Tax Reform: It Is Not a Slam Dunk

This Wednesday President Trump will announce his tax reform plan.  There is much speculation around both its tone and its specificity.  At first blush, tax reform may appear to be pretty straightforward—indeed tax cuts for all!   But peeling away the onion, what tax reform reveals is a mine field of problems.  Ultimately, the devil is in the details.

In anticipation of the President’s speech, let’s look at where American public opinion falls on the issue of tax policy and reform. Unequivocally, American public opinion agrees that the tax code itself is too complicated (86%). Over 80% of all Republicans and Democrats alike think so. What does being too complicated actually mean? Ostensibly, the tax forms themselves are confusing.  But most Americans (77%) say their federal income taxes are too. Maybe complication is really a way to express a sense of undo burden. Another way of simplifying is the flat tax, supported by a significant minority of Americans (41%), with a majority of Republicans (54%)—Trump’s base—supporting. The notion of  ‘flat tax’ is curiously inconsistent with the fact that all American, irrespective of political stripe, believe that the more affluent—both individuals and companies—should play more.

Partisan sentiment is strongly connected to views of how the tax code impacts the economy with Republicans generally thinking tax cuts will be good while Democrats are less optimistic. Only about 1 in 3 agree that tax cuts for the wealthy lead to economic growth. Here, Republicans are more likely to see the positives of tax cuts (53% agree). However, almost 2 in 3 agree that lowering taxes broadly is good for the economy. Here to, Republicans are more in favor of tax cuts (75%). Source: Reuters/Ipsos Poll, March 2017.

Ultimately, there is support for tax cuts and a belief that they are good for the economy.  And while there is cursory support for a flat tax to simplify the tax code.  American, at the end of the day, want equity in any sort of tax reform

Taxes are too complicated: meaning I pay too much

 

Flat or Graduated? We actually want both 

Taxes are a good thing, right?