The Rich Are Happier About Their Taxes Than the Poor

A Twitter conversation this afternoon got me curious about something. The biannual General Social Survey asks people what they think about the federal income tax. In 1994, when Newt Gingrich and the Republican Party were hammering Bill Clinton on his tax increase, we saw a sharp jump in the number of people who thought the federal income tax was too high. Since then, the number has gone steadily down:

There are several interesting things about this:

  • There’s not really that much difference between classes. From lower all the way to upper, there’s only about ten percentage points of separation.
  • The lower class has paid negative income tax since 1988 and the working class has paid negative income tax since 2001. How is it possible that half of them think this is too high?
  • The middle class pays an average income tax rate of about 4 percent. Again, how can so many think this is too much?
  • The upper class, which has gotten steady tax cuts since the late 90s, has seen a steady decrease in the number who think they pay too much. This kept going down during the Obama presidency, and even Obamacare and the 2012 “tax cliff” standoff didn’t faze them much.

Now, one possibility is that respondents were thinking about all federal taxes, not just income taxes, when they answered this question. That’s possible, especially outside the upper class. But even if you account for that, the lower class still pays a negative rate and the working class pays about 8 percent. It seems hardly plausible that either of these groups truly think these rates are out of line.

So what accounts for this? Part of it is just politics. Politicians constantly tell people that too much of their hard-earned money goes to taxes, so that’s what people think. Besides, when they look at their paycheck, net pay is a lot less than gross pay. The fact that this gap includes federal withholding plus Social Security plus Medicare plus state taxes may not really make much of an impression. Nor does the fact that for many of them, this withholding is made up at the end up the year via the EITC or a tax refund.

And one other thing: for folks in the middle class and below, literally everyone tells them their tax rates are too high. Republicans say it because they say that to everyone. Democrats say it because they’re constantly complaining that Republican tax cuts are regressive and the middle class is getting cheated. If both Republicans and Democrats agree that your taxes are too high, how could you think otherwise?

Whatever the case, by 2016 we had reached the absurd point where high earners—who really do pay a substantial amount of federal income tax—were more satisfied than all the other classes, who pay almost no federal income tax at all. This is a crazy world.

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