax loopholes, she is not nearly as supportive of progressive taxation as one might imagine. “This is what I

[ 203 ]

appendix b go back and forth about,” she says. She believes taxes should be progressive, but on the other hand, “I don’t want it to be like people are getting punished for having decent income.” Overall, Denise is pretty positive about the taxes she pays. “There are just certain things that you use together,” she notes. And “you never know when you might be in that situation” of needing a little help to get back on your feet. The experience of Hurricane Sandy was still at the forefront of her mind, nearly a year later; Denise was happy that tax dollars went to aid disaster victims, even those who were “very, very, very affluent” and who might, themselves, not have paid in their share.

Donna Donna, a 67-year-old white woman, was born in Alaska but raised on the Gulf Coast of Texas. She peppers her responses with colorful aphorisms, and she repeatedly references her Second Amendment right to armed resistance against tyranny. As she puts it, “I grew up sleeping with a pistol under my pillow. Honest to God. Smith & Wesson.” Donna sees herself as an independent, but closer to the Democratic Party, and supports a wide array of social programs, at least in principle. She argues that Social Security should not be based on what you pay in: it should be a right, as she believes it is in Scandinavian countries. At the same time, her views of American government are bleak. “Unfortunately, our form of government feeds the bureaucracy first,” rather than looking after the citizens.

[ 204 ]

meet the interviewees Donna’s pessimism may come in part from her own experience with government in her home state of Texas. Donna spent much of her later life caring for her elderly mother, and fell into poverty after Hurricane Rita destroyed much of the Gulf Coast where she lives. Texas, she informs me, did not accept the Medicaid expansion, which would have helped reduce her healthcare costs. At the same time, an error at the local property tax office nearly led her to lose her home. Still, being a taxpayer is “a bad thing and a good thing”: It’s bad because it doesn’t always work the way it’s supposed to. It’s good because it should work the way it’s supposed to. And rarely, it actually does. Sometime they do come and get you off your roof when the water’s up to the edge.

Eileen Eileen is a 59-year-old white woman who lives on a small farm in rural Washington state, near Mt. Rainier National Park. She worked in a sawmill until her right hand was crushed in an accident. “I had to learn to write lefthanded,” she comments, “but I still do okay. I can still milk a goat.” She is the mother of five adult sons and has a menagerie of animals, some of which played a voluble part in our interview. Though she is at least as well informed as many other interviewees, she doubts if she should be interviewed. A strong Democrat, her views are colored by her left-leaning

[ 205 ]

appendix b politics; she is a big fan of MSNBC, dislikes “corporate welfare,” and makes a comment about Mitt Romney’s low tax rate. Even so, she isn’t sure if she supports a progressive income tax. Eileen says she has been poor most of her life and doesn’t buy much, so she doesn’t pay much in taxes. The taxes she does pay, she doesn’t mind. “Part of me hates having to pay to live on my own property,” she says, but on the other hand, she likes that she knows where that money goes—she gets a statement from her local government about where her property taxes were spent. And anyway, she figures, since her accident, she’ll end up getting more out of the tax system then she ever put into it.

Erick Erick is a 43-year-old single white Republican man, unemployed and living in Michigan. He says he is not currently a taxpayer, “but in the past and in the future I will be again.” Erick’s views on taxation contain what appears to be a sharp contradiction. When asked his first thoughts about taxes, Erick quickly volunteers that taxes are a “negative thing” because they are a “redistribution of wealth.” Later, when asked directly about progressivity, Erick responds, I think that the higher your income the more you should pay. And I believe people that are in poverty shouldn’t pay anything or they should get that money back at the end of the year. They sort of do now, earned income credit, which I think is good.

[ 206 ]

meet the interviewees Erick also specifically opposes a flat tax because “it would harm people who have to buy things who have limited income. So that wouldn’t be fair.” To the extent that his views can be reconciled, Erick’s initial concern about wealth redistribution may be related to his most fervent opinion about government spending: opposition to foreign aid. Erick is upset about American money sent overseas, and makes repeated references to Israel. In addition, Erick’s email address suggested an interest in, or perhaps even a sympathy toward, the armed forces of Nazi Germany. This potential level of extremism was not entirely apparent during the interview itself, though Erick did make passing reference to “racial” stories in the news, which he found “upsetting” but was unwilling to elaborate on.

Gabriel Gabriel is a 28-year-old Pacific Islander living in Provo, Utah. He describes himself as leaning toward the Democratic Party, and he says being a taxpayer is “bittersweet”: The sweet part is knowing that you’re making enough to be able to contribute to live in a better society. You know, I’ve heard of taxes as paying for civilization . . . so I like that aspect of it. But I wish I had a bigger voice to be able to exclude my taxes from those things that I disagree with morally. Like some other interviewees, he believes that there is so much waste in the system, and the wealthy pay so little in

[ 207 ]

appendix b taxes, that a flat tax, without loopholes, might be able to lower taxes on everyone. He distinguishes waste from inefficiency. He at first describes about 30 percent of government spending as waste, thinking about excessive spending, like in the military. Thinking specifically about inefficiency, he thinks only 15 percent is wasted. Overall, Gabriel would like to see people better educated both about “where their tax dollars are going” but also “what they can do about it” to hold their elected officials accountable.

Gloria Gloria is a 52-year-old white woman from southeast Kansas. She is disabled, relies on food stamps, and lives in subsidized housing. She is deeply religious and active in her local Tea Party. After the recorded interview, Gloria informed me that she was planning to send her $15 interview payment to missionaries in the Middle East. Thinking about taxes, her first thought is about President Obama, whom she strongly opposes. Gloria repeatedly claims that taxes on the wealthy should not be increased, though she does not think that wealthy people currently pay too much. Wealthy people, she argues, are productive, and she does not begrudge them their money. Gloria is very aware of the amount she pays in sales tax, especially on food, and is also the only interviewee to offer an estimate of the state gas tax. Nonetheless, she does not perceive herself as a taxpayer and refers to herself instead as someone who “benefits from taxpayers.” Her reliance on others is something she feels guilty about:

[ 208 ]

meet the interviewees Sometimes though I feel kind of bad when I hear someone say, “Those disabled bums. They’re just living off the rest of us.” Because I do feel that. I feel that I am able to live in this apartment because of the generosity of others.

Grace Grace is a 24-year-old Asian college student in San Francisco. She works part-time to help pay for her education and describes herself as a strong Democrat. In response to a question about whether she thinks of herself as a taxpayer, Grace makes reference to Mitt Romney’s comments about some people not paying taxes, and then disagrees: “Even when I’m not working, I’m still paying sales tax whenever I’m buying non-food products.” Though Grace believes in the principle of progressivity and thinks “working class” people like herself should pay the least, she thinks the sales tax is the fairest tax because “the rich will buy heck of more luxury stuff.” Grace believes the income tax takes the largest chunk of her monthly paycheck, perhaps because she does not distinguish her payroll taxes from her federal income taxes. Asked about the different taxes that appear on her pay stub, she remembers only the federal and state income taxes. Grace is explicitly supportive of social programs, including welfare, though she has not benefited from them directly, because “stuff like that can help bridge the income gap.” Asked to define the range of incomes that make up the middle class, she explicitly cites Obama

[ 209 ]

appendix b when she picks $250,000 as the top end of the middleclass spectrum.

Jacqueline Jacqueline is a married white woman in her forties living in central Massachusetts. Her husband is a musician, and she mostly works through crowd- sourcing websites. They used to live in Boston, but moved out of the city to have a simpler and slower life. They have no children. Jacqueline is a Democrat and has strongly positive views about taxation. Asked how it feels to be a taxpayer, she says, “I like the fact that each person is contributing in their own way. . . . I don’t love paying extra, but I do enjoy being connected with the larger whole of what it contributes to.” She’s upset by the political rhetoric she hears. “Just in politics in general, when there’s all this no new taxes. . . . As if it’s this horrible thing and yet we get so much out of it.” She readily remembers what she is glad about paying for—infrastructure, firefighters, education—but struggles to come up with anything she opposes. Eventually, later in the interview, she remembers that military spending is “very disconcerting” to her. Jacqueline used to own a successful small business as a jewelry designer and feels very strongly about being ethical in collecting sales tax. She believes that some small-business owners are less honest, paying people under the table and not reporting sales. A question about whether Jacqueline has ever experienced an IRS audit “makes my heart stop” because “I think of just being

[ 210 ]

meet the interviewees dishonest and having it catch up with you. That would be awful.”

James James is a 35-year-old white man, an appliance repairman living in rural northern Michigan. He has five children. He doesn’t follow the news much himself, but his mother is an avid Fox News watcher, and he gets a lot of his information from her. James describes his partisanship as closer to the Republican Party. With five kids, James knows he benefits from Medicaid, but is uncertain how that and Medicare will be affected by Obamacare. He also knows that he gets a larger refund than he pays in, which is helping him buy the land across the street from his house. James feels pretty good about the property tax, in part because “I know a lot of that goes into my community of some sort. Because my father-in-law’s the treasurer of our county.” He worries that people in his rural area take advantage of disability and unemployment, but his main concern is that tax money is either going overseas or toward luxuries for politicians, like Bill Clinton’s “$400 haircut.” The idea of politicians living high on taxpayer dollars is a theme James returns to repeatedly: I mean, I know I’m not president or nothing but if I was, whenever we’re having meetings or dinners or whatever, I would just make everybody chip in and I wouldn’t spend tax dollars on it. Everyone should

[ 211 ]

appendix b bring a dish and we can have a potluck. You know? Make everybody drink out of orange juice cups or something, and recycle!

Jason Jason is a 26-year-old white man from Ohio. A strong Republican with a master’s degree in education, Jason has been working for the past two years as a business teacher in a local high school. Jason has strongly negative views of taxation, which he sees as the “government taking away my money that I work hard for.” Jason is a vigorous proponent of a flat tax and believes that taxes on investments should be taxed at a lower rate because investment stimulates the economy. Nonetheless, Jason does think certain things are worth paying for, including education, public safety, and infrastructure, and sees taxpaying as a responsibility to the “Founding Fathers.” He opposes environmental projects and programs associated with “entitlement culture” and the “nanny state.”

Jessica Jessica is a 32-year-old white woman, a mental health therapist living in a small town outside Atlanta, Georgia. She is married and says she’s closer to the Republican Party. She has only recently found full-time, salaried employment and notes that her clients benefit from Medicaid or Medicare. “So I wouldn’t have a job if it weren’t for some of these sort of systems.”

[ 212 ]

meet the interviewees Jessica has talked with her husband about a federal sales tax, which she believes has the advantage of capturing tax money from people working under the table or illegally. But she supports progressive taxation, says she does not “respect money management and stock trading that much as a career,” and worries that “the top quarter percent of the U.S. population . . . have really disproportionate control” of the economy. Jessica sees taxation as a “shared responsibility,” a “Golden Rule type” of thing, though “a lot of people . . . aren’t going to follow that under any circumstances.” She says she has personally benefited from tax dollars, including when she was hospitalized with appendicitis. Twenty thousand dollars of her medical bills were paid for by the state’s indigent care fund. “If you are going to benefit from living in this country and all the overt and covert benefits that go along with that, then you have to pay back into the system as well,” she says.

Joe Joe is a 62-year-old Hispanic man from California, a strong Democrat, receiving Social Security. He opens his interview by telling me he is “opinionated” but “won’t say any bad words.” He doesn’t “talk like that with anybody, much less ladies,” he notes. With two grown children and a grandchild, he believes he has become more concerned about the longterm view, rather than simple self-interest. “Some people get more conservative as they get older. I’m probably going the other direction.” Joe is well informed about the politics of taxation, making references to the tax rates under Clinton and Reagan and

[ 213 ]

appendix b discussing the “9-9-9” plan put forth by 2012 Republican candidate Herman Cain. In keeping with his strongly progressive politics, Joe has very positive views of most kinds of taxes. To his mind, avoiding taxes is not a victimless crime, and tax cuts, while popular, damage important services like education and entitlements. If a politician just says, “Let’s cut taxes,” he immediately has a pretty good- sized electorate going for him already. In my opinion, that’s kind of like shorting the country. You’re hurting the country.

Kenneth Kenneth is a 37-year-old from Peoria, Illinois. He is an Asian American, an attorney, and a Democrat. A lawyer, Kenneth often asks for clarification before committing himself to answering interview questions. He is also well versed in tax policy. The issues he raises are quite detailed, such as opposing the home mortgage interest deduction for second homes. Kenneth is also a strong proponent of the progressive income tax, on the grounds of equity, and also because he believes that a return to historically higher top rates would be good for the economy. Kenneth offers an unusual take on the question of who “benefits more than their share from government spending,” a question that typically provokes comments about welfare cheats or lobbyists. He responds, “Well I think all of us have, haven’t we? . . . We all get that benefit as a result of us pitching in with our taxes.”

[ 214 ]

meet the interviewees

Kimberly Kimberly is white woman in her thirties, a veterinary technician living alone with her dog and four cats in the Florida Panhandle. A Republican, she receives her news from Fox News and the Drudge Report. Kimberly is among the most negative of the interviewees. She is among the very few who do not consider taxpaying a “responsibility,” volunteering instead that taxpaying is a “burden.” She sees the income tax as a punishment for working. Her taxes are financially onerous. “I feel like I work my butt off to earn my money and barely make ends meet as it is and I end up owing taxes at the end of the year.” She compares her case to that of other people with children, who she knows are “getting thousands of dollars back in taxes.” Though she is glad that money is paying for the military and for “community safety,” she cannot think of a single way in which she has personally benefited from government spending. Kimberly names nurses, mailmen, and garbage collectors as examples of careers in which one works hard, but does not later recall healthcare, mail service, or sanitation, when asked about examples of government spending. She wonders repeatedly where her money goes, and doesn’t feel as if a “little person in the world” like herself has a say in where tax money is spent.

Kyle Kyle is a 39-year-old white man, a stay-at-home father in Cincinnati, Ohio. His partner works in banking, while he stays

[ 215 ]

appendix b at home with their one-month-old child. “She works full time and I take care of him, that takes up pretty much every waking moment of my day right now,” he says. Kyle is a Democrat, and thinks first about what taxes pay for—“roads, police, firemen, and schools.” Because he isn’t working, he doesn’t think of himself as a taxpayer right now, but goes on to note that he has always worked since he was sixteen, and anyway, he does pay sales tax. He thinks the property tax is the biggest tax for his family, but still deems a tax on assets the fairest possible tax. “The more that you have the more you should pay,” he argues. Like other interviewees, his concerns with spending are mostly about corruption and pork, like the new healthcare website, and Bill Clinton’s “$500” haircut.

