Back when I used to listen to Rush Limbaugh there was one thing in particular he used to say that I agreed with. Over and over he said that liberals defined themselves largely by the worthiness of their objectives and the sincerity of their motives. The actual results of their policies didn’t matter at all. Thus liberals support the minimum wage because they care about the well being of workers at the bottom of the wage scale. That many of these workers lose their jobs or fail to find jobs because the minimum wage priced them out of the labor market was a matter of no concern to liberals. All that mattered is that they cared.
One of the reasons I became a conservative way back when is because conservatives lived in a world where one’s actions are defined by their consequences, not one’s motives. Conservatives also prided themselves on being reality-based and fact-based in their analyses, while liberals often seemed to live in a dream world disconnected from history, institutions and ideology, among other things.
Today, however, conservatives have largely adopted the liberal operating assumption and now also define themselves by the righteousness of their motives. This fact became very obvious to me this week when I examined the knowledge that tea party demonstrators on Capitol Hill had on the subject of taxation. As I recount in my column below, most of those in the crowd grossly overestimated the level and burden of federal taxes, thinking that they are many times higher than they actually are.
This column has gotten more than the usual amount of hostile reaction from those on the right. I won’t link to the comments; they are easily found with a Google search. But I want to respond to two points that have been made over and over again.
First is that a survey of 57 people is an invalid way of determining the views of tea party members. I would just note that if we take this view seriously then the whole science of public opinion polling goes out the window. A typical national poll only has about 1,000 responses. The survey of Tuesday’s crowd of between 300 and 600 people thus represents between 10% and 20% of the group—a very large sample by polling standards.
While it is conceivable that those who went to the trouble to come to Washington are more ignorant than the typical tea party member, it would seem much more likely that the opposite is the case. Insofar as one can define a group’s knowledge and understanding, it is reasonable to assume that its activists and leaders attending a high-profile demonstration in our Nation’s capital, where they have gone to persuade members of Congress, would be among the best-informed members of that group.
The second criticism I have heard time and again is that Americans in general are probably equally ignorant of facts such as federal taxation as a share of GDP. This is undoubtedly true. But the average American is not attending tea party demonstrations or proclaiming intense anger at the level of taxation. I don’t think it is unreasonable that those protesting a specific thing at least have some idea of the factual basis of their protest. And it’s not the fact that protesters were mostly wrong about the burden of taxation, it’s that they weren’t even in the ballpark of being right. Their beliefs are off by orders of magnitude, not by a few percentage points. I think this is revealing. Others can draw their own conclusions.
The Misinformed Tea Party Movement
For an anti-tax group they don’t know much about taxes
On March 16 the tea party crowd showed up for yet another demonstration on Capitol Hill in Washington. Curious about the factual knowledge that these people have regarding the issues they are protesting, my friend David Frum enlisted some interns to interview as many tea partiers as possible on a couple of basic questions. They got 57 responses–a pretty good sized sample from a crowd that numbered between 300 and 500 people. (Survey results are here.)
The first question that was asked concerned the size of government. Tea partiers were asked how much the federal government gets in taxes as a percentage of the gross domestic product. According to Congressional Budget Office data, acceptable answers would be 6.4%, which is the percentage for federal income taxes; 12.7%, which would be for both income taxes and Social Security payroll taxes; or 14.8%, which would represent all federal taxes as a share of GDP in 2009.
Not everyone follows these numbers closely and tea partiers may have been thinking of figures from a few years ago, before the recession when taxes were higher. According to the CBO, the highest figure for all federal taxes since 1970 came in the year 2000, when they reached 20.6% of GDP. As we know, after that George W. Bush and Republicans in Congress cut federal taxes and they fell to 18.5% of GDP in 2007, before the recession hit, and 17.5% in 2008.
Tuesday’s tea party crowd, however, thought that federal taxes were almost three times higher than they actually are. The average response was 42% of GDP and the median was 40%. The highest figure recorded in all of American history was half those figures: 20.9% at the peak of World War II in 1944.
To follow up, tea partiers were asked how much they think a typical family making $50,000 per year pays in federal income taxes. The average response was $12,710 and the median was $10,000. In percentage terms, this means a tax burden of between 20% and 25% of income.
Of course, it’s hard to know what any particular individual or family pays in taxes, but according to the IRS tax tables, a single person with $50,000 in taxable income last year would owe $8,694 in federal income taxes, and a married couple filing jointly would owe $6,669.
But these numbers are high because to have a taxable income of $50,000, one’s gross income would be higher by at least the personal exemption, which is $3,650, and the standard deduction, which is $5,700 for single people and $11,400 for married couples. Owning a home or having children would reduce one’s tax burden further.
According to calculations by the Joint Committee on Taxation, a congressional committee, tax filers with adjusted gross incomes between $40,000 and $50,000 have an average federal income tax burden of just 1.7%. Those with adjusted gross incomes between $50,000 and $75,000 have an average burden of 4.2%.
