There are no bigger supporters of the current tax system than the exemplars of the American dream: middle-class and upper-middle-class families living in large homes, with multiple children and employment-based insurance. We find in our analysis that these characteristics — more than partisanship, ideology or political values — predict strong support for a range of the most expensive and regressive subsidies in the tax code. This support is politically weighty since this group also votes, donates and volunteers on a consistent basis.
Is there anything that can end the American love affair with the regressive subsidies embedded in the tax system? We may find the answer in President Trump’s tax policies.
The 2017 tax bill, formally called the Tax Cuts and Jobs Act, cut taxes for everyone. But its main provisions slashed taxes for corporations and millionaires, making it one of the most unpopular pieces of legislation passed in the last 50 years. Recent surveys by The Economist/YouGov and Monmouth University found the bill had 34 percent approval.
Because the tax law increased the standard deduction and reduces marginal tax rates, fewer middle-class households will itemize their taxes; those that do will save less money. So the law severs the alliance between the middle class and the wealthy, kicking them out of the first-class cabin where there are major tax benefits to itemize, back to the crowded coach section, where everyone uses the standard deduction.
Our analysis predicts that as fewer middle-class households claim the regressive tax benefits, these programs will become less popular and politically vulnerable over time.
So policymakers looking for federal money — to shore up Social Security and Medicare, expand health care insurance and pass green energy initiatives — may find it easier to increase revenues. They can strengthen the I.R.S., giving it the resources necessary to pursue wealthy tax cheats and eliminate regressive tax breaks without worrying about a middle-class revolt at the ballot box.
Taxpayers, too, must change. If we want policymakers to create a fairer tax code, we must outgrow our prolonged fiscal adolescence. We must stop acting like any increase to our taxes — whether through a reduction in tax breaks, or a slight increase to marginal rates — is a bigger threat than climate change, a crumbling national infrastructure, or an inadequate public health system.
Christopher Faricy is associate professor at the Maxwell School of Citizenship and Public Affairs at Syracuse University and co-author of the forthcoming book “The Other Side of the Coin: Public Opinion Toward Social Tax Expenditures.”
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