by Mish
A recent Gallup poll pegged the percentage of Americans who think their own federal income tax bills are too high at 57%. That’s up from 51% last year and it’s the highest level since 2001, just before the Bush tax cuts became law.
Here’s the problem. Just 55.5% of American households will pay federal income taxes in 2016, according to the Tax Policy Center.
What is going on here?
One possibility is the survey itself. The Gallup poll has a 4 percentage-point margin of error and it’s asking people about income taxes at the very moment they’re angriest about them—the run-up to Monday’s tax-filing deadline.
The second possibility is that Americans aren’t distinguishing between income taxes (what’s reconciled on your annual return) and payroll taxes (what comes out of your paycheck often labeled as FICA) for Social Security and Medicare. For about two-thirds of all households—and three-quarters of households making $40,000 to $75,000—the payroll tax is bigger than the income tax, according to the congressional Joint Committee on Taxation. And none of that includes state or local taxes.
So Americans may be responding to a different question from the one that Gallup asked.
There may also be some election-year politics at work.
Republican presidential candidates Donald Trump and Ted Cruz are campaigning on enormous tax cuts, and they’ve clearly got a receptive audience: 73% of Republicans say they pay too much.
I would be curious to know what percentage of Republicans pay no income taxes but the survey did not say.
Mathematically speaking, the reported setup is not impossible even if the Journal missed the reasons.
In this era of negative interest rates, “free” services, free food stamps, etc., people apparently want negative taxes as well.
I jokingly proposed negative taxes to a friend the other day. I have been meaning to write that up and will do so later.
Mike “Mish” Shedlock