Lawrence Lawrence is a 40-year-old white Democrat, a hairstylist in Ypsilanti, Michigan, who peppers his responses with funny anecdotes and asides. Lawrence thinks the income tax is “outdated” because it is so complicated and fails to capture the income of people at the top of the spectrum. He prefers a flat tax, or a tax on consumption, which he believes would hit the rich harder than the poor. “If you’re buying a $2,000 Louis Vuitton bag to match every outfit, that’s more than my sister’s purse from the Gap.” He also approves of the property tax, because he can see where that money is going, “I do want someone to come and get my garbage,” he says. “I

[ 216 ]

meet the interviewees don’t have any kids, but I want these yahoos around me to be educated, to have jobs and not steal my car for a living.” Like some other interviewees, Lawrence has seen family members abuse the social safety net. He tells the story of a cousin of his who works part-time at a gas station and has three kids. “She didn’t make five grand and she got seven thousand dollars back at the end of the year. How’s that something that happens? How did you get back more than you made?” Lawrence asks. He knows that his cousin is “not living the high life,” but still, it’s “wrong.”

Lucy Lucy is a 59-year-old white woman, a strong Democrat, and a single mom. Until recently, she was living in California, but long-term unemployment led her to move back in with her parents in Chicago. She misses “everything” about San Diego. Lucy’s experience with taxation is strongly shaped by a long-term problem with the IRS; after making a mistake on her taxes several years in a row, she ended up owing enough money to be “on a payment plan for years and years.” Lucy personally thinks many taxes are much too high, and believes people abuse the unemployment and disability system. But she is a strong supporter of progressive taxation and is concerned by wealthy people not wanting to pay their share. As she puts it, “I have a hard time with not wanting to share your good fortune.”

[ 217 ]

appendix b

Luis Luis is a 24-year-old from Lowell, Massachusetts, working for a construction company. He was born in the Dominican Republic, but has lived in the United States since he was a baby. He is a Democrat. Luis describes a conversation he had with a friend of his, who was angry to discover that a recent pay increase was resulting in a higher tax rate. Luis responded by reminding his friend that really wealthy people pay much higher rates. He thinks progressive taxation is a good idea. Obviously, my friend complained and stuff like that, but the way I see it . . . with all that money that you’re getting, if you don’t know how to manage it, then it’s on you. It’s not as if the government is taking away money that you can’t do anything without. If us poorer people, so to speak, or middle-class people can manage with what we have, then people who earn more should be able to manage with what they have after the government takes out their taxes. So I understand it. Luis has differing opinions on the Medicare tax and the Social Security tax. The tax for Medicare is the best tax, in his opinion, because he thinks health is the most important thing. But he’s heard “different things from different people” about the Social Security tax, and worries that the benefit “might get taken away” from his generation. For that reason, he considers it the worst tax.

[ 218 ]

meet the interviewees

Marjorie Marjorie is a 53-year- old white woman, a strong Republican from outside Gary, Indiana. She has worked as a substitute teacher, in grocery stores, and at fast food chains. After suffering a fall, Marjorie was unable to work for several months. Without a working car, she could not find another job, and she is now living with her daughter and receiving disability. She describes herself as “povertystricken.” Marjorie finds tax time extremely stressful, both because she is uncomfortable with paperwork and because she worries about owing money that she cannot afford. She is angry with the government for wasting money, both through inefficiency and by sending money overseas. “I try so hard to pinch pennies and make a dollar stretch,” she says, “but the government doesn’t take that money seriously.” She is more positive about the state government, which she sees as pretty efficient, though “stingy” for not accepting the Medicaid expansion in the Affordable Care Act that would have helped her family. Marjorie is a strong proponent of raising the minimum wage. Asked about whether taxes should be progressive, she agrees, and talks in detail about the ways in which the “top people” in fast food industries exploit their workers. She concludes that, since the money that owners are receiving should rightly have gone to their workers, the owners “should have to pay a higher rate for it.”

[ 219 ]

appendix b

Marshall Marshall is a 48-year-old African American man, a strong Democrat. He is a military veteran, a husband, and a father of four, living outside Wake Forest, North Carolina. Marshall would be much happier with a simple, progressive tax code, “You make $50,000 dollars, you’re taxed at x rate. Or you made a $150,000 dollars, you’re taxed at x rate. Without all the loopholes.” When he thinks of government waste, he thinks of the new federal health insurance website that required extensive repair. Marshall considers voting and military service to be responsibilities that, like taxpaying, should be shared by all citizens. Good citizenship, for Marshall, is like being a good neighbor, maintaining one’s own property and being ready to help others.

Matthew Matthew is a Black Hawk helicopter pilot, a white male Republican, married with one child, and currently stationed in Washington. Matthew is very well versed in the tax code, at least in terms of his own tax responsibilities. He uses rental properties to reduce his federal income tax, and takes pride in having accurately calculated his withholding, so that he does not receive either a bill or a refund come tax time. When asked which tax he would guess makes up the biggest part, he responds, “I wouldn’t guess, I would know it.”

[ 220 ]

meet the interviewees Matthew is concerned about government waste, particularly in his own experience in the military, and also believes that some people on welfare “abuse the system to keep the money rolling in.” In addition to basic infrastructure, he believes he benefits from taxes because they “keep Russia from crossing the border.”

Michael Michael is a 51-year-old white man from Ohio, a Democrat who works part time in IT. Michael is primarily concerned with the tax code’s complexity, which he sees as evidence of the government’s lack of accountability to its citizens: “When you have to pay somebody to figure this out for you then I think that that’s just saying something about how out of control it is.” He repeatedly describes the government as controlled by wealthy interests. “I just think Congress people end up being CEOs once they retire from government. They’re working with their buddies.” As a result, Michael doesn’t trust government officials to do the right thing with the taxes they receive. He recalls how Ohio promoted the state lottery as a way to increase school funding. Of course all the money from the lottery did go to the schools, but a lot of the taxes that they were spending on the schools all of a sudden went somewhere else, where it wasn’t additional money for the schools. This was just a ruse to get us to feel good.

[ 221 ]

appendix b Michael is committed to some progressivity, in principle, but believes that switching from an income tax to a sales tax would be progressive, because people who buy more would end up paying more, and because there aren’t many opportunities for loopholes in the sales tax.

Patsy Patsy is a 58-year-old white woman, a registered nurse from Sacramento, California. She works part-time, giving up fulltime work after her mother had a stroke. She now lives in privately run low-income housing, where rent is affordable. Patsy says she has become more political as she has gotten older; though she didn’t vote for many years, now she reads left-wing websites like Daily Kos and Alternet, and mentions receiving emails from “various Democratic organizations” as a source of her news. Patsy is angry that “there are so many corporations that don’t pay one red cent” in taxes. She defines government waste with reference to tax breaks for wealthy people and corporations. She is quick to name government spending that she is glad to pay for—from the Centers for Disease Control to programs for the homeless. Asked if it is ethical to find legal ways to avoid paying much in taxes, Patsy says, “Hell no, it’s not. Pardon my language.” Taxes “keep everything going as it should so that we can continue to have laws upheld and have people following diseases and immunizations for our kids. Otherwise, we’d be screwed.”

[ 222 ]

meet the interviewees

Ralph Ralph is a 57-year-old married white man living in a small town in central New York. Ralph describes himself as a moderate Republican and works as a drug addiction counselor. Ralph expresses a great deal of confusion about tax policy, which he sees as one big “gray area.” He struggles to name an instance of government spending he was upset by. Eventually, he says that “I’m just not sure but I think sometimes money goes from taxes to maybe an abortion clinic,” something a taxpayer might oppose but have to pay for anyway. Ralph expresses the greatest certainty when discussing the value of wealthy people to society; they deserve their money, he argues, even if they didn’t work for it. “I don’t see where this feeling of anti-rich comes from. Another thing some people say well a lot of them were just born into it. Good for them. That didn’t hurt me any. They didn’t take it away from me. They got lucky. Good for them.”

Rhonda Rhonda is a 43-year-old African American woman, a pharmacy technician currently living near West Palm Beach, Florida. She is a married mother of two and a Republican. Rhonda considers even legal methods of tax avoidance unethical, and is suspicious of tax breaks for religious groups who might not really be helping anyone. Asked

[ 223 ]

appendix b about whether people with higher incomes should pay a higher percentage in income taxes, Rhonda says, “I think about this,” and then relates her own experience of getting a raise and seeing her withholding go up. Despite the cost to herself, Rhonda concluded that “when you look at the whole picture,” “the percentage should go up a little” for wealthier people. She is quick to name the kinds of government spending she approves of, from libraries and parks to Social Security and Medicare, and she doesn’t think that many people are getting more than their share from government spending. She notes, In the media where all the other stuff is . . . like the bad stuff, but also some of the good things are happening— they could throw the word “taxes” in there so that people would realize, “Oh, okay. Maybe they are doing something with it. Maybe this is helping.” People take it all for granted. From her interview, it would be difficult to tell that Rhonda is a Republican; so much so, in fact, I reconfirmed her partisanship at the end of the interview. She identified immediately as a Republican, but said her partisanship was “not very strong because I’m kind of liberal.”

Rosemary Rosemary is a single white woman, 56 years old, from Sacramento, California. Of her political views, she says, “I’m a liberal-conservative. I consider myself a Democrat, but I

[ 224 ]

meet the interviewees vote for the person and that kind of thing. I am patriotic and believe in the country and all of that, even though we’re falling apart.” Rosemary describes taxes as “a burden and a hardship” and sees the sales tax as her “biggest nemesis.” By contrast, Rosemary is supportive of the payroll tax, because she is receiving disability. That some people take advantage of the system is hard on Rosemary. “It makes it that much tougher because people look at you and they just see ‘crook’ now.” She was keenly embarrassed to have to apply for benefits, she says. We were at the Social Security office and my sister was saying something about how bad I felt or whatever. I remember the lady saying, “Hey, this is what we do. This is what we put your money into. You worked all those years.” She already had my history that I put on it. She said, “That’s what you put your money in for. Don’t feel bad about it.” I remember that. That’s probably the one thing that I really remember from that very traumatic time of when I was getting on disability. Asked what the most important chapter would be in her own book about taxation, she talks about the inequality of America’s “class system.” Homelessness is a key issue for Rosemary. “We have kids living in cars now. They’re kids who are homeless. I’m not even talking about—I’m talking about children who go to school, but are homeless and living in cars. This country is too great for that crap to be going on.”

[ 225 ]

appendix b

Roy Roy is a 61-year-old retired mailman, living in a small town in eastern Ohio. He is white, a Republican, goes to church every week, and gets his news from Fox. Despite his decades of public service, Roy is hard pressed to think of things he is glad that taxes pay for. “I really haven’t thought about that much,” he comments. Roy also does not think he has benefited much from tax dollars. “Very little. Just the essentials.” Roy says, before listing defense spending and public safety as among the things he has benefited from. Roy believes raising taxes on the rich is the wrong answer. “We tried that and then all they do is just ship jobs overseas.” He sees hard work as what makes a person deserving, but believes rich people do work hard. “Well, when I say ‘hard,’ I’m not referring to digging a ditch. I’m not referring to manual labor. I’m referring to, perhaps, the president of a company or an owner.” Roy expresses a sense of civic pride in paying taxes, but that pride comes along with a sense that other people aren’t doing their part. “I feel like I’m contributing to the economy and the growth of our economy. I like the fact that I am contributing in that way because there are so many who aren’t.”

Sharlene A 53-year-old African American, Sharlene works as a project manager for a media firm. A Republican, she lives with her

[ 226 ]

meet the interviewees husband in a medium- sized town in New Jersey and has two grown children. Speaking with great speed and a New Jersey accent so powerful that even a native New Yorker had a hard time following her, Sharlene expressed her almost limitless opposition to income taxation, which she describes as “Uncle Sam always in my pocket, pulling out like he’s the one who’s actually out there working every day.” Sharlene defines herself by her work. Put it this way, every time I’ve left a job, they’ve had to hire three or four people to fill my spot. I know that I do the work of two or three people. . . . I think that in anything that you do, you should take pride in it. If I swept floors, you better believe it, everybody will be talking about the ways the floors were swept. Other people do not show the same pride or commitment, Sharlene believes. “Everybody feels like somebody owes them something. It’s always the other guy’s fault. . . . So, I’m totally disgusted. I really feel like every time I pay the taxes, I’m just giving away money. I don’t see any real benefit.” Sharlene does not automatically think about other forms of taxation; when other taxes are explicitly raised, she has relatively little to say. Her ire is aimed almost exclusively at the income tax, an anger that may have been stoked by a bad experience with the IRS: “I went through four years of trying to get my life back.”

[ 227 ]

appendix b

Stacy Stacy is a 28-year-old white woman, a transcriptionist from southwestern New Hampshire. She is single and employed full-time, but says she is making less than $20,000 a year. She describes herself as an independent who does not lean toward either party. Thinking about taxes makes Stacy angry. She used to work as a dishwasher, and, looking at her paystub, thought it seemed low. She “came to the realization that at least 30 percent of my income was taxed and taken out. [How did you feel about that?] I wasn’t very happy because I really needed the money for other things.” Stacy has a hard time with questions that involve numbers or other abstractions. But she is certain that taxpaying is a responsibility. She makes a distinction between people who are “living very comfortably” and those who have suffered major economic losses, like unemployment or foreclosure; wealthier people who avoid paying taxes are being unethical, but poor people “need their income to survive.”

Stella Stella is a white woman, a strong Republican, a military veteran, and a mother of two. Her husband served in the Air Force and is now a military contractor. Stella is from upstate New York, and her husband is originally from Mexico, but they are currently living in Alabama. She doesn’t work

[ 228 ]

meet the interviewees outside the home, which makes her feel “conflicted” about her tax opinions. But she also thinks she works hard: saving, making sacrifices, and planning for the family’s future. Asked about taxes, Stella thinks almost exclusively of the federal income tax, about which she is very angry. Now that her husband is making more money in the private sector and her children have grown up, the income tax “kind of bit us in the butt,” as she describes it. “Makes you not want to work sometimes,” she notes, and goes on to wonder if the tax rates her family is paying are a result of the Obama administration. She believes in somewhat progressive taxation, but also is convinced that right now, poor people aren’t paying enough and the rich are paying too much. Stella has previously benefited from tax credits and food stamps, but doesn’t think she’s benefiting anymore. And other people are abusing the system, getting huge tax refunds and benefits they don’t deserve: The people that drive a better car than I do and go into the grocery store and buys whatever they want and they take their EBT card out and without even a flinch and like, “Wow.” I’m taking my credit card to pay for my purchases or whatever and then I see that. That irritates me. Overall, she worries that the country has changed. “It feels it’s like more of a dog-eat-dog world and people are hating on each other, including me. I find myself that I am as well. And I never used to feel this way.”

