By Daniel Chomsky, Professor of Political Science, Temple University. Originally published at the Institute for New Economic Thinking website
hile Donald Trump posed as a populist during the 2016 presidential campaign, the tax legislation he promoted and signed in 2017 showered substantial benefits on businesses and the wealthy. The Tax Policy Center estimates that individuals in the bottom quarter of the income distribution will gain, on average, about $40 per year from the income tax provisions in the new law. Those in the top one percent will get about $33,000 per year. And this does not include the effects of the estate tax and corporate tax reductions, which favor the wealthy as well. The change directly contradicts the expressed preferences of the American people. Americans opposed the legislation 53 percent to 29 percent just before its passage. And its regressive features were even less popular. According to an Associated Press-NORC survey in October, 72 percent favored higher taxes on business and the wealthy. Only 14 percent wanted a business tax cut. Only nine percent supported tax cuts for the wealthy.
The sharp divergence between public preferences and policy outcomes in this instance reflects a broader pattern. Over the last four decades, substantial majorities of Americans have consistently favored higher taxes when specifically asked whether businesses or the wealthy pay too little, too much, or the right amount. In contrast, the number favoring higher taxes on the middle class has never reached even 10 percent. Yet, over the same time period, tax policy has moved decisively in the other direction, with lower taxes for businesses and the wealthy, and higher taxes on everyone else to make up for some of the lost revenue.
In my new INET paper, “A Distorting Mirror: Major Media Coverage of Americans’ Tax Policy Preferences,” I examine the representation of public attitudes in two national newspapers, the New York Times and USA Today. I count all references to public preferences with respect to taxes in front page articles. And I concentrate on years associated with major tax policy change. While the Times predictably devoted more attention to tax policy than USA Today, practices at both newspapers were otherwise nearly identical. Both newspapers highlighted public opposition to taxes. Both downplayed public support for higher taxes on businesses and the wealthy. And both privileged official and other elite sources over ordinary people. The persistent media misrepresentation of public preferences has effectively excluded the public from political discussion of tax policy and may contribute to the failure of democratic responsiveness on this issue.
The newspapers also reinforced the efforts of policy makers. As officials moved to reduce taxes, the national newspapers emphasized public support for tax cuts even more strongly. The New York Times advertised public opposition to taxes in 92 separate front page articles during 1981 as the Reagan tax cuts were debated and passed in 1981. In contrast, newspaper references to public support for progressive taxes vanished toward zero. The Times published only one in 1981. There were none at all in 2001 when the Bush tax cuts were adopted. In 2016 the Timeshad two articles that advertised public opposition to tax cuts. USA Todayhad only one.
The tone and direction of news coverage reflects the newspapers’ reliance on elite sources. Government officials represent almost two thirds of all sources on taxes in both newspapers. And business representatives and experts were the next most common sources, accounting for another quarter of sources. All other sources appeared less frequently. Labor unions received some attention in 1981, appearing as sources in 7 articles, or 2 percent of sources in the New York Timesthat year. That was the greatest attention labor unions received during the period. Labor union references declined to virtual invisibility thereafter, appearing in only one or two stories in subsequent years. There was a single reference to a labor union source in the Timesin 2016, or a fraction of one percent of sources in the paper that year. There was not even one union representative in USA Today forthe entire year. They accounted for 7.6 percent of sources in the Timesfor the entire period, almost exactly half of the percentage of business sources, and one ninth of the percentage for officials. They were even less visible in years with regressive tax cuts, just 2.8 percent of sources in the Timesin 1981 and 6.6 percent of sources in 2001. They were 6.9 percent of the sources in the Timesin 2016, quite close to their representation in 2001. But not a single ordinary person appeared as a source in USA Todayfor the entire year. In fact, every one of the sources inUSA Todayin 2016 came from government, business, or the intellectual class.
However, in years with progressive tax increases, the national newspapers paid more attention to public support for progressive taxes, and they were more likely to cite ordinary people. References to public opinion and the use of ordinary people as sources both peaked in 2012, leading to a small increase in taxes on the wealthy at the end of the year. Coverage may have been affected by the emergence of Occupy Wall Street. Attention was relatively intense during the fall of 2011, underscoring the potential impact of citizen action in exceptional circumstances. The comparative silence on progressive taxes as Occupy faded from the scene, and the spike in attention around the election—with the continued dominance of officials as sources—suggests that it was the Obama administration and its presidential campaign that drove newspaper attention. This indicates that social movements succeed when they capture the attention of elites. But it also shows that newspaperstake issues seriously when elites promote them. Over the last forty years policy makers have shifted the tax burden away from businesses and the wealthy and increased the relative burden on ordinary citizens, with the consistent support of the national newspapers.
Sammartino, Frank, Phillip Stallworth, and David Weiner. 2018. “The effect of the TCJA individual income tax provisions across income groups and across the states.” Tax Policy Center, March 28, 2018.
