Poll Shows Administration?s Priorities Are Out-of-Touch with Country?s Needs

by Guest Blogger, 4/21/2003

Federal Budget Policy, Federal Tax Policy, President's Budget Proposal, Revenue & Spending, Government Matters, Bush Tax Cuts, Alternative Minimum Tax (AMT), Estate Tax, Social Security, Capital Gains Tax

A recent poll conducted by National Public Radio (NPR), the Kaiser Family Foundation, and the Kennedy School of Government reveals much about how tax payers view current proposals to reduce taxes when compared with spending on education, Social Security, health care, and even reducing the deficit. The survey, conducted between February 5 and March 17, 2003, also revealed that many people feel they don’t know enough about various tax cut proposals to offer an opinion on them. This result is disconcerting, surely, but is also very interesting given the efforts of Treasury Secretary John Snow and other White House officials in recent months to educate Americans on the administration’s tax cut agenda through road shows across the country.

The poll shows that about 55 percent of those surveyed favor the generic category of “government services” over tax cuts, but this number soars to 80 percent when specific government services such as education, health care and Social Security are mentioned.

White House Pushes for (Smaller, Delayed) Dividend Tax Cut
An April 21 Wall Street Journal article reports that Treasury Secretary Snow “would settle” for a 50% cut in the dividend tax this year, if Congress will phase in the remaining 50% cut over the next 10 years. Apparently the White House is also willing to consider delaying an additional cut in the top marginal tax rate from 38.6% to 35% in return for other rate cuts.

Even at 50% the dividend tax cut remains very expensive and still goes against the advice of most economists. Nevertheless, it does suggest that the White House expects this year’s protected tax cut figure to be limited to $550 billion.

Those working to prevent tax cuts in order to preserve funds for vital programs should take note. The same article reports that White House Budget Director Mitch Daniels “is looking for more spending cuts to free funds for tax reduction.”

The President’s tax cut proposals fared less well. Only 42 percent of those polled answered yes when asked, “When you hear the President talk about income tax cuts, do you think you and your family will benefit financially from these cuts?” – 50 percent said they would not benefit. Only 31 percent favor accelerating the rate cuts passed in 2001 and only 23 percent support making the 2001 cuts permanent, with 48 percent and 60 percent, respectively, reporting they lack enough information to give an opinion.

Only 38 percent of respondents have ever heard of the dividend tax cut proposal. Of these, only 40 percent favor it, 31 percent oppose it and a full 28 percent don’t have enough information to form an opinion. In a later question, only 35 percent said they expected a “cut in taxes on dividends companies pay to stockholders” would stimulate the economy. This would seem to cast at least some doubt on the White House’s argument that the centerpiece of its recent tax cut package, the dividend tax cut, is what is needed by most Americans to restore confidence in the country’s economy.

The American Dream Lives
49% of respondents think most families end up paying the estate tax

Actually, in 2002, less than 2% of estates paid the tax. Under current law, in 2009, this number will drop to less than 1%.

Though more respondents know something about the estate tax and many are opposed to the tax, the poll does suggest that more information about the estate tax’s provisions dramatically increase support for the tax (with some changes in the exemption level). Specifically, though 57 percent support repeal of the estate tax (28 percent don’t know enough to say), 41 percent support the estate tax with an exemption for estates at $1 million or less. If those who support an estate tax only on estates valued above $5 million are included, support for retaining an estate tax rises to 52 percent. These results are similar to those of a poll conducted by OMB Watch in May 2002. View results and notes on this poll on the Americans for a Fair Estate Tax website.

Other issues covered by the poll include alternative tax structures including a consumption tax, general knowledge about the tax system (e.g., “Are people with higher incomes taxed at a higher percentage of their income than people who make less money?”), general views about fairness and levels of complexity about the current tax system, and which party could best address the federal tax system. The full report is available online.

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