[ 229 ]

appendix b

Steve A retired military officer, Steve is a fifty-year-old white man, and now works as a contractor near Fort Drum, New York. He is a strong Republican, a widower with two adult daughters. Steve describes himself as “a guy who don’t like no tax.” Housing prices have risen dramatically near the military base, and so Steve is very angry about his property taxes. He think the gas tax is “the crookedest” and estimates that the gas itself only costs 98 cents, with nearly three dollars added in taxes. He believes Social Security will soon be bankrupt. Still, Steve sees taxpaying as a responsibility to the nation. “You should serve your country when called upon,” he says.

Tiffany Tiffany is a 32-year-old white woman, a stay-at-home mom who runs a small preschool from her house in central Texas. She says she leans toward the Republican Party. Her husband served in the military, and when the family was stationed in Germany, Tiffany was very impressed by the roads, and wishes the American infrastructure were so well kept. Tiffany’s feelings about taxation are pretty mild. She doesn’t rate tax policy as a very important in a candidate, and chooses “not sure/no opinion” on several survey questions. She thinks her family’s income taxes are pretty reasonable, and she knows that her taxes are considerably lower because of her two children. She sees the state income tax as

[ 230 ]

meet the interviewees the best, because she believes she can see a higher return on those dollars compared to federal taxes. Off the top of her head, she knows that there are “four or five” different taxes on her family’s paystubs, but can only think of the federal and state income taxes. Reminded about Social Security taxes, she says she doesn’t understand “why it’s still there,” since she knows there won’t be any money left for her generation.

Tom Tom is a 63-year-old white man, working as a consultant but planning to start collecting Social Security later this year. Living in a suburban area near Detroit, he is married with two grown children. He says he is closer to the Democratic Party. Asked about taxes, Tom has a great deal to say. He is very angry about the complexity of his taxes since he became a consultant, and about the details of his Social Security contribution and the taxes he will have to pay on his retirement income. He is also angry about property taxes, which he is still paying despite the fact his children are no longer in school. Tom is very concerned about government waste, which he perceives in almost every aspect of government. He has a hard time focusing on what he is glad to pay for or how he has benefited from taxation, returning repeatedly to questions of waste and inefficiency. Tom has conflicting views on progressivity. He thinks very wealthy people should pay more, but also believes that a flat tax would be best, and argues that “the reason, I’m

[ 231 ]

appendix b sure, it hasn’t happened is the lobbying in Washington.” At the same time, he is aware of the Earned Income Tax Credit, and approves of it.

Tracy Tracy lives in Birmingham and works for the University of Alabama. She is a white woman in her forties, married with two children. She is a strong Democrat. When Tracy thinks about taxes, she thinks about unfairness in the tax distribution—specifically that wealthy people can take advantage of loopholes in the income tax code, and that poor people are paying too much because of the sales tax. When asked how it feels to be a taxpayer, she describes taxpaying as a “civic duty.” She has already prepared her children, who are both near adulthood, for the taxes that will be taken out of their paychecks, “trying to explain to them that it’s not a penalty, it’s a decent thing, and what their responsibilities are.”

Whitney Whitney is a single mother of a teenage daughter, living in New York City. She is African American, a strong Democrat, around 30 years old, and she works in tech support. She generally sees the income tax as fair, because it is based on how much you make and takes account of expenses like children or education, but at the same time, “I guess I do have a problem, because it’s like, the more, I realize the

[ 232 ]

meet the interviewees more you make the less you get back, which, I don’t really get that concept, but, I guess it is what it is.” Asked about what bothers her about government spending, she immediately recalls an incident of local government incompetence. I guess they were trying to make a bike lane, but they never finished it, but now they made one lane, more traffic in the street because now it’s reduced to one lane, and the parking space is wider than necessary. I think that was a waste of money. . . . They created more traffic, and I thought that money could have went to somewhere else.

Wilma Wilma is a 57-year-old white woman, a Democrat, and a single mom of an adult son. Living in Florida, she is retired after more than twenty years working for the local court system and is now pursuing her college degree. She is proud of her Italian heritage and describes herself as very family-oriented. For Wilma, taxpaying is part of one’s responsibility to make society better, like participating in community meetings and looking after your family. Wilma talks at length about the importance of honesty. “It hurts the society to cheat the government,” she notes. She can think of many good things her taxes pay for and is only really upset by the excess spending on the nearby Tampa Bay Rays stadium. Wilma is very involved in her neighborhood. She is anxious about crime and worries about some people who she

[ 233 ]

appendix b knows receive HUD and food stamps, and yet drive “these cars with the gold chains around their neck and everything else.” She believes their income comes from illegal drug sales. At the same time, she says, “people that are really hurting” for assistance “cannot get it.” Asked if she ever speaks to anyone about taxes, Wilma is reminded of a neighbor of hers, who goes in and looks up how much everyone else in the neighborhood is paying in property taxes. As a result, Wilma knows she is paying much less than another neighbor who built a new home, a fact that she worries may result in “contention.”

[ 234 ]

NOTES

Preface: The Tax Revolt Was a Long Time Ago 1. “The O’Reilly Factor,” Fox News, October 10, 2008; “Transcript: Republican Presidential Debate,” New York Times, November 11, 2015, http:// www .nytimes .com /2015 /11 /11 /us /politics /transcript -republican -presidential -debate .html?_r=0; “The Ed Show,” MSNBC, September 19, 2011, http:// www.nbcnews .com /id /44593325 /ns /msnbc -the _ed _show/CNN; “Inside Politics,” CNN, January 14, 2013; “Lou Dobbs Tonight,” CNN, April 12, 2003. 2. Lloyd A. Free and Hadley Cantril, The Political Beliefs of Americans (New Brunswick, N.J.: Rutgers University Press, 1967). 3. Benjamin I. Page and Lawrence R. Jacobs, Class War? What Americans Really Think about Economic Inequality (Chicago: University of Chicago Press, 2009), 23. For more on American opposition to economic inequality, see L. McCall, The Undeserving Rich: American Beliefs about Inequality, Opportunity, and Redistribution (New York: Cambridge University Press, 2013). 4. Christopher Hoene, “Fiscal Structure and the Post-Proposition 13 Fiscal Regime in California’s Cities,” Public Budgeting & Finance 24, no. 4 (2004): 51–72. 5. Thomas Byrne Edsall and Mary D. Edsall, Chain Reaction: The Impact of Race, Rights, and Taxes on American Politics (New York: W. W. Norton, 1992); Robert Kuttner, Revolt of the Haves: Tax Rebellions and Hard Times (New York: Simon and Schuster, 1980); David

[ 235 ]

notes to preface Sears and Jack Citrin, Tax Revolt: Something for Nothing in California (Cambridge: Harvard University Press, 1982). 6. Isaac William Martin, The Permanent Tax Revolt: How the Property Tax Transformed American Politics (Stanford: Stanford University Press, 2008). 7. Ibid. The interpretation of other historical events has also been colored by recent anti-tax activism. For instance, the 1773 Boston Tea Party, though much celebrated by modern anti-tax activists, was in fact a response to a tax cut, not a tax increase—a special business loophole given to the East India Company. Joseph J. Thorndike, “Four Things You Should Know about the Boston Tea Party,” Tax History Project (April 8, 2010), http://www.taxhistory.org/thp/readings.nsf/ArtWeb /1BB0C8F894BB490B852577020083A6F6?OpenDocument. 8. Andrea L. Campbell, “What Americans Think of Taxes,” pp. 48–67, in The New Fiscal Sociology: Taxation in Historical and Comparative Perspective, ed. Isaac William Martin, Ajay K. Mehrotra, and Monica Prasad (New York: Cambridge University Press). 9. Isaac W. Martin, Rich People’s Movements: Grassroots Campaigns to Untax the One Percent (New York: Oxford University Press, 2013). 10. Alexander Hertel-Fernandez and Theda Skocpol, “Asymmetric Interest Group Mobilization and Party Coalitions in US Tax Politics,”  Studies in American Political Development  29, no. 2 (2015): 235–49. 11. Theda Skocpol and Vanessa Williamson, The Tea Party and the Remaking of Republican Conservatism (New York: Oxford University Press, 2011). 12. The upward trend is especially noteworthy because over time more of these measures are initiatives, put on the ballot by citizen groups and traditionally less successful than referenda that come via the state legislature.

[ 236 ]

notes to introduction 13. Joshua J. Dyck, “Political Distrust and Conservative Voting in Ballot Measure Elections,”  Political Research Quarterly  63, no. 3 (2010): 612–26.

Introduction 1. Thomas Paine, “Agrarian Justice” (1797), in The Writings of Thomas Paine, ed. Moncure Daniel Conway (New York: G.P. Putnam, 1895), 3:340. The National Women’s Rights Convention is quoted in Lawrence Zelenak, Learning to Love Form 1040: Two Cheers for the Return-Based Mass Income Tax (Chicago: University of Chicago Press, 2013), 21–22. Full text of the address is available in Ida Husted Harper, The Life and Work of Susan B. Anthony: Including public addresses, her own letters and many from her contemporaries during fifty years. A Story of the Evolution of the Status of Woman (Indianapolis: Hollenbeck, 1908), 2:968. 2. Compañia General de Tabacos de Filipinas v. Collector of Internal Revenue, 275 U.S. 87, 48 S. Ct. 100, 72 L. Ed. 177 (1927). 3. John Adams credited the famous phrase to James Otis, Jr., a lawyer, pamphleteer, and member of the Massachusetts assembly. 4. Judith N. Shklar, American Citizenship: The Quest for Inclusion (Cambridge: Harvard University Press, 1991), 3. 5. Andrea Nill Sanchez, “Pro-Immigration Reform Activists Say ‘Viva Taxes!,’ Cite Immigrants as Untapped Revenue Source,” ThinkProgress (April 15, 2010), http://thinkprogress.org/security /2010/04/15/176006/pro-immigration-reform-activists-say-viva -taxes-cite-immigrants-as-untapped-revenue-source/. 6. Glenn Kessler, “Clinton’s Claim That Illegal Immigrants Pay More in Taxes Than Some Corporations,” The Washington Post, May 11, 2015, https://www.washingtonpost.com /news/fact-checker/wp/2015/05/11/clintons-claim-that-illegal -immigrants-pay-more-in-taxes-than-some-corporations/.

[ 237 ]

notes to introduction 7. Immigrants, including those without legal authorization to live in the United States, pay a substantial amount in taxes. See appendix A. Oliver Darcy, “CNN Host Tells Donald Trump Illegal Immigrants Pay Billions in Taxes—Watch His Fiery Response,” The Blaze, November 12, 2015, http://www.theblaze .com/stories/2015/11/12/cnn-host-tells-donald-trump-illegal -immigrants-pay-billions-in-taxes-watch-his-fiery-response/. 8. Pew Research Center for the People and the Press Political Survey, February 2015 [survey question]. USPSRA.031915. R29. Princeton Survey Research Associates International [producer]. Storrs, Conn.: Roper Center for Public Opinion Research, iPOLL [distributor], accessed February 18, 2016. 9. “The Non-Taxpaying Class,” The Wall Street Journal, November 20, 2002, http://www.wsj.com/articles/SB1037748678534174748. 10. Jesse Drucker, “The World’s Favorite New Tax Haven Is the United States,” Bloomberg, January 27, 2016, http://www .bloomberg .com /news /articles /2016–01–27 /the -world -s -favorite-new-tax-haven-is-the-united-states;

Susan

Adams,

“26 CEOs Who Made More Than Their Companies Paid in Federal Tax,” Forbes, August 17, 2012, http://www.forbes.com /sites/susanadams/2012/08/17/26-ceos-who -made-more-than -their-companies-paid-in-federal-tax/. 11. This is in substantial part because the United States relies heavily on a graduated income tax, while many European countries raise much of their public money from a VAT (or value-added tax, a kind of consumption tax). For an overview of the U.S. tax system, including data on how much people of different incomes pay in taxes, see appendix A. 12. At these very, very top echelons of wealth, it is hard to say what percentage of income is taxed either in the United States or in Europe; as the release of the Panama Papers demonstrated,

[ 238 ]

notes to introduction the income of the extremely wealthy is difficult to pin down, and their strategies for tax avoidance are multinational. 13. Richard Attiyeh and Robert F. Engle, “Testing Some Propositions about Proposition 13,” National Tax Journal 32, no. 2 (1979): 131–46; Shaun Bowler and Todd Donovan, “Popular Responsiveness to Taxation,” Political Research Quarterly 48, no. 1 (1995): 79–99. David M. Cutler, Douglas W. Elmendorf, and Richard Zeckhauser, “Restraining the Leviathan: Property Tax Limitation in Massachusetts,” Journal of Public Economics 71, no. 3 (1999): 313–34; Donald Philip Green and Ann Elizabeth Gerken, “Self-Interest and Public Opinion toward Smoking Restrictions and Cigarette Taxes,” Public Opinion Quarterly 53, no. 1 (1989): 1–16; D. O. Sears and C. L. Funk, “The Role of Self-Iinterest in Social and Political Attitudes,” Advances in Experimental Social Psychology 24, no. 1 (1991): 1–91. 14. Campbell, “What Americans Think of Taxes.” 15. Ibid. 16. Liam Murphy and Thomas Nagel, The Myth of Ownership: Taxes and Justice (New York: Oxford University Press, 2002). Several of my interviewees draw this same “state of nature” analogy in explaining why they see taxpaying as an obligation. See chapter 1, under the heading “Looking Deeper: Taxpaying and the Meaning of Responsibility.” 17. This idea is similar to what some scholars have called one’s “community of fate.” John S. Ahlquist and Margaret Levi, In the Interest of Others: Organizations and Social Activism (Princeton: Princeton University Press, 2013). 18. A similar argument is made by sociologists Jeffrey Kidder and Isaac Martin, who, in their study of Southern small-business owners, argue that debates about taxation rest upon the “morally charged” boundaries between social groups. Jeffrey L.