If the track record for main stream media newspapers on international affairs has proven to be nothing more than a web of lies and insinuations, then how can you expect the same media to be any more truthful on domestic issues such as taxation?
Ideally, the media should be like a mirror in that it reflects both the nation and the international world – not for it to be like a looking glass from Alice in Wonderland.
Support for low taxes has to be engineered by the elites. The conversation goes like this.
Citizenry: We’d like high-quality, low cost education, health care, child care, public transport, parks, playgrounds and other facilities.
Government: That’s cute. How about acceptable roads, mediocre scools, a massive empire, and we’ll give you a little help if you get desperately poor. Everything else will be privatized, cartelized and overpriced.
Government: Oh, by the way, we’ll need to raise your taxes.
Citizenry: F%&@ You!!!
Media: Wow, Americans really don’t like paying taxes!
LoLz! This is a superb and humorous demonstration of a basic principle articulated by Rousseau in The Social Contract published in 1762. Rousseau pointed out that the attitude of the people to being taxed is entirely dependent on the goods they see those taxes bringing them, not on the absolute amount of the tax. If there is anyone out there who has not yet read this little gem by Rousseau, by all means read it.
Very good point, Jamie, about people supporting taxes if they can see the goods the taxes bring them. These days the only goods people see taxes bring is greater bureaucracy.
The Trump tax cuts would likely have been the Clinton tax cuts if things had played out a little differently. I don’t think a Democrat led tax cut would have been very different than this one. Ninety percent of the benefit of the tax cut goes to C Corps. If that translates into lower prices as companies compete with each other, then the public will be better off for these cuts.
I heard a presentation from a mid-sized CPA firm to the effect that wealthy people should not assume their taxes are going down as a result of this tax cut. It gives with one hand, and takes with the other, and anyway, as I mentioned, ninety percent of the benefit goes to C Corps. That leaves just ten percent to be spread around to others.
Europeans are happier to pay taxes than we are because they see what the taxes get them. In America, we don’t necessarily see it, and it may be that we’re just less efficient than the Europeans at delivering goods and services through government.
These days the only goods people see taxes bring is greater bureaucracy.
Yes, and it’s a complete myth. The real work of government is under-funded to an alarming degree (deteriorating roads, schools, and public services), while increases in government spending get siphoned off to contractors, the military, and the parasitic health care industrial complex. The public sees their tax burden getting more onerous (in large part due to stagnant incomes) and poor quality public services and thinks “WTF, this bureaucracy is completely out of control.”
When Rousseau wrote that, taxes, along with borrowing, funded government spending in France.
Today, federal taxes don’t fund DC spending. People would hate paying taxes when there is no inflation dragon to fight.
This is why both parties have focused on crappifying government services over the past 30 years so that Americans won’t want more of that. Social Security is one of the few that is run very well and it appears to be annoying the hell out of many people because they would love to vilify it, but struggle because that is a difficult task. So they simply throw it into a big pot of “entitlements” where undeserving poor brown and black people siphon the lifeblood out of deserving white people /sarc.
I think racism is still the huge underlying unspoken theme in the tax debate. We are still living with the legacy of slavery 150 years after the Civil War ended and it is hurting our economic growth, as well as social structure. The echoes of slavery and Jim Crow still permeate much of society. The other developed countries don’t have that historic albatross hanging around their neck and so they developed their systems over the years to try to deliver services to a broad swathe of the public. They have had difficulties with bureaucracy as any system does, but they have been able to deliver many critical services more widely and efficiently than the US.
Occupy didn’t fade from the scene, it was bullied out of existence. Remember that coordinated nationwide crackdown?
x2. We faded some folks.
One of the down-crackers, former Syracuse mayor Stephanie Miner,
is making preliminary moves to jump into this year’s NYS gubernatorial race.
The most likely outcome would be to cleave off enough votes from Cynthia Nixon
in the primary to give Cuomo the nomination with a plurality, if not a majority.
Once safely re-elected, Cuomo will be able to continue to fashion himself as a
progressive enemy of taxation.
I don’t think she will be in play. I don’t think she could have been re-elected mayor of Syracuse, never mind any other office. Initially, there was speculation she would run against Katko for the House seat and I think Katko was salivating at the thought of having her as the opponent.
Newspaper owners like low taxers and don’t use public services..
In completely unrelated news, the newspapers they own promote low taxes and minimal public services.
don’t use public services..
Depends on how you define public services. Seems to me tax abatements are public services.
I used to deliver newspapers. I used public roads exclusively. I would even go so far as to say that no one could read newspapers without public roads.
Over the weekend, I listened to one of the interviews that Thomas Frank made with the Real News Network. One of the points that he made is the need for third parties to prevent the two main parties from converging on key issues. Using trade as the example, he argued that game theory applies and the two parties would act in their self-interest and adopt positions that align with each other, even when opposed by the majority of the population and members of their own parties as there is no one who is able to keep them honest.
The issue of taxes on the wealthy seems to be another example of this.
