Americans Want Higher Taxes

For rich people, according to a new Pew/National Journal survey conducted at the end of July.  The poll asked, “Which comes closer to your view about the tax cuts passed when George W. Bush was president?“  Only 30% of respondents want to keep the tax cuts in place, whereas 27% want to repeal the cuts for the wealthy and 31% want to repeal them for everyone.

I basically agree with this reaction from Andrew Therriault:

Regardless where it comes from, though, this trend in public opinion (assuming it’s confirmed by subsequent polls) throws the conventional wisdom on its head. There’s been talk of Obama and the Democrats in Congress attempting to steal the populist mantle back this fall by campaigning on a platform of increased taxes on the rich (a theme from Obama’s 2008 campaign, as well) and using the revenue to rein in the deficit and help out the working and middle classes. Until now I’d been doubtful–the attack ads and talking points write themselves–but perhaps it’s not as crazy to propose raising taxes as it once was. Now we just need to wait and see which candidates have the cajones to actually try it.

These data illustrate to me two features shaping the political landscape.  First, Americans realize that our deficits will not reduce themselves purely from spending cuts.  We have to raise revenue, and the discussion is shifting to be about the mechanics, the how, not the foundational debate itself, the if.  Second, perpetually stagnant wages have slowly eroded middle class stability, and no one wants to pay more taxes if they don’t have more income.  It’s pretty intuitive: if my benefits have eroded, my pay is the same as it was five, ten, or thirty years ago, my children can’t afford college, and my wealth has collapsed, then I want the government off my back (lower taxes) because it is the easiest cost for an individual to fight.  You can see taxes and connect that to the government, and voting is a lot easier than confronting complex structural issues such as financial reform, tax structures, or health care costs.  Fixing those three issues will achieve much more for middle class families than changing their taxes another +/- $200.  This economic crisis is not about liquidity constraints or mark to market; it’s about fundamental wounds in our social fabric.