[ 239 ]

notes to introduction Kidder and Isaac Martin, “What We Talk about When We Talk about Taxes,” Symbolic Interaction 35 (2012): 123–45. 19. An important and understudied question is how minorities themselves feel about taxation, particularly in contexts where the public services they receive are inferior and the taxes they pay disproportionately high. 20. David O. Sears and Jack Citrin, Tax Revolt : Something for Nothing in California (Cambridge: Harvard University Press, 1985), 239. Lowery and Sigelman look at public opinion data across the country at the time of the Proposition 13 campaign and come to the same conclusion. David Lowery and Lee Sigelman, “Understanding the Tax Revolt: Eight Explanations,” American Political Science Review 75, no. 4 (1981): 963–74. 21. K. S. Newman and R. L. O’Brien, Taxing the Poor: Doing Damage to the Truly Disadvantaged (Berkeley: University of California Press). 22. Michael Tesler and David O. Sears, Obama’s Race: The 2008 Election and the Dream of a Post-Racial America (Chicago: University of Chicago Press, 2010). Feelings of fellowship can be limited by economic, as well as ethnic, divides, though this question is not as thoroughly studied. Experimental evidence indicates that the existence of inequality reduces the willingness of all participants to contribute to public goods provision. Lisa R. Anderson, Jennifer M. Mellor, and Jeffrey Milyo, “Inequality and Public Good Provision: An Experimental Analysis,” Journal of SocioEconomics 37, no. 3 (2008): 1010–28. When ethnic and economic divisions overlap, opposition to public goods provision is especially high. Evan S. Lieberman and Gwyneth H. McClendon, “The Ethnicity-Policy Preference Link in Sub-Saharan Africa,” Comparative Political Studies 46, no. 5 (2013): 574–602. 23. The same phenomenon holds in other countries as well. See Evan S. Lieberman, “National Political Community and the

[ 240 ]

notes to introduction Politics of Income Taxation in Brazil and South Africa in the Twentieth Century,” Politics & Society 29, no. 4 (2001): 515–55. 24. Margaret Levi, Consent, Dissent, and Patriotism (New York: Cambridge University Press, 1997). 25. Martin Gilens, Why Americans Hate Welfare: Race, Media, and the Politics of Antipoverty Policy (Chicago: University of Chicago Press, 2009), 3. 26. Steven A. Bank, Kirk J. Stark, and Joseph J. Thorndike, War and Taxes (Washington, D.C.: Urban Institute Press, 2008). Note that wars that do not involve mass mobilization and broadly borne sacrifice do not appear to have the same impact. See Kenneth Scheve and David Stasavage, Taxing the Rich: A History of Fiscal Fairness in the United States and Europe (Princeton: Princeton University Press, 2016). 27. James T. Sparrow, “‘Buying Our Boys Back’: The Mass Foundations of Fiscal Citizenship in World War II,” Journal of Policy History 20, no. 2 (2008): 263–86; N. Feldman and J. Slemrod, “War and Taxation: When Does Patriotism Overcome the Free-Rider Impulse?,” pp. 138–154, in The New Fiscal Sociology: Taxation in Comparative and Historical Perpective, ed. Isaac Martin, Ajay K. Mehrotra, and Monica Prasad (New York: Cambridge University Press, 2009). 28. Lawrence Bartels, “Homer Gets a Tax Cut: Inequality and Public Policy in the American Mind,” Perspectives on Politics 3, no. 1 (2005): 15–31. See also Mayling Birney, Michael J. Graetz, and Ian Shapiro, “Public Opinion and the Push to Repeal the Estate Tax,” National Tax Journal 59, no. 3 (2006): 439–61. 29. Jacob S. Hacker and Paul Pierson, “Abandoning the Middle: The Bush Tax Cuts and the Limits of Democratic Control,” Perspectives on Politics 3, no. 1 (2005): s49. 30. For instance, to assess whether we should be spending more to fight crime, one probably should know whether the crime

[ 241 ]

notes to introduction rate is high or low, by historical standards, and also whether the crime rate is falling or rising. One’s level of education and political involvement is not closely correlated with awareness of these facts. Many intelligent and politically involved people are unaware that violent crime rates have fallen steadily and dramatically since the early 1990s. Martin Gilens, “Political Ignorance and Collective Policy Preferences,” American Political Science Review 95, no. 2 (2001): 379–96. 31. For an example of how facts can change tax attitudes, see John Sides, “Stories or Science? Facts, Frames, and Policy Attitudes,” American Politics Research 44, no. 3 (2016): 387–414. Unfortunately, simply contradicting a person who believes a wrong thing does not necessarily improve his or her grasp of the information. In some circumstances, people respond by doubling down on their bad ideas. See Brendan Nyhan and Jason Reifler, “When Corrections Fail: The Persistence of Political Misperceptions,” Political Behavior 32, no. 2 (2010): 303–30. 32. For more on the impact of media partisanship, and particularly the impact of conservative media, see Matthew Levendusky, “Why Do Partisan Media Polarize Viewers?,” American Journal of Political Science 57, no. 3 (2013): 611–23; Stefano Della Vigna and Ethan Kaplan, “The Fox News Effect: Media Bias and Voting,” The Quarterly Journal of Economics 122, no. 3 (2007): 1187–234; Peter Dreier and Christopher R. Martin, “How ACORN Was Framed: Political Controversy and Media Agenda Setting,” Perspectives on Politics 8, no. 3 (2010): 761–92. 33. Lawrence Zelenak, “Mitt Romney, the 47 Percent, and the Future of the Mass Income Tax,” Tax Law Review 67 (2013): 471. 34. “Full Transcript of the Mitt Romney Secret Video,” Mother Jones, September 19, 2012, http://www.motherjones.com /politics/2012/09/full-transcript-mitt-romney-secret-video.

[ 242 ]

notes to introduction 35. Zachary Pleat and Remington Shepard, “How the Right Wing Media Built Mitt Romney’s 47 Percent Line,” Media Matters, September 18, 2012, http://mediamatters.org/research /2012/09/18/how-the-right-wing-media-built-mitt-romneys-47 /189967; “Makers vs. Takers: Romney’s ‘47 Percent’ Rhetoric Echoes Fox News,” Media Matters, September 18, 2012, http:// mediamatters .org /research /2012 /09 /18 /makers -vs -takers-romneys-47-percent-rhetoric-ec/189987. See also Michele Bachmann, “Question: If 45% of Americans Pay No Federal Income Taxes, Should They Be Allowed to Vote?,” https:// twitter.com/michelebachmann/status/702716472305565696, [Twitter], February 24, 2016. 36. By contrast, there is a body of important academic literature examining how the experience of public policy affects awareness of government spending. I am indebted to the work of Suzanne Mettler on the “submerged state” and Joe Soss on “policy learning.” Suzanne Mettler, The Submerged State: How Invisible Government Policies Undermine American Democracy (Chicago: University of Chicago Press, 2011); Joe Soss, “Lessons of Welfare: Policy Design, Political Learning, and Political Action,” American Political Science Review 93, no. 2 (1999): 363–80. 37. Christopher Howard, “The Hidden Side of the American Welfare State,” Political Science Quarterly 108, no. 3 (1993): 403–36. 38. About thirty-two million of those returns are paper; the rest are online. Brett Collins, “Projections of Federal Tax Return Filings: Calendar Years 2011–2018,” Internal Revenue Service Statistics of Income Bulletin 31, no. 3 (2012): 180–91. About twenty million people use H&R Block each year. Steve Gelsi, “H&R Block Tax Season Customer Base Rises 3.8%,” MarketWatch, May 10, 2007, http://www.marketwatch.com/story/hr-block-tax-season -customer-base-rises-38. TurboTax has about twenty-nine million customers annually. Ann Carrns, “Users Say TurboTax

[ 243 ]

notes to introduction Deluxe Is Less Deluxe Than It Used to Be,” New York Times, January 9, 2015, http://www.nytimes.com/2015/01/10/your -money /taxes /users -say-turbotax-deluxe -is -not -as -deluxe -as -previous-versions.html. 39. The Tax Foundation estimates the cost of tax compliance at $20 billion a year. Joshua McCaherty, “The Cost of Tax Compliance,” The Tax Foundation Tax Policy Blog, September 11, 2014, http://taxfoundation.org/blog/cost-tax-compliance. 40. Zelenak, Learning to Love Form 1040. 41. Experts traditionally used the word loophole to mean accidents of the tax code that lead to windfalls for particular people or industries. In general parlance, however, loophole has lost the implication of unintentionality on the part of policymakers. I use the term as my respondents do, that is, adhering to the popular usage. 42. Dennis Ventry, “Americans Don’t Hate Taxes, They Hate Paying Taxes,” University of British Columbia Law Review 44, no. 3 (2011): 841–42. 43. Excise taxes are taxes applied to the purchase of a particular product or group of products. For instance, there is an excise tax on cigarettes. 44. Susan Hansen briefly made this intuitive point several decades ago, though she did not measure its effects. “If taxes are disguised as part of the retail sales price, one’s mortgage payment, or the effects of inflation, people can easily underestimate tax burdens.” Hansen, The Politics of Taxation (New York: Praeger Publishers, 1983). Two studies from the National Bureau of Economic Research demonstrate the effects that Hansen has theorized: Marika Cabral and Caroline Hoxby, “The Hated Property Tax: Salience, Tax Rates, and Tax Revolts,”  National Bureau of Economic Research, paper no. w18514, 2012; Raj Chetty, Adam Looney, and Kory Kroft,  “Salience

[ 244 ]

notes to introduction and Taxation: Theory and Evidence,” National Bureau of Economic Research, paper no. w13330, 2007. 45. Katherine Cramer Walsh, “Scholars as Citizens: Studying Public Opinion through Ethnography,” in Political Ethnography: What Immersion Contributes to the Study of Powe, ed. Edward Schatz (Chicago: University of Chicago Press, 2009), 166. 46. Martin Gilens, “Inequality and Democratic Responsiveness,” Public Opinion Quarterly 69, no. 5 (2005): 778. 47. For an analysis of the ethical considerations associated with the use of Mechanical Turk, see Vanessa Williamson, “On the Ethics of Crowdsourced Research,” PS: Political Science and Politics 49, no. 1 (2016). 48. Adam J. Berinsky Gregory A. Huber, and Gabriel S. Lenz, “Evaluating Online Labor Markets for Experimental Research: Amazon.com’s Mechanical Turk,” Political Analysis 20, no. 3 (2012): 351–68. 49. See table A1 in the Methodological Appendix: https:// dataverse.harvard.edu/dataverse/readmylips. 50. To match the U.S. adult population, the population was balanced in terms of gender, partisanship, and education, and the results weighted in terms of age, race, household income, and region. 51. One problem is that surveys on tax attitudes are often politically motivated. Such surveys formulate questions “the way a drunk uses a lamppost—for support rather than illumination.” Karlyn Keene, “What Do We Know about the Public’s Attitude on Progressivity?,” National Tax Journal (1983): 371–76. 52. Of course, anyone can use a refresher on the outlines of the tax code. One is available as appendix A. 53. Available at https:// dataverse .harvard .edu /dataverse /read mylips.

[ 245 ]

notes to chapter 1 54. Throughout the book, I use welfare in the way my respondents use it—as a term that includes an array of social assistance programs including food assistance but excluding Social Security retirement benefits, education grants, or tax credits.

Chapter 1: Pride and Prejudice and Taxes 1. Eric Liu and Nick Hanaver, True Patriot Survey, August 2008 [survey question], USGREEN.08PATRIOT.R035. Greenberg Quinlan Rosner Research [producer]. Storrs, Conn.: Roper Center for Public Opinion Research, iPOLL [distributor], accessed March 2, 2016. 2. James Alm and Benno Torgler, “Culture Differences and Tax Morale in the United States and in Europe,” Journal of Economic Psychology 27, no. 2 (2006): 224–46. 3. Because such a small percentage of Americans disagree with the statement that taxpaying is a civic duty, statistical methods are limited in what they can tell us about these respondents. I pooled six years of IRS survey data to try to assess this question; of over six thousand respondents, 274 either disagreed or disagreed strongly with the statement, “It is every American’s civic duty to pay their fair share of taxes.” On average, men are slightly less inclined to describe taxpaying as a responsibility, while white people are slightly more inclined to describe taxpaying as a civic responsibility. These effects are very small—a percentage point or two of difference. Education, income, age, and region of the country did not predict perception of taxpaying as a civic duty. The IRS does not collect data on political variables like partisanship. 4. Pew Research Center, Pew Social Trends Poll, July 2009 [survey question], USPSRA.081209S.R19M, Princeton Survey Research Associates International [producer], Cornell

[ 246 ]

notes to chapter 1 University, Ithaca, N.Y.: Roper Center for Public Opinion Research, iPOLL [distributor], accessed June 1, 2016; Scripps Howard News Service/Ohio University, Scripps Howard News Service/Ohio University Poll, July 1994 [survey question], USSCRIPP.94SH08.R09N, Scripps Howard News Service/Ohio University [producer], Cornell University, Ithaca, N.Y.: Roper Center for Public Opinion Research, iPOLL [distributor], accessed June 1, 2016. 5. CBS News, CBS News Poll, August 2002 [survey question], USCBS.081102.R44, CBS News [producer], Cornell University, Ithaca, N.Y.: Roper Center for Public Opinion Research, iPOLL [distributor], accessed June 1, 2016; Gallup Organization, Gallup Poll, July 1999 [survey question], USGALLUP.072099.R9, Gallup Organization [producer], Cornell University, Ithaca, NY: Roper Center for Public Opinion Research, iPOLL [distributor], accessed June 1, 2016. 6. Time, Time/Yankelovich, Skelly, and White Poll, March 1983 [survey question], USYANK.838614.R27H, Yankelovich, Skelly & White [producer], Storrs, Conn.: Roper Center for Public Opinion Research, iPOLL [distributor], accessed February 29, 2016. 7. The partisan divide persists when one accounts for age, gender, income, race, ethnicity, and level of education. See the Methodological Appendix, table A2, for these results: https:// dataverse.harvard.edu/dataverse/readmylips. 8. The IRS estimates tax compliance at about 83 percent—that is to say, about 17 percent of the total “amount of tax liability faced by taxpayers” is not paid on time. IRS, “IRS Releases New Tax Gap Estimates; Compliance Rates Remain Statistically Unchanged from Previous Study,” January 6, 2002, https:// www.irs.gov/uac/irs-releases-new-tax-gap-estimates-compliance -rates-remain-statistically-unchanged-from-previous-study.