Pennsylvania could be interesting in this mid-term election. If a redistricting map can’t be sorted out, they might go to state-wide proportional representation for selecting House members. That would open the door to a third party candidate or two picking up enough votes to get elected to the House (European-style).
If the third-parties fielded a couple of very strong candidates, they could generate an alternate voice in the House.
Such a study might only portray a part of the problem — MSM make insinuations in the category of public spending and “waste” all the time, too.
The daily here constantly runs stories on well-paid public retirees and has a running link to the highest public salaries, I assume just to keep the public enraged.
Stories illustrating the successes of collective public investment are rare while individual acts of private philanthropists supporting the public good are trumpeted. Hard to quantify, but easy to notice.
Ironic that the highest paid public employees in virtually every state are the football and basketball coaches at State U, followed by the business school and economics faculty at State U, all firmly supported by those that otherwise detest public employees. And if we had good data on privatization, it would also be clear that the other major feeders at the public trough are the consultants and government contractors doing government work more poorly and at higher cost than public employees would have.
The solutions to high public pensions are very simple and many public servants are subject to these already:
1. A Social Security model where you effectively average inflation-adjusted income over a long time (10-35 years)
2. A late career focus where the final (or highest consecutive years in nominal dollars) 3-5 years are averaged.
These approaches make it difficult to game by a last minute promotion or overtime stuffing in the last year which is especially common in the first responder unions. The really high pensions are usually in the plans where it is just the last year or highest individual year used for the calculation – this option allows for many gaming and favoritism opportunities to pad a pension.
NYS teachers pension is determined by the five highest nominal consecutive years pay. The last three years are averaged but those years can’t be more than 10% higher than the previous two years. Also, the only income that counts is student contact time, so you have to be teaching, running after-school programs, etc. You can’t just get paid extra to sit on a couple of committees to pick the new color scheme for the school. They get 1-2/3% of that average final salary per year of service up to 20 years when it increases to 2% per year for the entire service. They also pay and collect Social Security.
So typical NYS teacher pensions for current teachers will rarely be more than about 70% of their last few years salary. Many came into teaching later in life or took time off to raise kids, so their pensions are more likely to be 25%-40% of their last few years’ salary. So a NYS teacher with 20 to 35 years service will likely end up with an income of about $40k – $80k in retirement with pension and Social Security factored in, comfortable but certainly not the gold-plated examples always trumpeted.
The 403b has no employer match and most of the options are with expensive insurance variable annuity type firms. You have to really hunt for options that have expenses less than 1%/year.
One of the major changes over the last 50 years hinted at in this article is the decline of union economists as a critical source of progressive economic expertise. If one studies economic policy in the postwar “golden age,” one finds union economists as the main opposition to conventional pro-business economics – invited to important conferences, quoted in newspapers – with some academic institutional economists providing occasional support. By the 1980s, the institutional economists were gone and the union economists were completely isolated and belittled in presenting a progressive alternative to Reaganism. Nowadays, as indicated above, the economic voice of the unions on larger economic issues has been completely eradicated. (Yes, the teachers know teacher pay and the steelworkers know excess capacity – but ask a steelworker about teacher pay or a teacher about tariffs and the absence of shared vision becomes glaringly obvious.)
Basically the rich have dominated the discourse of American politics.
What they want is what happens. There was that Princeton Democracy Study indicating that the government had zero responsiveness to the preference of the people and much more to the preference of the rich.
Effectively the government is a plutocracy.
Its time to acknowledge the rich are aristocrats.
They also enjoy privileges under the law.
The situation is even more dire. Any successful social organization has to have a mechanism in place to keep the “aristocrats” in check and accountable for their actions. Its not that they exist as a class that is the problem, only that they become unaccountable.
Unaccountability leads to the downfall of civilizations.
Even in the economic sphere, some limit must be imposed on the size and power of individual organizations in order to impose some form of accountability. Monopoly power leads to corruption. Smaller entities would more likely follow a natural life cycle and die an appropriate death is they became too corrupt or oppressive.
Elites will always try to lock-in their privilege. The problem today is the vast majority of people don’t strive for building a society that ensures proper access and opportunity- more energy is spent complaining about their desire to enter the elite club or become “aristocrats” themselves.
No wonder the actual powerful elite are humored by it all.
The threat of guillotines will end the humor very quickly.
Yes. It is not that Americans hate taxes. It is that PACs hate taxes.
That was the one thing that truly scared the Republicans about candidate Trump, that his rhetoric was exposing the lie that the rank and file Republican base wants above all else to keep the tax rates low on top margin earners and businesses.
Disposable income = wages – (taxes + the cost of living)
The neoclassical economist worries about high taxes, but not high housing costs.
Lower taxes will give you more money in your pocket.
I actually have less money in my pocket because it went on rent.
Obvious, when you think about it.
Maximising profit, required minimising wages.
China’s low cost of living meant it was the ideal destination for investment and off-shoring. In the four decades of globalisation it naturally became a super power.