Paying taxes feels like a necessary evil to citizens who perceive that they derive some value from what the government takes from each paycheck. 

Whether it’s funding feeding programs or national defense, Americans aren’t revolting against Washington over taxes. Increasingly, Americans express less tolerance for federal taxes though.

Public attitudes about how much taxpayers fork over to the federal coffers are souring. Docile citizens could eventually rise up again and demand better fiscal responsibility as they did during the Tea Party movement.

President Joe Biden and Speaker of the U.S. House of Representatives Kevin McCarthy are in negotiations to raise the debt ceiling before we approach a debt default cliff–possibly as soon as June 1, 2023. Policymakers would be wise to ensure that fiscal responsibility and pro-growth tax policy are not sacrificed for the sake of getting a deal.

Polling on Americans’ Attitudes Toward Taxes

According to new Gallup polling, nearly two out of three adults (60%) say the amount of federal taxes that they pay is too high. This is up six percentage points from one year ago and up a whopping 15 points from 2019. 

A third say their federal tax amount is about right and just 3% say they pay too little. Those are probably the folks clamoring for the government to raise taxes on them like Warren Buffett and Bill Gates but won’t willingly send an extra check to the IRS or not use tax strategies to lower their tax liability. 

Gallup explains the political component behind attitudinal changes:

Republicans (71%) are now sharply more likely to believe their taxes are too high — under a Democratic president — than they were in 2020 under a Republican president (46%). Democrats’ attitudes haven’t changed (40% in 2020 and 41% now), while the 14-point increase among independents, from 48% to 62%, is about half as large as the change among Republicans.

Interestingly, a record 51% of Americans say their taxes are unfair.

In addition, federal income taxes beat out local taxes to be the most hated taxes by adults: 

  • A third of adults (34%) say federal income tax is the worst–i.e., least fair–tax up from 20% in 2005. 
  • Federal income tax has overtaken local property tax as the least fair now at 29% down from 35% in the prior survey.
  • Between 10% and 14% of Americans say federal Social Security tax, state income tax, and state sales tax are the worst taxes. 

Gallup posits that these attitudinal changes are a reaction to elevated inflation continuing to erode Americans’ purchasing power. While the consumer price index for April fell to 4.6% from a high of 9.1% in June 2022, rent is accelerating and food prices remain high leaving workers with less after Uncle Sam raids their paychecks. 

Or, rising wages due to the tight labor market over the past few years may have bumped taxpayers into higher tax brackets forcing them to lose more of their hard-earned money to the federal government. However, pay increases still do not outpace inflation. The idea of moving to a higher tax bracket but enjoying lower disposable income is grating.

Both hypotheses should compel federal lawmakers to embrace fiscal restraint and responsibility, which President Biden and Democrats in Washington are bucking against.

Implications for the Debt Ceiling Negotiations 

The Republican-led U.S. of Representatives passed the common-sense Limit, Save, Grow Act to raise the debt ceiling, return to FY 2022 spending levels, and implement work requirements for able-bodied childless adults to receive welfare benefits.

President Biden has delayed negotiations until the eleventh hour and now is calling the conservative position “extreme.” Work requirements weren’t extreme to Biden when he supported them in the past. Limiting spending to pre-pandemic levels is not extreme given that he ended the pandemic emergency declaration last month.

The left has no issue restraining their spending after generations of lawmakers have maxed out the taxpayer charge card. Raising the credit limit (debt ceiling) will get done, but it’s insane not to cut back on spending and then start to address the biggest drivers of federal spending.

Americans are souring on federal taxes because they have to be fiscally prudent given inflation. Why can’t Washington?