[ 247 ]

notes to chapter 1 9. For a review of this literature, see Lars P. Feld and Bruno S. Frey, “Trust Breeds Trust: How Taxpayers Are Treated,” Economics of Governance 3, no. 2 (2002): 87–99. 10. Partisans among my interviewees used slightly different language to describe the group to which one is responsible. Rather than refer to the collective as “society” or “the community,” Republicans among my interviewees tended to say “everyone,” “all of us,” or “each other.” Even if this apparent rhetorical difference held up in a quantitative survey, it would be difficult to say whether it had substantive meaning. Perhaps Republicans are simply more averse to words linguistically related to “socialism” or “communism.” Alternatively, the difference of language might mean that Republicans and Democrats actually see the responsibility of taxpaying in different terms. Republicans may perceive the responsibility of taxpaying as a kind of compact between individuals (e.g., “each other”), rather than a duty to the collective as a whole (“society”). But Republicans do not always shun the notion of a group entity to whom one is responsible; Republican interviewees frequently described taxpaying as a responsibility to the nation. 11. Up to this point, I have focused on quotations from my interviewees, rather than the participants in my national survey. Interviews are an excellent venue to explore complex and subtle ideas like responsibility and civic duty. But in this section, the survey data come in handy. The question of immigration broaches sensitive topics about race and ethnicity. As Bonnie’s aside suggests (“I’m half Spanish, by the way”), interviewees may have been hesitant to express or appear to express racially motivated attitudes. So I rely more heavily on anonymous survey data in this section of the chapter. 12. For the details of immigrant taxpaying, please see appendix A.

[ 248 ]

notes to chapter 1 13. German Marshall Fund of the United States, the Compagnia di San Paolo, Italy, the Barrow Cadbury Trust, United Kingdom, and the Fundacion BBVA, Spain, Transatlantic Trends Immigration Survey, August 2011 [survey question], USTNS.12IMMIG.R18E, TNS Opinion and Social Institutes [producer]. Storrs, Conn.: Roper Center for Public Opinion Research, iPOLL [distributor], accessed March 2, 2016. 14. Cable News Network, CNN/Opinion Research Corporation Poll, July 2010 [survey question], USORC.072910.R29E, Opinion Research Corporation [producer], Storrs, Conn.: Roper Center for Public Opinion Research, iPOLL [distributor], accessed March 2, 2016. 15. German Marshall Fund of the United States, the Lynde and Harry Bradley Foundation of the United States, the Compagnia di San Paolo, Italy, the Barrow Cadbury Trust, United Kingdom, and the Fundacion BBVA, Spain, Transatlantic Trends Immigration Survey, November 2010 [survey question], USTNS.11IMMIG.R07A1, TNS Opinion and Social Institutes [producer], Storrs, Conn.: Roper Center for Public Opinion Research, iPOLL [distributor], accessed March 2, 2016. 16. Though my survey does not prompt respondents to think about immigration, over fifty survey respondents explicitly oppose government services they think are available to unauthorized immigrants; twenty-four of those respondents list no other kinds of spending they object to except those used by unauthorized immigrants. Negative attitudes about immigrants are strongly correlated with educational levels, as the grammatical and spelling errors in quotes from my survey respondents will suggest. 17. Peter Burns and James G. Gimpel, “Economic Insecurity, Prejudicial Stereotypes, and Public Opinion on Immigration Policy,” Political Science Quarterly 115, no. 2 (2000): 201–25.

[ 249 ]

notes to chapter 2 Chapter 2: How the Taxpaying Experience Obscures Low-Income Taxpayers 1. Carl Davis, Kelly Davis, Matthew Gardner, Harley Heimovitz, Sebastian Johnson, Robert S. McIntyre, Richard Phillips, Alla Sapozhnikova, and Meg Wiehe, “Who Pays? A Distributional Analysis of the Tax Systems in All 50 States,” Institute on Taxation and Economic Policy, January 2015, http://www .itep.org/pdf/whopaysreport.pdf. For more on who pays taxes and how much, see appendix A. 2. It is worth noting that interviewees tend to think of a “taxpayer” as a man; at least, no one explicitly imagines a woman. This may be because of unconscious assumptions about gender that are specific to taxpaying—for instance, that it is men who work outside the home, or that fiscal matters are “man’s work”—or simply because “male” is the neutral or default category in most Americans’ thinking. 3. The correlation of income with describing oneself as a taxpayer, even controlling for homeownership and employment status, is demonstrated in table A4 of the Methodological Appendix: https://dataverse.harvard.edu/dataverse/readmylips. 4. In calling a tax “easy to pay,” I am referring only to the procedure by which it is paid. I mean that the tax is (1) predictable, (2) occurring automatically and in small increments, and (3) with little or no paperwork on the part of the taxpayer. Thus a tax can be easy to pay, but also expensive. Sales and excise taxes usually fall into this category, as well as payroll taxes for most wage earners. 5. The interviewees’ answers are largely the same. The federal income tax is volunteered by twenty interviewees (41 percent). Thirteen interviewees (27 percent) choose the sales tax. The property tax and the payroll tax are each chosen by 12 percent of interviewees.

[ 250 ]

notes to chapter 2 6. For each respondent, I have self-reported information about their household income and its sources, their employment, their marital status, number of dependents, and whether they own their home. To estimate the federal income and payroll taxes paid by the survey respondents, I relied on TAXSIM, a program from the National Bureau of Economic Research that calculates federal and state income tax liabilities from survey data. To calculate sales tax levels, I turned to the Institute for Taxation and Economic Policy’s “Who Pays,” a report detailing the average level of taxes paid, by state, for taxpayers in each income quintile. For property taxes, I relied on countylevel data from the Tax Policy Center. For details of my tax estimation process, see the Methodological Appendix: https:// dataverse.harvard.edu/dataverse/readmylips. 7. Compared to my survey respondents, my interviewees and I agree substantially more often about what their biggest tax is. There are several plausible explanations for why. First, my estimates for the interviewees’ taxes are probably more accurate. In the course of our discussions I got to know the interviewees more than I did the survey respondents, and thus I tend to have a more complete picture of their respective financial situations. In addition, the interview process may have encouraged respondents to think more carefully about their tax obligations than someone filling out a survey online. 8. Nine hundred and forty- six respondents gave enough demographic information for me to create the tax estimates. Fortyseven respondents are not included in the table because they list more than one kind of tax as most expensive, such as the respondent who mentions “federal income and property tax.” The remaining respondents give a response that could not be coded because it was too vague (e.g., “the taxes taken out of

[ 251 ]

notes to chapter 2 our pay checks”), listed another kind of tax (e.g., “city tax”), or simply said they did not know for sure. 9. Two other interviewees were also asked what taxes appeared on their paystub, but had a paystub on hand and read it aloud to me, and so I could not judge which taxes they would have recalled without a reminder. It is worth noting, also, that the interviewees do not see Social Security and Medicare taxes as a contribution to a personal account; but they know that these are taxes that pay for current retirees. 10. The Social Security tax is a flat tax on wages up to about $118,000 a year. All earnings above about $118,000 a year are free from the payroll tax. As a result, high earners pay a lower effective Social Security tax rate than other Americans. 11. For more on the regressivity of state taxes, see Carl Davis, Kelly Davis, Matthew Gardner, Harley Heimovitz, Sebastian Johnson, Robert S. McIntyre, Richard Phillips, Alla Sapozhnikova, and Meg Wiehe, “Who Pays? A Distributional Analysis of the Tax Systems in All 50 States,” Institute on Taxation and Economic Policy, January 2015, http://www.itep.org/pdf /whopaysreport.pdf. 12. Still, the total expense can be startling. Throughout her interview, Alexa shows herself to be exceptionally adept at mental arithmetic, so I ask her to give me a rough estimate of how much she spends on grocery tax each year. “Well, I spend about $500 in groceries in a month, let’s see times 7.25 percent . . . probably a good 500 dollars” a year, she concludes with audible surprise. “Yes and that’s a whole lot. I never really think about it that way. So, yes, that’s a lot of money actually.” Alexa previously guessed that the sales tax was the biggest tax her family paid, but even so, the total was not something she had taken into account.

[ 252 ]

notes to chapter 2 13. The most comprehensive analysis of this question is Lawrence Zelenak, “The Conscientious Legislator and Public Opinion on Taxes,” Loyola University Chicago Law Journal 40, no. 2 (2009): 369. 14. In fact, Michael likely overestimated the progressivity of the federal income tax because of his unfamiliarity with marginal tax rates. See chapter 4 of this book. 15. In 2013 the EITC lifted about 6.2 million people out of poverty, including about 3.2 million children. See Center on Budget and Policy Priorities, “Policy Basics: The Earned Income Tax Credit,” January 15, 2016, http://www.cbpp.org/research /federal-tax/policy-basics-the-earned-income-tax-credit. 16. Christopher Howard, “The Hidden Side of the American Welfare State,” Political Science Quarterly 108, no. 3 (1993): 403– 36; C. Faricy and C. Ellis, “Public Attitudes toward Social Spending in the United States: The Differences between Direct Spending and Tax Expenditures,” Political Behavior 36 no. 1 (2014): 53–76. 17. Suzanne Mettler, “Reconstituting the Submerged State: The Challenges of Social Policy Reform in the Obama Era,” Perspectives on Politics 8, no. 3 (2010): 803–24. 18. There are not, to my knowledge, lifetime usage data about the EITC. About 20 percent of tax filers claimed the EITC in 2011 alone. 19. My respondents’ examples of how they used their EITC benefits are typical. Sarah Halpern-Meekin, Kathryn Edin, Laura Tach, and Jennifer Sykes, It’s Not Like I’m Poor: How Working Families Make Ends Meet in a Post-Welfare World (Berkeley: University of California Press, 2015). 20. Mettler, “Reconstituting the Submerged State.” 21. Research suggests that EITC benefits are primarily used by low-income working families to cover necessities or, if possible,

[ 253 ]

notes to chapter 2 to accrue some savings. Halpern-Meekin, Edin, Tach, and Sykes, It’s Not Like I’m Poor. 22. Isaac William Martin, The Permanent Tax Revolt: How the Property Tax Transformed American Politics. (Stanford: Stanford University Press, 2008); Isaac William Martin, Rich People’s Movements: Grassroots Campaigns to Untax the One Percent (New York: Oxford University Press, 2013); Campbell, “What Americans Think of Taxes.” 23. Zelenak, “Mitt Romney, the 47 Percent, and the Future of the Mass Income Tax,” 471. 24. Regression tables available in the Methodological Appendix: https://dataverse.harvard.edu/dataverse/readmylips. 25. The difference between high-political-information Republicans and other Americans persists even when controlling for age, gender, education, political ideology, and marital status, as well as for several different indicators for economic wellbeing (household income, employment status, and homeownership), other measures of political engagement (political knowledge, political efficacy), and whether one sees oneself as a taxpayer. See table A3 in the Methodological Appendix: https://dataverse.harvard.edu/dataverse/readmylips. 26. Of course, there are times when the last tax one has paid was actually the income or property tax. I conducted many interviews in the spring, and so someone might just have sent a check to the IRS. An interviewee who does not drive a car or own a house, and lives in a state without a sales tax, might indeed pay few taxes other than the federal income tax. Finally, one might think of income taxpaying as an ongoing process. Brandon says he pays his income taxes “every two weeks,” when he gets paid. But even excluding all the respondents who might have, by any stretch of their wording, been accurate in saying that they most recently paid income or property

[ 254 ]

notes to chapter 3 taxes, Republican interviewees are much more likely to report having most recently paid income taxes. 27. See table A5 in the online Methodological Appendix: https:// dataverse.harvard.edu/dataverse/readmylips. 28. Kaiser Family Foundation/Harvard University’s Kennedy School of Government/NPR Poll: Taxes Study, February 2003 [dataset], USICR2003-NPR012, Version 2. ICR—International Communications Research [producer], Cornell University, Ithaca, N.Y.: Roper Center for Public Opinion Research, RoperExpress [distributor], accessed July 27, 2016. National Survey of Americans’ Views on Taxes, 2003, National Public Radio/Kaiser Family Foundation/Kennedy School of Government. 29. See table A4 in the Methodological Appendix: https:// dataverse.harvard.edu/dataverse/readmylips.

Chapter 3: Where Should Tax Money Go? 1. Page and Jacobs, Class War? See also Free and Cantril, The Political Beliefs of Americans. 2. Mettler, “Reconstituting the Submerged State”; Joe Soss and Sanford F. Schram, “A Public Transformed? Welfare Reform as Policy Feedback,” American Political Science Review 101, no. 1 (2007): 111. 3. Shrimp have indeed been made to run on a treadmill. In the Chronicle of Higher Education, marine biologist David Scholnick defended his work as intended to assess the bacterial contamination rates of an important food source. He notes that the treadmill cost less than $50 to make, and that he paid for it himself, without taxpayer funds. A YouTube video of the running shrimp in question, accompanied by the “Benny Hill” theme song, had received almost 2 million views as of February 11, 2015.

