The Joe Biden White House and Democrats in Congress are focused on increasing taxes on those with high incomes to help fund a sweeping legislative agenda. The majority of Americans, public opinion data show, favor the concept of higher taxes on the wealthy -- a fact of which the White House and Democrats in Congress are well aware. As White House Senior Adviser Anita Dunn wrote in a memo for her White House associates, "The President believes that we need to restore basic fairness to the tax code, and in the process generate revenues to invest in our competitiveness, children, and economy. And, the American people agree."
I entitled my review of 优蜜传媒data a couple of years ago "Americans' Long-Standing Interest in Taxing the Rich." Pew Research recently summarized its data: "Far more Americans continue to say they are bothered 'a lot' by the feeling that some corporations and wealthy people do not pay their fair share of taxes than by the complexity of the tax system or even the amount they pay in taxes."
Journalists have picked up on the data. The New York Times concluded, "A wide range of polls now show broad public support for tax increases on high earners." A New York Magazine headline stated, "Biden's Tax Hike on the Wealthy Is Incredibly Popular." Axios reported, "The top pollster for Joe Biden's presidential campaign is advising the White House to do something that often makes Democrats nervous: Talk loudly and proudly about raising taxes on the rich. [Pollster] John Anzalone tells Axios his extensive polling and research has found that few issues receive broader support than raising taxes on corporations and people earning more than $400,000 a year." And the list goes on.
Thus, it is clear that the idea of taxing the rich generally resonates with Americans' underlying attitudes. But, as is true with most things in life, nothing is unambiguous, and few things are unequivocal. What follows is a brief review of several considerations I think can be usefully taken into account by policymakers as they move forward on efforts to reduce inequality by raising taxes on the rich and wealthy.
I. Not everyone approves.
Although clear majorities of Americans approve of the idea of taxing the rich, it is by no means 100% support, despite the "incredibly popular" headlines. Naturally enough, opposition is highest among Republicans (over 50% opposed in a recent Quinnipiac survey). Republican congressional leaders echo this negativity among their constituents, leading to the current stalemate on Biden's tax proposals. Thus, as is true with many policy issues, majority support from the people does not always or automatically translate into congressional action.
II. The reduction of income and wealth inequality is not a top priority for Americans.
It is hard to find evidence that reducing inequality is a top priority for Americans. Concern about income inequality (or, for that matter, worry that taxes on the wealthy are not high enough) rarely shows up in Gallup's monthly updates on the most important problem facing the nation. In Gallup's May update, to cite the most recent example, only 2% of Americans mentioned the gap between the rich and the poor as the biggest problem facing the nation.
Gallup's research from 2019 found that "the distribution of income and wealth" tied for last place in a list of possible priorities for Congress and the president. Pew Research last year concluded that "relatively few see [economic inequality] as a top policy priority for the federal government." Other more recent 优蜜传媒research shows that when placed in the context of many other worries, reducing inequality of income and wealth scores at about the middle range of all issues tested.
With that said, the Biden administration is pitching higher taxes on the wealthy as a practical way to fund Biden's social agenda, including expanded education, childcare, paid leave, combatting climate change, and in other ways expanding the nation's social safety net. An increased sense of priority for increased taxes on the rich could be generated to the degree that such actions are positioned as a means of achieving desirable policy objectives. And polling shows that most of these policies are, in fact, favored by the American public.
III. Americans like having a rich class and don't want it abolished.
Gallup, over the years, has done interesting research on the "rich," and the conclusion I keep coming back to is that Americans, in some ways, like having a rich class. The majority of Americans themselves would like to be rich someday. Further, Americans believe that having rich people in society is good for that society.
Americans thus do not harbor the heavy resentment toward the rich that might be assumed from their agreement that income inequality should be reduced. It appears that while Americans think the rich should pay more into the tax system, Americans don't broadly view them as evil or as of no benefit to our society. Demonizing the rich thus may not be the most advisable course of action for politicians -- even as they propose to raise their taxes. President Biden has taken note of this fact and has been cautious about making it clear that he doesn't want to eradicate the rich as a class, just to force them to pay more in taxes (As Biden opined, "We're not going to deprive any of these executives of their second or third home, travel privately by jet," adding, "It's [the tax increase] not going to affect their standard of living at all.")
IV. There is always an undercurrent of concern about too much government intervention into American life, particularly among Republicans.
Americans are not all enthusiastic about the idea of government intervention in the economic system. This is in part because not all Americans are enthusiastic about the government in general. For example, our annual update on views of governance last fall showed that while 83% of Democrats want the government to do more to solve the nation's problems, only 22% of Republicans agree. As I've written about extensively, the exact determination of what the government's role should or should not be in American society today is one of the contentious issues that has confronted the nation since its founding almost 250 years ago.
I should note that reducing income inequality does not have to be done by the government. Companies can make voluntary decisions to limit how much they pay their high-ranking employees, for example, and individuals in those roles could decline to accept high levels of compensation or restrict how much they are paid. One should not hold one's breath, however, that enough of this type of voluntary reduction in high incomes will occur to make a significant difference.
V. Reducing income and wealth inequality does not address the more complex and controversial issue of inequality in access to income and wealth, particularly when correlated with what sociologists refer to as "ascriptive" characteristics -- that is, qualities fixed at birth.
Reducing inequality of income and wealth does not deal with the other important dimension involved in any discussion of the topic -- who gets to be rich and wealthy and who doesn't. The process by which each generation of Americans is sorted into socioeconomic strata is highly complex but not random by any means. There are significant relationships between one's income and wealth and the income and wealth of one's parents, one's zip code of birth, one's physical attributes (including physical attractiveness and height), and one's gender, race and ethnic status. Thus, even though we may approve of the structure of income and wealth distributions, we may not approve of the process by which individuals are sorted out and end up at the various levels of income and wealth acquisition.
In other words, altering inequality of results does not directly address concerns with inequality of opportunity. Critics may be happy that the gap in income between rich and poor is reduced but may remain unhappy about who gets to be rich, to begin with.
Bottom Line
I would summarize American public opinion on this topic by saying that a majority of Americans on average are fine with addressing income and wealth inequality by increasing taxes on the rich, but I would at the same time advise policymakers to move forward along these lines with some caution. Any increase in the use of the government to intervene in Americans' economic life walks a tightrope between desirable objectives and trepidation about government overreach, and the idea of increasing taxes on the rich provides no exception.
