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October 23, 2017

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Q+A: How do Americans feel about taxes? Author’s take may surprise you

Vanessa Williamson has asked a lot of Americans about how they feel about taxes, and she says the majority initially respond like young children who are asked for their thoughts about getting shots.

“They say, ‘Oh, Americans hate taxes,’” said Williamson, a fellow in governance studies at the Brookings Institution.

But get beyond the reflexive response, Williamson said, and it turns out that Americans don’t revile taxes quite as much as they let on. She said their true feelings are reflected in the title of her latest book: “Read My Lips: Why Americans are Proud to Pay Taxes.”

“I know that sounds so strange, considering the rhetoric (about taxes),” she said, “but they see taxpaying as a civic responsibility. That's a view held overwhelmingly.”

Vanessa Williamson is a fellow in governance studies at the Brookings Institution. Her latest book is titled, "Read My Lips: Why Americans Are Proud to Pay Taxes."

Vanessa Williamson is a fellow in governance studies at the Brookings Institution. Her latest book is titled, "Read My Lips: Why Americans Are Proud to Pay Taxes."

Last week, while visiting UNLV, Williamson sat down with the Sun to discuss her book, tax issues in Congress, President Donald Trump’s campaign statement that he was smart not to pay taxes, and more. Williamson, who has also studied the tea party and government transparency, based “Read My Lips” on extensive surveys and interviews with taxpayers.

Excerpts of the conversation, edited for clarity and length, follow:

I'm going to start with a question they tell us in journalism school not to ask in a situation like this, which is a yes-or-no. Will there be tax reform this year?

No.

OK, why?

In terms of a meaningful, comprehensive, well thought out series of reforms that would involve actual winners and losers, where trade-offs would be made — you know, the kind of thing we saw in the 1980s, where there was bipartisan support and everyone kind of took their lumps, and they were going to close loopholes and people were going to be unhappy — I don't think they have anything like the legislative chops they would need to do that.

They don't have the leadership. I mean, you saw health care reform. They weren't ready, and they had a long time to get ready.

Now, of course, taxation is something where you have stronger cohesion within the Republican Party lowering taxes. But nonetheless, Paul Ryan had a plan, and that plan has not gotten any widespread support at all in his own caucus. So I think, like health care, this is going to be a real life.

Now, will they manage to get through some tax cuts? That's much more likely. I have to admit they've had more trouble with that than I would have predicted a few months ago, so we'll wait and see. I thought tax reform was out of reach without a doubt from the beginning of the administration, but I would have thought we would have had tax cuts in the spring.

They really seem challenged.

What kind of tax cuts were you expecting?

The rollback of the taxes from Obamacare, I thought was a done deal, so a rollback of taxes that hit very high earners. And that hasn't happened.

I would have expected a lowering of corporate rate, something that even some Democrats approve of — not the 15 or 20 percent rates that Republicans have been talking about, but something in that genre. I would have expected just very top-heavy tax cuts.

Also, I would have expected something from the Bush-era playbook: something small for everybody else so you could get these big tax cuts through.

You've done a lot of research on how Americans view taxes, and you’ve come up with some counterintuitive ideas on it. What was the evolution of your book?

This was something I started being interested in when I was writing my previous book, which was on the tea party. These were people who were very angry about what they thought government was doing, but I was struck by how often people described themselves as taxpayers.

I remember, this was very touching and sad, but I was at a tea party rally and a woman who'd lost her son in a wreck was talking about the sacrifices she'd made, and she talked about the taxes she'd paid.

To me, as a mother, the taxes I pay and my son, I'd never even think of them together. But even though she could claim such a deep sacrifice to the country, she still wanted to talk about the fact that she was a taxpayer.

And it struck me how often I'd been hearing that — "I'm a taxpayer, and ..." — it was a way of justifying yourself as a part of public life.

So I realized there wasn't a good book talking to people about the big picture. We tend to ask a lot of questions about the estate tax or the income tax on high earners, so not everyone pays. We don't ask very often about sales tax, we don't ask about payroll taxes, the taxes that are actually expensive for most families.

So I thought let's do some surveys and interviews and find out how people really feel about taxes. And what struck me was that Americans are proud to pay taxes.

I know that sounds so strange, considering the rhetoric (about taxes), but they see taxpaying as a civic responsibility. That's a view held overwhelmingly.

If you ask is it every American's civic duty to pay their fair share of taxes, you get something like 95 percent agreement. That's basically unheard of. I was looking for survey questions at a similar level of agreement because it was so far out of the norm, and it's things like whether the moon landing was faked or Elvis was still alive.

And in interviews, one of the reasons people are angry at the thought of someone else not paying taxes is because they see this as a responsibility where we all chip in.

They're definitely unhappy about a couple of things. One, they're unhappy at their government — whether it's spending the money fairly.

The other thing people are angry about is the thought that some people aren't paying their share. That's a critique aimed at the rich — people who hold their money in off-shore companies or that there are so many loopholes that rates don't even matter for the rich.

But a lot of people think that the poor don't pay, either. That's because they're focused on the income tax and not thinking about sales tax, payroll tax. In particular, there's a lot of misunderstanding about taxes paid by immigrants.

Normally, I can convince people that Americans are proud to pay taxes. But if I'm talking to someone who thinks immigrants don't pay taxes, no number of facts seems to turn them. For instance, the Social Security Administration will tell you that Social Security is being propped up right now by undocumented people paying in but not being able to take back out. Where are these dollars coming from? The administration will tell you this money is there, but it's very hard to change minds.

So undocumented people not only file income taxes a lot of the time, but they pay sales taxes, of course, just like anyone. They pay payroll taxes often, and they don't qualify for those benefits.