[ 255 ]

notes to chapter 3 4. Ramsey Cox, “Coburn Tells Interior to Stop Funding ‘Sheep Counting’ Studies,” The Hill, April 30, 2013, http://thehill.com /blogs /floor -action /senate /296995 -coburn -tells -doi -to -stop -funding-sheep-counting-studies; “McCain Misfires at Grizzlies,” New York Times editorial, March 12, 2008, http://www .nytimes.com/2008/03/12/opinion/12wed4.html. 5. Public spending on family planning is not mentioned frequently enough to be included in figure 3.1 but nonetheless fits the pattern of salience among a small group of angry partisans. Though surveys show that a majority of Democrats are supportive of these services, when they are asked about them, family planning is a form of government spending that does not leap to their minds. While 8 percent of Republicans describe themselves as upset about birth control, abortion, or Planned Parenthood, no Democratic survey respondents spontaneously describe themselves as glad to pay for these services. 6. Katrina Trinko, “Leonardo DiCaprio Wants You to Vote. So?,” column, USA Today, October 17, 2012, http://www.usatoday .com /story /opinion /2012 /10 /16 /column -leonardo -dicaprio -wants-you-to -vote-so/1637373/. 7. Lindsay Koshgarian, “Penny on the Dollar: US Foreign Aid Is about One Percent of Spending,” National Priorities Project, August 12, 2014, https://www.nationalpriorities.org/blog /2014/08/12/penny-dollar-us-foreign-aid-about-one-percent -spending/; Max Fisher, “The U.S. May Cut Aid to Egypt. Five Reasons That’s a Good Idea (and Six Why It’s a Bad Idea),” Washington Post, October 9, 2013, https://www.washingtonpost .com/news/worldviews/wp/2013/10/09/the-u-s-may-cut-aid -to -egypt-five-reasons-thats-a-good-idea-and-six-why-its-a-bad -one/; Tim Rogers, “Drug War Do-Over: Can the U.S. Push Trafficking Out of Central America?,” Time magazine, April 4,

[ 256 ]

notes to chapter 3 2013, http://world.time.com/2013/04/04 /drug-war-do -over -can-the-u-s-push-trafficking-out-of-central-america/. 8. Moreover, the survey has already primed respondents to think about the problems in “developing countries such as those in Africa, Asia, and Latin America,” but does not mention the Middle East—a choice that may have encouraged respondents to think about hunger and disease, rather than war. 9. See table A7 in the online Methodological Appendix: https:// dataverse.harvard.edu/dataverse/readmylips. 10. Jeff Manza, Fay Lomax Cook, and Benjamin I. Page, Navigating Public Opinion: Polls, Policy, and the Future of American Democracy (New York : Oxford University Press, 2002). 11. It is unclear precisely what Marjorie is referring to; the 9/11 attackers attended a number of Western universities, including universities in the United States. See Peter Bergen and Swati Pandey, “The Madrassa Myth,” New York Times, June 14, 2005, http://www.nytimes.com/2005/06/14/opinion/the -madrassa-myth.html?mtrref=www.google.com&assetType= opinion&_r=0. Al Qaeda recruiter Anwar al-Awlaki, a U.S. citizen, claimed to be a foreign national in order to receive U.S. AID funding for his college degree at Colorado State University. See Scott Shane, “National Security Archive Electronic Briefing Book No. 529,” George Washington University National Security Archive, September 15, 2015, http://nsarchive.gwu.edu/NSAEBB/NSAEBB529-Anwar-al -Awlaki-File/. 12. In addition, military spending is strongly associated with government waste—a subject that makes up the bulk of chapter 5 in this book. 13. The Center for Budget and Policy Priorities says “safety net programs” make up 10 percent of the federal budget. Their calculation does not include means-tested healthcare programs,

[ 257 ]

notes to chapter 3 such as Medicaid and CHIP, which cost about $362 billion annually. See Center on Budget and Policy Priorities, “Policy Basics: Where Do Our Federal Tax Dollars Go?,” March 4, 2016,

http://www.cbpp.org/research/federal-budget/policy

-basics-where-do -our-federal-tax-dollars-go. 14. The “discretionary” budget is spending that Congress can decide how to allocate on an annual basis. The other part of the budget is mandatory spending, which is mostly Social Security, Medicare, and veterans’ benefits. 15. One might think that earned benefits like Social Security disability, and unemployment and workers’ compensation would be understood differently from income-supplement programs. But respondents regularly talked about unemployment and disability in the same breath as “welfare.” 16. Medicaid is the means-tested healthcare program for the poor; Medicare is the healthcare program for elderly retirees that is paid for with payroll taxes. Federal law bars unauthorized immigrants from receiving Medicare or Medicaid. 17. The other common answer to this question is “corporations.” See chapter 5 in this book for more on attitudes about corporations. 18. “Five times apiece” does not mean they merely use a relevant phrase repeatedly in the course of a few sentences. I count a reference to welfare abuse as new only when it is in answer to a different question. 19. The program most commonly associated with the term welfare is Aid to Families with Dependent Children (AFDC), a program that once provided monetary assistance to poor children’s families. It was created in 1935 and eliminated in 1996 as a part of welfare reform. AFDC was replaced with Temporary Assistance to Needy Families (TANF), which, as the name would suggest, is temporary. Different states have slightly different

[ 258 ]

notes to chapter 3 policies, but in general federal TANF funds are available to an adult for a maximum of sixty months. 20. The Center on Budget and Policy Priorities describes 11 percent of federal spending as going to social safety net programs. See its article “Policy Basics: Where Do Our Federal Tax Dollars Go?,” March 4, 2016, http://www.cbpp.org /research/federal-budget/policy-basics-where-do -our-federal -tax-dollars-go. 21. The correlation between underestimating the taxpayer population and opposing welfare spending holds up, and in some models strengthens, with additional controls for gender, education, income, employment status, and political engagement. See table A6 in the Methodological Appendix: https:// dataverse .harvard .edu /dataverse /readmylips. Note also that, though the statistical significance declines in the interaction model, the effect appears to be concentrated among self-described taxpayers who underestimate the taxpaying population. 22. Figure 3.3 and these predicted probabilities are drawn from the results of the second model in table A6 (see preceding note 21), with the other variables held at their means. This approach isolates the relationship between estimate of the taxpayer population and opposition to welfare spending, controlling for other demographic factors. However, the relationship is apparent even in the raw data. Overall, 47 percent of conservative Republicans in the survey complain about welfare. But among the sixty- seven conservative Republicans in my survey who think less than half of U.S. adults pay taxes, 63 percent complain about welfare. By contrast, among the sixty-eight conservative Republicans who think at least three-quarters of U.S. adults pay taxes, only 34 percent say they are upset about a welfare program.

[ 259 ]

notes to chapter 3 23. The popularity of Social Security in my Q14 survey is in keeping with other national survey results. Americans as a rule say they do not mind the costs of Social Security because they value its benefits, and also say they would be willing to pay more to ensure the program’s longevity. See Elisa A. Walker, Virginia P. Reno, and Thomas N. Bethell, “Americans Make Hard Choices on Social Security: Report Highlights,” National Academy of Social Insurance, October 2014, https:// www.nasi .org /sites /default /files /research /HIGHLIGHTS _Americans_Make_Hard_Choices_on_SS.pdf. 24. Theda Skocpol, “Targeting within Universalism: Politically Viable Policies to Combat Poverty in the United States,” pp. 411–436, in The Urban Underclass, ed. Christopher Jencks and Paul E. Peterson (Washington, D.C.: Brookings Institution Press, 1991); Robert Greenstein, “Universal and Targeted Approaches to Relieving Poverty: An Alternative View,” pp. 437– 59, in The Urban Underclass. 25. For more on public understanding of the payroll tax, see chapter 2 of this book. 26. Gallup, “Social Security,” 2015, http://www.gallup.com/poll /1693/Social-Security.aspx. 27. Patsy also mentioned her support for raising the cap on Social Security contributions, though not in the context of preserving the program’s solvency. For more on the Social Security contribution cap, see appendix A. 28. Social Security retirement and disability benefits are based on one’s work history; one does not receive them if one has not worked, and one must also have worked recently in order to qualify. The rule of thumb is that to qualify for disability you need to have worked for at least ten years total, and five years in the last ten years before becoming disabled. There are some protections in place for people who become totally disabled

[ 260 ]

notes to chapter 4 at a young age, before they are able to have worked a full ten years. Details are available at ssa.gov. 29. The other context in which healthcare spending is mentioned negatively by the survey respondents is that of politicians receiving better healthcare plans than their constituents, as in the case of a 40-year-old man from North Carolina who complained about “politicians’ big salaries and perks and their pensions and medical.” For more on attitudes about politicians’ perks, see chapter 5. 30. Bonnie’s policy solution is not simply increasing border enforcement. She clarifies that she does not “mind people wanting to immigrate here.” In fact, she says she supports “a path for them to become citizens” specifically because such a strategy would mean they would pay taxes.

Chapter 4: How the Taxpaying Experience Shapes Attitudes about Progressivity 1. National Opinion Research Center, University of Chicago, General Social Survey 2008, April 2008 [survey question], USNORC.GSS08J.Q1391, National Opinion Research Center, University of Chicago [producer], Storrs, Conn.: Roper Center for Public Opinion Research, iPOLL [distributor], accessed February 22, 2016. Flat tax support is higher among Republicans; about half of Republicans support a flat tax. See CBS News, CBS News Poll: 2012 Presidential Election/Economy/Foreign Affairs, November 2011 [dataset], USCBS2011– 11A, Version 2. CBS News [producer], Cornell University, Ithaca, N.Y.: Roper Center for Public Opinion Research, RoperExpress [distributor], accessed July 27, 2016. 2. Zelenak, “The Conscientious Legislator and Public Opinion on Taxes,” 369.

[ 261 ]

notes to chapter 4 3. Page and Jacobs, Class War? 4. Adam is likely referring to the statistic that the top eightyfive wealthiest people in the world own as much as the bottom half of the world’s population. See Laura Shin, “The 85 Richest People in the World Have as Much Wealth as the 3.5 Billion Poorest,” Forbes, January 23, 2014, http://www.forbes .com/sites/laurashin/2014/01/23/the-85-richest-people-in-the -world-have-as-much-wealth-as-the-3–5-billion-poorest/. 5. Leslie McCall, The Undeserving Rich: American Beliefs about Inequality, Opportunity, and Redistribution (New York: Cambridge University Press, 2013); Leslie McCall and Lane Kenworthy, “Americans’ Social Policy Preferences in the Era of Rising Inequality,” Perspectives on Politics 7, no. 3 (2009): 459–84. 6. M. I. Norton and D. Ariely, “Building a Better America—One Wealth Quintile at a Time,” Perspectives on Psychological Science 6, no. 1 (2011): 9–12. 7. Sorapop Kiatpongsan and Michael I. Norton, “How Much (More) Should CEOs Make? A Universal Desire for More Equal Pay,” Perspectives on Psychological Science 9, no. 6 (2014): 587–93. 8. As Zelenak notes, Americans “suffer from a certain failure of imagination with respect to how high the highest income might be.” Zelenak, “The Conscientious Legislator and Public Opinion on Taxes,” 369. 9. In basing taxation on one’s capacity to pay, these respondents reiterate the arguments put forward by some of the earliest proponents of the progressive income tax. For more on the campaigns for a modern income tax, see Ajay K. Mehrotra, Making the Modern American Fiscal State: Law, Politics, and the Rise of Progressive Taxation, 1877–1929 (New York: Cambridge University Press, 2014). 10. In this concern, my interviewees are anything but unique. For more on how attitudes about work effort influence support

[ 262 ]

notes to chapter 4 for progressive taxation and spending, see Skocpol, “Targeting within Universalism: Politically Viable Policies to Combat Poverty in the United States”; Alberto Alesina and GeorgeMarios Angeletos, “Fairness and Redistribution,” American Economic Review 95, no. 4 (2005): 960–80; Martin Kreidl, “Perceptions of Poverty and Wealth in Western and Post-Communist Countries,” Social Justice Research 13, no. 2 (2000): 151–76; Adrian Furnham, “The Protestant Work Ethic, Human Values and Attitudes towards Taxation,” Journal of Economic Psychology 3, no. 2 (1983): 113–28. 11. A handful of other interviewees do describe particular luxuries as unearned, but do not connect those incidents with a need for progressive taxation. Rosemary is angry that “the CEO of Anthem Blue Cross” has a private plane, while his company is “charging their health policy holders mega-tons of money and turning down procedures and all that kind of thing.” 12. It is significant, also, that Joe, knowing it is unlikely that someone actually paid 90 percent of his or her income in taxes, imagines that “deductions” explain the difference. 13. Pew Research Center for the People and the Press Political Survey, December 2011 [survey question], USPSRA.122011. R52, Princeton Survey Research Associates International [producer]. Storrs, Conn.: Roper Center for Public Opinion Research, iPOLL [distributor], accessed March 2, 2016. 14. The IRS website has dozens of forms dedicated to obscure provisions like the American Samoa Economic Development Credit, the Distilled Spirits Credit, and the Mine Rescue Team Training Credit. 15. The Earned Income Tax Credit phases out as one earns more money, so normally earning a few extra dollars would not have a big effect on one’s tax refund. But the credit is much larger for parents, and so they can lose a substantial amount

[ 263 ]

notes to chapter 4 of money when their children hit adulthood—even if their income is unchanged and they are still financially supporting their kids. Wilma believes she may have missed out on “a good chunk of rebate,” as she puts it, because of her son’s age. “So I didn’t get it that year and I was getting it all those years because I was raising a son by myself,” she concludes. 16. Joe may not have been aware that Clinton-era tax rates had been partially restored when, in 2013, the Bush tax cuts were allowed to expire for the top income-tax bracket. See Ezra Klein, “Democrats Don’t Want to Go Back to Clinton-Era Rates,” Washington Post, September 5, 2012, https://www.washingtonpost.com /blogs/ezra-klein/wp/2012/09/05/democrats-dont-want-to -go -back-to-clinton-era-rates/; Jonathan Weisman, “Senate Passes Legislation to Allow Taxes on Affluent to Rise,” New York Times, January 1, 2013, http:// www.nytimes .com /2013 /01 /02 /us /politics/senate-tax-deal-fiscal-cliff.html. 17. Joel Slemrod, “The Role of Misconceptions in Support for Regressive Tax Reform,” National Tax Journal 59, no. 1, (2006): 57–75. 18. Zelenak, “The Conscientious Legislator and Public Opinion on Taxes,” 369. 19. For details of how much Americans at different income levels pay in federal income tax, see appendix A. 20. Though on paper, corporations should pay a relatively high tax rate in the United States, the “effective” tax rate—the rate companies actually pay—is much lower. For details, see appendix A. 21. The “Double Irish with a Dutch sandwich” is a tax maneuver used by technology companies that involves routing patent royalties through several European subsidiaries before sending the funds to a tax haven. Charles Duhigg and David Kocieniewski, “Apple’s Tax Strategy Aims at Low-Tax States and Nations,” New York Times, April 29, 2012, http://www.nytimes

[ 264 ]

notes to chapter 5 .com /2012 /04 /29 /business /apples -tax-strategy-aims -at -low -tax-states-and-nations.html.

Chapter 5: (How) Is Tax Money Wasted? 1. As this quote suggests, Bonnie expressed some mixed feelings about the parties in her interview. However, she identified as a Republican in her survey, and so is listed as such here. 2. While policymakers in general estimate government waste at a few pennies on the dollar, some public figures may have encouraged high waste estimates. Ronald Reagan’s Grace Commission reported in 1984 that “one third of all income taxes is consumed by waste and inefficiency.” One result of high waste estimates may be that Americans imagine that budgets can be cut without a reduction in service quality. See Susan Welch, “The ‘More for Less’ Paradox: Public Attitudes on Taxing and Spending,”  Public Opinion Quarterly  49, no. 3 (1985): 310–16. Also relevant: David O. Sears and Jack Citrin, Tax Revolt: Something for Nothing in California (Cambridge: Harvard University Press, 1982), 51. 3. People often pick quite large percentages when asked to estimate something. By way of comparison, I also asked the interviewees to estimate waste in corporations, small businesses, and charities. On average, they estimated corporations waste about 28 percent of their money, small businesses 11 percent, and charities 30 percent. 4. Marc J. Hetherington, Why Trust Matters: Declining Political Trust and the Demise of American Liberalism (Princeton: Princeton University Press, 2005); Derek Bok, “Measuring the Performance of Government,” pp. 55–76, in Why People Don’t Trust Government, ed. Joseph S. Nye, Philip Zelikow, and David C. King (Cambridge: Harvard University Press, 1997).

