Americans have not always hated taxes. The marginal tax rate was approximately 90% for the wealthiest Americans during World War II, but 85% to 90% of the public still described their tax rate as fair. In the mid-20th century, new payroll taxes were enacted to help pay for Social Security and Medicare, while federal taxes helped fund the Interstate Highway System, strengthened research and education at America’s premier public universities and built the world’s most powerful military.
The ethic enabling these advances has often counteracted the fierce individualistic streak pervading America’s political culture. The nation’s capacity to balance these dueling impulses has unleashed America’s entrepreneurial spirit while underwriting some of America’s greatest schools, bridges, laboratories and museums.
This balance is hanging by a thread. The anti-tax sentiment sweeping America since the 1970s continues to ripple across debates about politics and policy, with profound consequences.
The decades-long tax revolt undermined the nation’s aging transit systems and public school facilities, and ever since Californians enacted Proposition 13 in 1978 as a cap on people’s property taxes, an unyielding anti-tax consensus has taken hold. The politics are hard to miss.
President Ronald Reagan effectively portrayed his Democratic rival, Walter Mondale, as a tax-and-spend liberal, while President George H.W. Bush‘s no-new-taxes campaign promise undermined his public standing after he inked a bipartisan agreement to reduce the deficit partly by raising taxes. Even Democratic Presidents Bill Clinton and Barack Obama pledged during their own presidential campaigns that under their budgets, only the wealthiest Americans would see their taxes increase.
So the country reaps what it sows. In recent times, the barely hidden antipathy toward “big government” and paying taxes has blocked progress and transcended ideological debates.
And so, we get labor unions who are opposed to taxing high-end health care plans to pay for extending health insurance to millions of Americans. Food and beverage lobbyists have run television commercials blasting proposals to tax soda. Even the proposed tax on indoor tanning – an eminently sensible idea that would raise money and discourage an unhealthy practice – has come under attack.
The bottom line: Few elected leaders these days are willing to go to bat for the idea that shared sacrifice is required to improve the public sphere, even though studies show that the tax burden in America is the lightest in the developed world.
Stubborn anti-tax public opinion polls are a big part of the reason so few officials call on their constituents to sacrifice on behalf of the greater good.
More than 80% of Americans, for instance, oppose substantial increases in the federal tax on gasoline, according to a 2009 Rasmussen survey.
An April Gallup Poll showed 48% of Americans agreeing that their federal income tax burden was “about right,” while 46% judged it “too high.” But that relatively reasonable pro-tax number was the highest showing since 1956.
According to a poll conducted during the Great Recession, 55% of Americans described “big government” as a greater threat to America’s future than “big business.” It’s an astounding number given that this was registered at a time when public anger toward financial leaders soared.
It’s a shame. The nation’s problems are sufficiently complicated that the country will find it harder and harder to make real progress if tax hikes – broad ones that include some pain for the middle class – are removed from the menu of policy options.
As Joshua Schank, director of transportation research at the Bipartisan Policy Center (where I’m a visiting scholar), points out, one sensible tax increase could be driver user fees. Such fees would help revitalize America’s aging infrastructure, “reduce congestion and consumption of fuel” and “provide realistic, usable and effective alternatives to driving.” Yet that idea was rejected in New York in large part because of concerns about taxation and equity.
Raising the federal gasoline tax would improve America’s air, reduce dependence on foreign oil and provide revenues for making necessary transportation investments. Yet not a single elected official of national significance is fighting for the idea.
Imposing a modest tax on soda and junk food might reduce the obesity rate and result in lower health care costs, while Obama’s pledge to raise taxes on Americans making more than $250,000 a year could help rein in the federal budget deficit. Yet even these reasonable and targeted tax hikes meet heavy resistance.
Taxes are no magic solution to all that ails America. But if the United States is going to eliminate record red ink, expand health care coverage to millions, rebuild aging airports and roads, fight in Afghanistan and invest in scientific and medical research, then we must all be willing to pay more.
The status quo, comforting though it may seem to some, is a road map to an economically feebler America.
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