But these facts are really hard for people to accept. And it's part of that feeling that taxpaying is what you do if you're part of the community. So if you really don't want to see immigrants as part of the community, you really don't want to believe they're taxpayers.

So that was one of the harder parts of the work for me was that sense that bringing facts to the table wasn't going to change minds when people have a very emotional reaction to who counts as "us" and who is part of the "them."

That emotional reaction, is that why taxes play such a role in the political rhetoric?

That's a good way of thinking about it. It goes back to our founding and before, seeing taxpaying and representation as related. I think taxes are, in principle, the part of our labor that we contribute to the public good and we distribute according to the democratic process. I think it's a good thing that people feel emotional about that. The problem, I think, is that we don't see ourselves as one country, which makes it harder to feel OK. It's harder to feel everyone is chipping in and harder to feel like the benefits that are going to other people are going to me, too.

I’ve been surprised by the response to my book, because people tend to see taxes as a little dull. You know, when you tell people you study taxes they do this lean-back. They're like, "Oh, that's so interesting. Excuse me, I need to get another drink." But that's the top layer, and when you scratch the surface a tiny bit, it's, "This is my country. My government doesn't work for me. Who are these people coming into our country?" A lot of this is really sensitive, deep political stuff.

And it's of course also about how much money you make and the economy and whether you're paid fairly.

What did you think the reaction would be when Donald Trump said he was smart not to pay taxes, and what was your reaction when that turned out not to really hurt him?

Look, if you would have asked me about half the things Trump had said a year beforehand and how the American public would react ...

But I was struck by it. I knew that was not what most Americans think at all. Most Americans don't think that's smart, they think it's unethical, and they think that quite strongly.

But it was about six days later when that tape of him talking on that bus about assaulting women came out. So the tax story was really short.

Where are we going to be a year from now on tax legislation? For average Americans, how will they feel those high-earner tax cuts you have been expecting?

I think there are two questions. One is whether people even hear what happened to the tax code, because a lot of it is going to affect people they've never met and who live lives totally different from most Americans. So you're not going to see the tax cuts, at least most of them, except at the very, very top.

So when an issue is not something Americans experience in their day-to-day life, it's much harder for them to get accurate information about it. It's much easier to mislead people.

It's hard to lie to people about the rate of the sales tax, for instance. People know the rate of the sales tax is. It's on their receipts.

But you can absolutely mislead people about the estate tax, because they never see it.

The other piece is whether that tax cut is going to come with spending cuts. And if it comes with spending cuts that does anything approaching offsetting it, those are going to hit programs that are really relevant to most Americans most of the time: Medicare, Social Security, Medicaid.

These are programs that nearly everyone's family uses.

What will be also interesting looking more forward than that is how the Democrats are going to move forward. The Republicans have had a strong message on taxes since Reagan, at least. They've had a strong message about cutting taxes, about government being wasteful and bloated and we should put more money back in your pockets.

What's the Democrats' position on taxes? Sometimes, it's raise taxes on people making more than $250,000 a year.

But what's funny about that choice is that, on the one hand, you're only raising taxes on those who are not most of your voters, but on the other hand it's not how you pay for social programs that are popular. Social Security, Medicare, those are not paid for with highly progressive taxation, they're paid for with taxes paid by everybody. And they're not unpopular taxes.

So I think the interesting question for Democrats is are they going to have a robust defense of government. If they're going to talk about an alternative that is not just a Republican-lite version of taxes, they're going to have to come up with a way to defend broad-based taxation as something that has value and has paid for important things.

What do you see as the failures of the media in covering tax issues, and how can we do a better job?

How much time do you have? (Laughing)

I'm going to put aside the media that presents misleading information on purpose. The well-meaning mistakes are, one — and this is hard to talk about — there's this thing, marginal taxation. Basically, what it means is that your next tax rate is applied only to the income you made over the top of the bracket. So let's imagine the tax bracket's at $10,000. If I made $9,999, and then I made an extra $2, it's only the last $1 over the $10,000 that's taxed at the new rate. Even millionaires pay the low rate on their first $10,000.

People don't know that, and it means that they worry about progressive taxation because they think that making a small amount more money means you'll take home less.

And that's hard to explain, it takes me a minute to do it — I don't have the one-sentence version — but it really misleads people in a very meaningful way when they're making decisions about whether a new tax plan sounds fair.

The other thing is media tends to focus on the income tax — maybe not so much here, since you don't have state income tax — but in general all the focus on national taxes means that people don't take into account the very real money they're paying in sales tax and Social Security and Medicare taxes, and they also discount taxes being paid by low-income people. And to me that's quite unfair, because those people are chipping in. The bottom 20 percent of earners pay 11 percent in taxes. So if you're making $20,000 a year, that's a lot.

Last week, it was reported that government units in the U.S. have sued individuals who have made open records requests to them. What's the state of open government?

I think the Obama administration had made a concerted effort to make a lot more information online. And that doesn't always work, by the way: Transparency is not a perfect solution at all. You put a lot of information online, and who has time to read it? Maybe me, because I work at a think-tank.

But actually pushing information out so it reaches people is a whole second step that I think we need to be doing a lot more of. So for instance, some localities will send property tax payers a summary — basically, a receipt about where that money went.

Social Security experimented with that for a while, and it actually made a meaningful impact both in peoples' knowledge and their confidence in the program.

So those are really neat programs. I think we have to go the extra mile, because people are busy. People work more hours compared to other countries like us.

Doing more to put information at intersections where people are is, I think, really important.

But now, what I think we are facing is really substantial backward momentum, away from transparency in government, away from accountability in government.

I think a lot of people are very concerned as to whether the information that's been available in the past will still be available in the future on important things like climate.

I had an idea of where we needed to go, but now I just feel like let's not go backward. I'll take that as a win.

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