[ 265 ]

notes to chapter 5 5. Gloria was not asked to list everything she deems wasteful. However, if Gloria believes Planned Parenthood and arts funding to make up half the federal budget, she is deeply mistaken. Planned Parenthood receives about $500 million a year in government funds, mostly in the form of state and federal reimbursements via Medicaid. Arts funding was about $1.7 billion in 2013. Together, they make up less than one-thousandth of the federal budget. See Danielle Kurtzleben, “Fact Check: How Does Planned Parenthood Spend That Government Money?,” It’s All Politics, NPR, August 5, 2015, http://www.npr .org/sections/itsallpolitics/2015/08/05/429641062/fact-check -how -does -planned -parenthood -spend -that -government -money; Congressional Budget Office, “Options for Reducing the Deficit: 2014–2023,” November 13, 2013, https://www.cbo .gov/content/options-reducing-deficit-2014–2023. 6. Because respondents could list many things they considered waste, these categories are not mutually exclusive. A respondent could be angry about Planned Parenthood (a program disliked on principle), the “bridge to nowhere” (an example of pork spending), and redundant government agencies (inefficiency). Each complaint was counted, and about a quarter of responses were coded in more than one category. Other definitions of waste were present but infrequent. Forty-two respondents made reference to campaigns and elections, for example, “political ads,” and twelve talked about outright criminal activity (e.g., “fraud” or “embezzlement”). 7. Respondents’ estimates of the price of the hammer ranged from $200 to $25,000. The overpriced hammer appears to be apocryphal, while the toilet seat, intended for an antisubmarine plane, was indeed originally priced at $640. See “Adjusting the Bottom Line,” Time magazine, February 18,

[ 266 ]

notes to chapter 5 1985, http://content.time.com/time/magazine/article/0,9171 ,960748,00.html. Sydney J. Freedberg, Jr., “The Myth of the $600 Hammer,” Government Executive, December 7, 1998; http:// www.govexec .com /federal -news /1998 /12 /the -myth -of-the-600-hammer/5271/. At least one other country has a well-known overpriced toilet story. “Tallinn City Sent EEK 2.3 Million Down the Toilet,” Baltic Business News, January 21, 2002,

http://www.balticbusinessnews.com/?PublicationId=

84d63cec-3a77–4038–982c-0d23d65bcbb5. 8. As we saw in chapter 3, views of the military are strongly partisan: 30 percent of Democrats in the Q14 survey, and 14 percent of Republicans, list military spending among the kinds of spending they deem wasteful. 9. Congressional pensions require at least five years of service, and there are significant age limits and deferral requirements. Patrick Purcell, “Retirement Benefits for Members of Congress,” Congressional Research Service, January 21, 2005, http:// www.senate .gov /reference /resources /pdf /RL30631 .pdf. 10. The “bridge to nowhere” was a $395 million project considered and partially funded by Congress in the mid-2000s, for a bridge between Ketchikan, Alaska, and nearby Gravina Island. The phrase appeared prominently in the campaign speeches of 2008 Republican vice presidential candidate Sarah Palin. 11. See table A8 in the online Methodological Appendix: https:// dataverse.harvard.edu/dataverse/readmylips. 12. Political science tends to confirm the public intuition that lobbying is an extremely profitable enterprise. “Firms that spend more on lobbying in a given year pay lower effective tax rates in the next year.” See Brian Kelleher Richter, Krislert Samphantharak, and Jeffrey F. Timmons, “Lobbying

[ 267 ]

notes to chapter 5 and Taxes,” American Journal of Political Science 53, no. 4 (2009): 893–909. See also Raquel Alexander, Stephen W. Mazza, and Susan Scholz, “Measuring Rates of Return on Lobbying Expenditures: An Empirical Case Study of Tax Breaks for Multinational Corporations,” Journal of Law and Politics 25 (2009): 401. 13. Linda McMahon, who with her husband developed the professional wrestling company World Wrestling Entertainment, ran twice for Senate in Connecticut. Then-Representative Chris Murphy defeated McMahon to become senator in 2012. 14. Author’s analysis of the IRS Oversight Board’s Taxpayer Attitude Survey, 2006–2010. 15. The interviewees are not exceptional in this regard. A recent survey by Pew finds that a third of Americans “like” or “love” doing their taxes. See Pew Research Center, “A Third of Americans Say They Like Doing Their Income Taxes,” April 11, 2013, http:// www.people -press .org /2013 /04 /11 /a -third -of -americans-say-they-like-doing-their-income-taxes/. 16. Original news reports priced the haircut at $200 and wrongly claimed that President Clinton’s haircut delayed flights at Los Angeles International Airport by several hours. Katy Steinmetz, “Top 10 Expensive Haircuts,” Time magazine, April 2, 2010, http://content.time.com/time/specials/packages/article /0,28804,1977252_1977334,00.html. 17. The anger about salaries and benefits discussed here is focused on high-level elected officials, not rank-and-file government workers; respondents coded as caring about perks talk about the president, senators, members of the House of Representatives, or use words like “legislators,” “officials,” “politicians,” and “leaders.” The latest salaries of top federal officials are available at https:// pressgallery.house .gov /member -data /salaries. Concerns about lower-level government workers

[ 268 ]

notes to conclusion being overpaid or not working hard enough are included in the category “inefficiency,” along with other critiques of the government bureaucracy. 18. Despite the romantic “Mr. Smith Goes to Washington” image of the amateur politician, the reality is that a nonprofessional legislature tends to be especially beholden to wealthy special interests. “Lawmakers are likely to rely on businesses’ proposals when they lack the time and resources to develop legislation on their own.” See Alexander Hertel-Fernandez, “Who Passes Business’s ‘Model Bills’? Policy Capacity and Corporate Influence in US State Politics,” Perspectives on Politics 12, no. 3 (2014): 582–602. 19. David W. Brady and Sean M. Theriault, “A Reassessment of Who’s to Blame: A Positive Case for the Public Evaluation of Congress,” pp. 175–92, in What Is It about Government That Americans Dislike?, ed. John R. Hibbing and Elizabeth Theiss-Morse (New York: Cambridge University Press, 2001).

Conclusion 1. Isaac William Martin, The Permanent Tax Revolt: How the Property Tax Transformed American Politics (Stanford: Stanford University Press, 2008). 2. In the late nineteenth century, when the foreign-born population was at its all-time peak, the federal government was funded largely by tariffs. 3. Thomas Piketty, Capital in the 21st Century (Cambridge: Harvard University Press, 2014). 4. Katherine S. Newman and Rourke O’Brien,  Taxing the Poor: Doing Damage to the Truly Disadvantaged (Berkeley: University of California Press, 2011). 5. See table A4 in the online Methodological Appendix: https:// dataverse.harvard.edu/dataverse/readmylips.

[ 269 ]

notes to conclusion 6. Philip Converse, “The Nature of Belief Systems in Mass Publics,” pp. 206–61, in Ideology and Discontent, ed. David E. Apter (New York: Free Press of Glencoe). 7. Christopher H. Achen, “Mass Political Attitudes and the Survey Response.” American Political Science Review 69, no. 4 (1975): 1218–31. 8. Michael X. Delli Carpini, and Scott Keeter, “Measuring Political Knowledge: Putting First Things First,” American Journal of Political Science 37, no. 4 (1993) 1179–206. 9. As political scientist Arthur Lupia notes, assessments of voter competence can be undermined by “elitism.” “Most politicalknowledge questions are not derived from a replicable or transparent logic about how their answers  bear on a voter’s ability to make decisions of a particular quality in the voting booth. Instead the questions test information that academics, journalists, and politicos value.” See Arthur Lupia, “How Elitism Undermines the Study of Voter Competence,” Critical Review 18, nos. 1–3 (2006): 217–32. 10. Mayling Birney, Michael J. Graetz, and Ian Shapiro, “Public Opinion and the Push to Repeal the Estate Tax,” National Tax Journal 59, no. 3 (2006): 439–61. 11. Fay Lomax Cook, Lawrence R. Jacobs, and Dukhong Kim, “Trusting What You Know: Information, Knowledge, and Confidence in Social Security,”  Journal of Politics  72, no. 2 (2010): 397–412. 12. I use the word confessing advisedly; when people believe their views to be in the minority, they are less likely to express themselves. Diana C. Mutz, “The Influence of Perceptions of Media Influence: Third Person Effects and the Public Expression of Opinions,” International Journal of Public Opinion Research 1, no. 1 (Spring 1989): 3–23.

[ 270 ]

notes to appendix a 13. E.R.A. Seligman, Essays in Taxation (New York: Macmillan and Co., 1895), 72.

Appendix A: The U.S. Tax System: A Brief Introduction 1. Many taxes that have a single rate are regressive in their effect. A tax on groceries is regressive because food makes up a big part of the budget of poor people. The bottom 20 percent of earners spend over a third of their income on food. Annemarie Kuhns, “Food Spending as a Share of Income Declines as Income Rises,” USDA Economic Research Service, April 12, 2016, http://www.ers .usda .gov /data -products /chart -gallery /detail .aspx?chartId=40096&ref=collection&embed=True&widgetId =39734. Wealthy people spend a much smaller percentage of their money on food, and therefore pay a smaller percentage of their income in grocery taxes. Grocery taxes are charged in fourteen states, though most of these states tax food at lower rates than other goods or offer rebates for low-income people. 2. An income tax had previously been used to fund the American military during the Civil War. Prior to the institution of an income tax, tariffs were the primary source of federal revenue. 3. Tax Policy Center, “2016 Individual Income Tax Rates, Standard Deductions, Personal Exemptions, and Filing Thresholds,” October 15, 2016, http://www.taxpolicycenter.org /statistics/personal-exemption-and-standard-deduction. 4. Table 3.6 Returns with Modified Taxable Income: Taxable Income and Tax Classified by Each Rate at Which Tax Was Computed and by Marital Status, Tax Year 2013, in IRS, 2015. “SOI Tax Stats—Individual Statistical Tables by Tax Rate and Income Percentile,” 2015, https://www.irs.gov/uac/soi-tax-stats -individual-statistical-tables-by-tax-rate-and-income-percentile.

[ 271 ]

notes to appendix a 5. Tax Policy Center, “Historical Highest Marginal Income Tax Rates,” February 19, 2015, http://webarchive.taxpolicycenter .org/taxfacts/Content/PDF/toprate_historical.pdf. 6. It is possible, of course, that a pay raise might negatively affect one’s eligibility for various tax credits and public programs, and so it is conceivable that after a raise a worker might see only a small increase, or even a reduction, in his or her disposable income. But this is not a result of the tax brackets. 7. About 14 percent of households own an individual stock. Cat ownership is more than twice as common; so is gun ownership. See Matt Egan, “More US Families Own Cats Than Own Stocks,” CNN, September 9, 2014, http://money.cnn.com /2014 /09 /09 /investing /stock -market -investing -us -families /index.html. Sabrina Tavernise and Robert Gebeloff, “Share of Homes with Guns Shows 4-Decade Decline,” New York Times, March 9, 2013, http://www.nytimes.com/2013/03/10/us/rate -of-gun-ownership-is-down-survey-shows.html. 8. Will Fisher and Chye-Ching Huang, “Mortgage Interest Deduction Is Ripe for Reform,” Center on Budget and Policy Priorities, June 25, 2013, http://www.cbpp.org/research /mortgage-interest-deduction-is-ripe-for-reform. 9. Here’s an example to show how that works. Let’s imagine that Bob makes $30,000 a year and qualifies for a $1,000 deduction (i.e., for student loan interest). That deduction will save Bob $150 in taxes because his income falls in the 15 percent tax bracket (15% × $1000 = $150). Now let’s imagine that Sue makes ten times as much, $300,000, and paid the same $1,000 in student loan interest. Sue’s deduction will save her $330 in taxes because she is in the 33 percent bracket. So Sue, who is making a lot more money, gets a much larger offset than Bob for the cost of her student loans.

[ 272 ]

notes to appendix a 10. Gerald Prante, “Most Americans Don’t Itemize on Their Tax Returns,” Tax Foundation, July 23, 2007, http://taxfoundation .org/article/most-americans-dont-itemize-their-tax-returns. 11. Center on Budget and Policy Priorities, “Policy Basics: The Earned Income Tax Credit.” January 15, 2016, http://www .cbpp .org /research /federal -tax /policy -basics -the -earned -income-tax-credit. 12. Chad Stone and Chye-Ching Huang, “Putting U.S. Corporate Taxes in Perspective.” Center on Budget and Policy Priorities, October 27, 2008, http://www.cbpp.org/research/putting-us -corporate-taxes-in-perspective. 13. Government Accountability Office, “Corporate Income Tax: Effective Tax Rates Can Differ Significantly from the Statutory Rate,” 2013, http://www.gao.gov/assets/660/654957.pdf. 14. Alan J. Auerbach, “A Modern Corporate Tax,” Center for American Progress and The Brookings Institution, December

2010,

https://www.americanprogress.org/wp-content

/uploads/issues/2010/12/pdf/auerbachpaper.pdf. 15. As with the federal income tax brackets, the cap is adjusted annually; this is the cap for 2016. Social Security Administration, “Contribution and Benefit Base,” 2016, https://www.ssa.gov /oact/cola/cbb.html. 16. John A. Brittain, “The Incidence of Social Security Payroll Taxes,” American Economic Review 61, no. 1 (1971): 110–25; Jonathan Gruber and Alan B. Krueger, “The Incidence of Mandated Employer-Provided Insurance: Lessons from Workers’ Compensation Insurance,” National Bureau of Economic Research Working Papers Series, Working Paper 3557, 1990. 17. Brackets as of 2016, from IRS data. Data on the impact of the estate tax are from the Center on Budget and Policy Priorities, “Policy Basics: Where Do Federal Tax Revenues Come

[ 273 ]

notes to appendix a From?,” March 4, 2016, http://www.cbpp.org/research/policy -basics-where-do -federal-tax-revenues-come-from. 18. Chye-Ching Huang and Brandon Debot, “Ten Facts You Should Know about the Federal Estate Tax,” Center on Budget and Policy Priorities, March 23, 2015, http://www.cbpp .org /research /ten -facts -you -should -know-about -the -federal -estate-tax. 19. Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming have no state income tax. New Hampshire and Tennessee have an income tax only on dividends and interest income. Alaska, Delaware, Montana, Oregon, and New Hampshire have no state sales tax (though some Alaska localities do charge a sales tax). 20. Scott Drenkard, Liz Emanuel, and Jordan Yahiro, “State and Local Sales Tax Rates Midyear 2014,” Tax Foundation, September 16, 2014, http://taxfoundation.org/article/state-and -local-sales-tax-rates-midyear-2014. 21. Nicole Kaedling, “State Individual Income Tax Rates and Brackets,” Tax Foundation, February 8, 2016, http:// taxfoundation .org /sites /taxfoundation .org /files /docs /TaxFoundation-FF500.pdf. 22. Benjamin H. Harris and Brian David Moore, “Residential Property Taxes in the United States,” Tax Policy Center, November 2013, p. 2, http://www.brookings.edu/~/media /research/files/papers/2013/11/18-residential-property-taxes /18-residential-property-taxes-harris.pdf. 23. Drenkard, Emanuel, and Yahiro, “State and Local Sales Tax Rates Midyear 2014.” 24. Tax Policy Center, “The State of State (and Local) Tax Policy,” The Tax Policy Center Briefing Book, 2016, http://www .taxpolicycenter.org /briefing -book /how-do -state -and -local -sales-taxes-work.

