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Poll: Balanced Budget Beats Tax Cuts
Posted By Barry Ritholtz On May 19, 2004 @ 11:11 am In Politics | Comments Disabled
Poll: Balanced Budget Beats Tax Cuts
Tue Apr 13,10:56 PM ET Add U.S. National – AP to My Yahoo!
By WILL LESTER, Associated Press Writer
By almost a 2-1 margin, Americans prefer balancing the nation’s budget to cutting taxes, according to an Associated Press poll, even though many believe their overall tax burden has risen despite tax cuts over the past three years.
About six in 10, 61 percent, chose balancing the budget while 36 percent chose tax cuts when they were asked which was more important, according to a poll conducted for the AP by Ipsos Public Affairs.
As the nation’s tax deadline of April 15 approaches, people’s lukewarm feeling about tax cuts may be influenced by a belief that recent cuts haven’t helped them personally.
Half in the poll, 49 percent, said their overall tax burden — including federal, state and local taxes — had gone up over the past three years. That’s almost four times the 13 percent in the poll who said their overall taxes had gone down.
“Every time you turn around, there’s a new gasoline tax, more property taxes, a library tax — because they don’t have enough money,” said Tom Artley, a 52-year-old supervisor at a manufacturing plant in Williamsport, Pa. He was referring to increasing financial problems faced by many cities and states.
“I’d like to retire in the next five years,” Artley said. “It’s scary for people like me who are going to be living on a fixed income.”
Even when it comes to federal taxes, most in the public don’t feel their taxes have gone down over the past three years. Twenty-five percent in the poll said their federal taxes had gone up during that time, while 43 percent said they had stayed the same.
Among those most likely to say their taxes had gone down were the wealthy and investors.
Both the conservative-leaning Tax Foundation and the liberal-leaning Center on Budget and Policy Priorities have come to the conclusion that the federal tax burden is easing for the average American family. The Tax Foundation suggests that federal income taxes are lower for Americans than they have been for almost four decades.
The perception of many that they’re paying more overall is no surprise to Iris Lav, deputy director of the Center on Budget and Policy Priorities.
“Federal tax cuts largely benefit higher income people,” Lav said. “In the meantime, people face tax increases on sales, cigarettes, gasoline.”
For 73-year-old Bonnie Shoemaker of Fort Morgan, Colo., the choice between tax cuts and balancing the budget is a tough one.
“We all need money to live on,” she said. “But I think we ought to concentrate on balancing the budget.”
Opinion was mixed on whether the wealthiest Americans should have to give up the tax cuts they’ve gotten over the past three years. Just over half, 53 percent, said they want the elimination of recent tax cuts for people who earn more than $200,000 a year, while 45 percent said they want those cuts to remain in place.
The presidential campaign has included plenty of debate between President Bush (news – web sites) and Democrat John Kerry (news – web sites) about taxes and balanced budgets.
More of the poll respondents thought Kerry would raise taxes than believed Bush would, 51 percent to 34 percent. Bush has been pushing cuts since his first campaign for president in 2000.
Some see tax cuts as the best way to improve the economy and — eventually — to balance the budget.
“If I had to choose, I would pick cutting taxes,” said Marta Mitzenmacher of Miami, a budget director for a community college. “I think the more money I have in my pocket, the more that circulates in the economy, and that puts more money back into government.”
The AP-Ipsos poll of 1,001 adults was taken March 19-21 and has a margin of sampling error of plus or minus 3 percentage points.
By the numbers
The income tax has changed the culture in many ways.
MODEL CITIZEN. The IRS has become the model for the modern government bureaucracy. Started with three clerks in July 1862, it was managing 4,000 employees a year later. But despite all the carping about its growth, it does deliver. Every $100 it collects only costs taxpayers 39 cents.
NOT-SO-MODEL CITIZENS. Neither local nor state lawmen could lay a glove on Al Capone in Prohibition-era Chicago. The IRS’s Intelligence Unit put away the world’s most famous criminal for 11 years for failing to pay his taxes. “The income tax is a lot of bunk,” Big Al is said to have said. “The government can’t collect legal taxes from illegal money.”
ORDINARY CITIZENS. From three pages in Lincoln’s day, the words written about the personal income tax have grown to fill a library as the Tax History Project notes on its comprehensive Web site. Americans may not understand it all but they have learned to live with it ever since World War II, when the withholding tax started and the ranks of taxpayers suddenly swelled sevenfold.
The one thing that both the IRS and the taxpayer soon learned was that this country is not big on reading the fine print. At one point the IRS was mystified as to why 40,000 people were all identifying themselves with the same Social Security Number, 078-05-1120, which belonged to Mrs. Hilda Schrader Whitcher. She turned out to be the secretary at a company that manufactured wallets, and to demonstrate how convenient their product was for carrying the newfangled cards, they inserted a dummy version of hers (marked “SPECIMEN” in red) in every wallet sold.
How tax dollars are spent
“Income Security” includes General Retirement and Disability, Federal Employee Retirement and Disability, Unemployment Compensation, Food and Nutrition Assistance, Supplemental Security Income, Family and Other Support Assistance, Earned Income Tax Credit, Offsetting Receipts, and Housing Assistance. “Other” includes International Affairs, General Science, Space and Technology, Agriculture, Administration of Justice, General Government, Allowances and Undistributed Offsetting Receipts.
National Defense 17.8%
Social Security 22.4
Health & Medical 21.9%
Income Security 15.0
Interest on Debt 8.5
Commerce & Transportation 3.8
Energy & Environment 1.5
Good news / bad news
Most Americans have already paid their 2004 taxes, according to calculations from the Tax Foundation, a nonpartisan organization that monitors tax policies. The agency declared April 11 to be Tax Freedom Day, the day when most Americans have earned enough money to pay off their total tax bill for the year. Because federal tax cuts have lightened the average American tax burden, it was the earliest Tax Freedom Day for 37 years.
But here’s the rub: In New York, where state and local taxes increase that burden, Tax Freedom Day is pushed back to April 27. It could be worse – our neighbors to the north in Connecticut have to wait until April 28.
SOURCE: The Tax Foundation, using .scal 2003 .gures.
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