Even though the tea partiers were specifically asked about federal income taxes, it’s possible that they were thinking about other federal taxes as well, such as payroll and excise taxes. According to the JCT, when all federal taxes are included, those earning between $40,000 and $50,000 have an average tax rate of 12.3%, and those earning between $50,000 and $75,000 pay a rate of 14.5%.
In short, no matter how one slices the data, the tea party crowd appear to believe that federal taxes are very considerably higher than they actually are, whether referring to total taxes as a share of GDP or in terms of the taxes paid by a typical family.
Tea party goers also seem to have a very distorted view of the direction of federal taxes. They were asked whether they are higher, lower or the same as when Barack Obama was inaugurated last year. More than two-thirds thought that taxes are higher today and only 4% thought they were lower; the rest said they are the same.
As noted earlier, federal taxes are very considerably lower by every measure since Obama became president. And given the economic circumstances, it’s hard to imagine that a tax increase would have been enacted last year. In fact, 40% of Obama’s stimulus package involved tax cuts. These include the Making Work Pay Credit, which reduces federal taxes for all taxpayers with incomes below $75,000 by between $400 and $800.
According to the JCT, last year’s $787 billion stimulus bill, enacted with no Republican support, reduced federal taxes by almost $100 billion in 2009 and another $222 billion this year. The Tax Policy Center, a private research group, estimates that close to 90% of all taxpayers got a tax cut last year and almost 100% of those in the $50,000 income range. For those making between $40,000 and $50,000, the average tax cut was $472; for those making between $50,000 and $75,000, the tax cut averaged $522. No taxpayer anywhere in the country had his or her taxes increased as a consequence of Obama’s policies.
It’s hard to explain this divergence between perception and reality. Perhaps these people haven’t calculated their tax returns for 2009 yet and simply don’t know what they owe. Or perhaps they just assume that because a Democrat is president that taxes must have gone up, because that’s what Republicans say that Democrats always do. In fact, there hasn’t been a federal tax increase of any significance in this country since 1993.
One other possibility is that taxpayers are operating on the basis of a sophisticated economic theory called “Ricardian Equivalence.” According to this theory, budget deficits have no stimulative effect on the economy because taxpayers implicitly discount the future tax increase that will be necessary to pay off the additional debt. People increase their saving now, so the theory posits, in order to prepare for this future tax increase, thus offsetting all of the stimulative effect of the deficits with an equal and contractionary increase in saving.
While Ricardian Equivalence is a legitimate economic theory that economists continue to debate, one often hears a variation of it on talk radio shows and such, where it is said that deficits are a tax on the economy. The problem is that many people conclude from this arguably true statement that raising taxes to reduce the deficit would in effect constitute a double tax. We’re being taxed once by the deficit, people think, so why should they have their taxes raised to reduce it?
Of course, this is a non sequitur. People can’t be taxed twice by the expectation of a tax and again by the actual tax itself. But more importantly, the underlying assumption of Ricardian Equivalence–that taxes will eventually rise to pay off the debt–is now seriously in doubt. Perhaps once it was true when people genuinely cared about a balanced budget. But today’s Republicans and tea party members oppose all tax increases for any reason, no matter how big the deficit is. I really believe that many would rather default on the debt than raise taxes by a single penny. If this is true, then Ricardian Equivalence is a dead letter–to the extent that it ever existed at all.
Probably the simplest motivation the tea partiers have is the one that Howard Beale (actor Peter Finch) gave in the 1976 movie Network. “I’m mad as hell and I’m not gonna take it any more!” he said to cheering crowds. In other words, tea parties just represent unfocused anger at current economic conditions. Those who feel this way have latched on to the tea party movement not because they really believe that their taxes are too high, that taxes are rising or that taxes are at the root of our economic problem. Rather, they have joined because it’s the only game in town; the only organized force with at least the potential of bringing about change that might make things better.
In this sense, the tea parties are simply the latest manifestation of populism, which has arisen periodically throughout American history. In the 19th century populist anger was based in rural America and directed at the banks and railroads as well as government. Populists thought that free coinage of silver, an inflationary policy that would have raised prices for farm commodities, was the solution to their problems in the same way that today’s tea party crowd think that the Federal Reserve, bailouts to big businesses and a looming government takeover of the health industry are at the root of our economic malaise. Tax cuts are like free silver–a one-size-fits-all policy response.
Unfortunately for the tea party populists, there is no evidence in American history that populism has ever had a meaningful effect on policy. Even when the movement had a charismatic and articulate leader in William Jennings Bryan, the populists only elected a handful of members to Congress and never achieved the presidency. One reason is that the major parties co-opted populist issues and leaders, which bought time until the populist impulse burned itself out like a brush fire.
Whatever the future of the tea party movement in American politics, it’s a bad idea for so many participants to operate on the basis of false notions about the burden of federal taxation. It only takes a little bit of time to look at one’s tax return to see what one is actually paying the Treasury, calculate the percentage of one’s income that goes to taxes, and compare it to what was paid last year and the year before. People may then discover that their anger is misplaced and channel it into areas where it is more likely to bring about positive change.