[ 274 ]

notes to appendix a 25. U.S. Department of Justice, Civil Rights Division, “Investigation of the Ferguson Police Department,” March 4, 2015, https://www.justice.gov/sites/default/files/opa/press-releases /attachments /2015 /03 /04 /ferguson _police _department _report.pdf. 26. Relatedly, increases in fuel efficiency result in less tax revenue per mile driven. 27. Alcohol and Tobacco Tax and Trade Bureau, “Federal Excise Tax Increase and Related Provisions,” September 4, 2012, https://www.ttb.gov/main_pages/schip-summary.shtml2010; “State Sales, Gasoline, Cigarette, and Alcohol Tax Rates by State, 2000–2014,” Tax Foundation, April 1, 2014, http:// taxfoundation .org /article /state -sales -gasoline -cigarette -and -alcohol-tax-rates. 28. Pim Borren and Matthew Sutton, “Are Increases in Cigarette Taxation Regressive?,” Health Economics 1, no. 4 (1992): 245–53. 29. One might almost say that literally every American adult pays taxes—but for a few potential exceptions. Some of these verge on the hypothetical: are there people within the United States who live entirely “off the grid,” but do not own their land (upon which they would then owe property taxes)? Perhaps. Certainly there are people who are institutionalized and therefore do not interact with the market economy in any meaningful way. Many incarcerated people work, but earn very little and so are rarely obligated to pay income taxes; nonetheless, inmates typically pay standard sales taxes on purchases. 30. Over the past decade, there has been a concerted campaign to increase immigrant access, including undocumented immigrant access, to banking services. Shaheen Pasha, “Banking on Illegal Immigrants,” CNN, August 8, 2005; Aaron Sankin, “Undocumented Immigrant Debit Cards: Oakland Introduces Landmark New Program,” Huffington Post, February 26,

[ 275 ]

notes to appendix a 2013. For more on the financial practices of immigrants, see Anna Paulson, Audrey Singer, Robin Newberger, and Jeremy Smith, “Financial Access for Immigrants: Lessons from Diverse Perspectives,” Federal Reserve Bank of Chicago and the Brookings Institution, May 2006. 31. Institute on Taxation and Economic Policy, “Undocumented Immigrants’ State and Local Tax Contributions,” February 24, 2016, http://www.itep.org/immigration/. 32. Congressional Budget Office, “The Impact of Unauthorized Immigrants on the Budgets of State and Local Governments,” December 2007, https://www.cbo.gov/sites/default/files/110th -congress-2007–2008/reports/12–6-immigration.pdf. 33. Maria Santana, “5 Immigration Myths Debunked,” CNN, November 20, 2014, http://money.cnn.com/2014/11/20/news /economy/immigration-myths/. 34. The following paragraphs rely on the excellent research by the Institute on Taxation and Economic Policy. Citizens for Tax Justice, “Who Pays Taxes in America in 2015?” (2015). The exact percentages differ slightly depending on how you measure income. The Tax Policy Center (TPC) defines income slightly differently from the Institute on Taxation and Economic Policy: TPC includes government transfers in income and so has higher income estimates for low- to middle-income households. See Tax Policy Center, “Historical Average Federal Tax Rates for All Households,” January 20, 2015, http:// tpcprod.urban.org/taxfacts/displayafact.cfm?Docid=456. 35. Christopher Ingram, “As the Rich Become Super-Rich, They Pay Lower Taxes. For Real,” Washington Post, June 4, 2015, https://www.washingtonpost.com/news/wonk/wp/2015/06/04 /as-the-rich-become-super-rich-they-pay-lower-taxes-for-real/; Adrian Dungan, “Individual Income Tax Shares, 2012,” IRS, 2015, https://www.irs.gov/pub/irs-soi/soi-a-ints-id1506.pdf.

[ 276 ]

INDEX

Affordable Care Act, 115 Aid to Families with Dependent Children, 258n19 alcohol taxes, 10, 167, 189 anti-tax activism, xii–xiii anti-tax perceptions, ix–xi, 5 arts funding, 147, 256n5, 266n5

Bachmann, Michele, 72 Bartels, Larry, 11 Bartiromo, Maria, ix Buffet, Warren, 137–38 Bush, George W., 11, 94, 264n16

Cain, Herman, 128 Cantril, Hadley, xi Child Tax Credit (CTC), 66–72, 132 cigarettes taxes, 6, 10, 167, 189 citizenship and taxation, 2, 5, 13, 23; “fiscal citizenship,” 32 civic and moral duty of taxpaying, 3, 5, 8. 23–24, 26–41, 120, 165, 174, 180–82, 246n3 Clinton, Bill, 158–59, 160, 268n16 Clinton, Hillary, 2 Coburn, Tom, 90 Converse, Philip, 175

corporate aid (tax breaks, bailouts, subsidies), 80, 82, 85, 89, 90–91, 116, 129 corporate political influence, 142, 143, 152–54 corporate taxes, xiii, 10, 186; avoidance of, 3–4, 82, 85, 89, 129, 136–40

deductions. See tax credits and deductions defense spending. See military spending Democrat views of taxes, 21–22, 30–31, 75–76, 171; on government spending, 81–85, 89–90; on immigrants, 42–43; on percentage of taxpayers, 73–74; on tax credits, 70 discretionary federal budget, 99, 258n14 Dobbs, Lou, x “Double Dutch sandwich,” 138, 264n21

Earned Income Tax Credit (EITC), 66–72, 132, 133, 186, 253n15, 253n21, 263n15

[ 277 ]

index education spending, 79–80, 86–87 elitism, 2, 11, 16, 30, 73, 143–44, 151, 158, 161, 170; in academia, 175–76, 270n9 estate tax, 10, 167, 176, 187 excise taxes, 15, 52, 75, 189, 244n43

148–49; estimates of, 145–46, 265nn2–3; “pork” and “perks,” 144, 147, 149, 151–54, 158. See also politicians

fees and fines as revenue, 188–89 fellowship and taxes, 3, 8–9, 26, 28, 32–39, 79–80, 165, 180–81; “community of fate,” 239n17; ethnic and economic divisions and, 240n22; “visible” and “proximate” spending, 24, 80, 85–89, 115–16 FICA taxes, 53 flat tax, 4, 5, 25, 63–64, 117–21, 130, 135–36, 138–40, 172 food stamps, 60, 69, 82, 99, 101–2 foreign aid spending, 91–97 Free, Lloyd, xi

gasoline tax, 10, 57–58, 75, 189 Gilens, Martin, 9 Goss, Stephen, 190 government spending, 79–116, 243n36; lack of transparency in, 142, 162–63 government processes, disappointment with, 142–43, 149–53, 170. See also politicians government waste, 25, 30, 142–54, 161–64; disliked programs and,

Hacker, Jacob, 11 Hansen, Susan, 244n44 healthcare spending, 80, 83, 85, 96, 110, 114–16, 257n13, 261n29 Hobbes, Thomas, 7, 239n16 Holmes, Oliver Wendell, Jr., 1

income inequality, 118, 120–22 income tax, x, xiii, 6, 10, 52–58, 63, 65–66, 184–86, 254n26; origins of, 9, 184, 271n2; filing process, 13–15, 119, 130–36, 156, 243n38, 268n15; privileged status of, 12–13, 48, 51–52; Republican focus on, 72–73, 75–78; state vs. federal, 188 immigrants and taxes, 2, 4, 24, 41–45, 47–48, 169, 190, 238n7, 249n16; healthcare and, 114 infrastructure and transportation spending, 79–80, 86 Internal Revenue Service, 31, 134, 154–57 investment income tax rates, 134–35, 137, 138, 185

Jacobs, Lawrence, xi

[ 278 ]

index Kidder, Jeffrey, 239n18

loopholes, 4–5, 14, 25, 36, 117, 119, 131–37, 140–41, 244n41 low-income taxpayers, 3–5, 6, 9, 22, 23–24, 46–52, 59–62, 64–72, 76–78, 98, 123, 125–26, 186; invisibility of, 4–5, 172–74; opposition to programs for, 46–47, 98–109 Luntz, Frank, ix Lupia, Arthur, 270n9

McCain, John, 90 McMahon, Linda, 153, 268n13 marginal taxation, 127–28, 178, 184–85 Martin, Isaac, 239n18 Mechanical Turk, 17 Medicaid, 69, 99, 101, 148, 258n13, 258n16 Medicare, 53, 55, 56–58, 100, 114, 187 military spending, 21, 82, 91–98, 99, 146, 148–49, 152, 257n12, 267n8 Murphy, Chris, 153, 268n13 Murphy, Liam, 7 Murtha, John, 152

Nagle, Thomas, 7 National Women’s Rights Convention, 1–2

non-taxpayers, resentment of, 12, 23–24, 41–49, 72–73, 76, 80–81, 110, 114–15, 166, 172 Norquist, Grover, xii

Obama, Barack, 41–42, 94, 121 Obamacare. See Affordable Care Act

Page, Benjamin, xi Paine, Thomas, 1, 8 parks and green spaces spending, 87–88 payroll taxes, 4, 10, 15, 48, 52–59, 187 Pierson, Paul, 11 Planned Parenthood and family planning programs, 147, 256n5, 266nn5–6 police and fire departments spending, 84, 88–89 politicians, complaints about, 143–44, 147, 149–54, 158–61, 261n29, 268n17 poll tax, 120–21 poor people. See low-income taxpayers “pork” and “perks.” See government waste Press, Bill, x progressive taxation, 4–5, 9, 12, 59, 63–65, 117–41, 172, 184, 186, 190–92; vs. proportional and regressive, 136, 183–84, 271n1

[ 279 ]

index property taxes, xii, xiv–xv, 6, 52–54, 75–76, 168, 188 Proposition 13, xii, xiii, 8 public understanding of tax policy, 10–15, 55, 175–80, 242n31

racism and taxes, 8–10, 28, 43–44, 169 Reagan administration, xii, 128 representation and taxation, 1–2, 174–75 Republican views of taxes, 12–13, 21–22, 24, 30–31, 171, 248n10; on government spending, 81–85, 89–90, 104; on immigrants, 42– 43; on income tax, 72–73, 75–78, 141; on percentage of taxpayers, 72–75, 103–4, 259nn21–22; on presumed non-taxpayers, 48–49, 72–73, 76, 81, 116, 172–73; on tax credits, 70–71 Romney, Mitt, 12, 48, 137–38 Ryan, Paul, 125

sales tax, xiii, 4, 6, 15, 21, 48, 52–54, 59–65, 75, 77, 173, 177, 188, 252n12 sanitation spending, 88 Schneider, Bill, x Schultz, Ed, x scientific research spending, 83, 85, 89–90, 91, 114, 116, 255n3 Seligman, E.R.A., 181–82 September 11 attacks, 97, 257n11

Shklar, Judith, 2 “sin” taxes, 167–68 social safety net spending, 4–5, 80–81, 85, 99, 103–4, 110, 166, 257n13. See also welfare system Social Security, 53, 55, 56–59, 82, 84–85, 110–13, 187, 252nn9–10, 260n23, 260n28; disability benefits and, 69, 99, 113, 258n15, 260n28; explanatory statements, 179; immigrants and, 190 state and local taxes, 188–89, 274n19; immigrants and, 190 state ballot tax measures, xiii–xv, 236n12 suffrage and taxpaying, 12, 72, 175 survey methodology and demographics, 16–23, 167–68, 245n50, 246n3, 248n11, 251nn6–8

tax avoidance, 3–4, 12, 28–31, 36, 119, 129, 133–40, 239n12. See also corporate taxes tax brackets, 64, 117, 127–28, 178, 184–85 tax breaks and subsidies. See corporate aid tax compliance, 9, 30, 31–32, 36, 244n39, 247n8 tax credits and deductions, 14, 66–72, 119, 128, 131–35, 138, 167, 177, 185, 272n9 tax holidays, 6 “tax morale,” 30, 32

[ 280 ]

index taxpayer, descriptions of hypothetical, 46, 49–52, 72, 250nn2–3 “taxpayer gap,” 24, 47, 107–9, 166, 173 tax rates, xiii, 5, 72, 123, 127–28, 130–31, 135–37, 184; uncertainty about, 14, 25, 119, 132–34, 140–41 tax revolt of 1978, xii, xv tax withholding system: compliance and, 31; introduction of, 6–7 Tea Party view of taxes, xii–xiii, 77, 103, 124, 236n7 Temporary Assistance to Needy Families, 258n19 top rates reduction, 5, 184 Trump, Donald, 2

U.S. tax system overview, 183–92 U.S. vs. European tax systems, 4–5, 238n11

VAT (value-added tax), 238n11 veterans, xiv–xv, 7, 258n14

wartime taxation, 9–10, 241n26 wealthy taxpayers, 3–6, 25, 117–41, 156, 184, 190, 191–92, 238n12 welfare spending, 9, 24, 66, 70, 81–82, 98–110, 116, 149, 172, 174, 246n54, 258n19 WIC (Special Supplemental Nutrition Program for Women, Infants, and Children), 99, 101

[ 281 ]