Many elected officials in both parties have long called for tax reform, although they often differ on what tax-related issues need to be addressed.
As President Trump and members of Congress consider tax proposals to pursue this year, a new national survey by the Pew Research Center may provide some useful information — and perhaps a surprise or two — on what taxpayers themselves think about the tax system.
Supporting the general idea of reform, the survey found that 56 percent of the respondents viewed the federal tax system as unfair, up from 48 percent in early 2015. The survey had a 2.9 percent margin of error.
But the survey found little change in recent years in how people viewed their own tax burdens, and some lawmakers, media commentators and Trump administration officials might be surprised at how many people had no complaints about how much money they send to Washington.
“Just over half (54 percent) say they pay about the right amount in taxes, considering what they get from the federal government, while 40 percent say they pay more than their fair share,” the survey report says. Five percent thought they should be paying more.
Only 27 percent said they were bothered “a lot” by their own tax bills.
The top complaint that people had about the tax system was that some corporations “don’t pay their fair share.” Sixty-two percent said this bothered them “a lot,” and another 18 percent said it bothered them “some.”
Running a close second to this complaint was the concern that some wealthy people don’t pay their fair share.
While “fairness” can be a subjective term, it is easy to see why so many people say they are concerned about it in connection with the federal tax system.
First of all, some individuals and businesses simply don’t pay the taxes they owe. In 2016 the IRS estimated that unpaid taxes — what is known as the “tax gap” — totaled $458 billion in 2008 through 2010.
IRS enforcement work and late payments brought the net tax gap figure for that period down to $406 billion, still a substantial amount that should irritate responsible taxpayers. The comparable figure for more recent years may well be larger because of economic growth, the growing complexity of the tax code, and short-sighted budget cuts that have reduced IRS enforcement efforts.
In addition, Congress has filled the tax code with special provisions that favor some individuals, businesses and industries over others. These are often called “tax expenditures” because they function much like federal spending programs.
“Tax expenditures, projected to total more than $1.5 trillion in 2017, cause (federal revenues to be lower than they would be otherwise and, like spending programs, contribute to the deficit,” the Congressional Budget Office said recently.
The Pew survey indicate Congress and administration officials should give serious consideration to reducing or eliminating many tax expenditures. This would boost federal revenue, enabling the government to reduce future deficits while creating a tax system that would more often treat similar people and businesses in similar ways.
The Pew survey also indicates that the president and lawmakers who are suggesting deficit-financed tax cuts should reconsider their assumptions about how many Americans actually feel their personal tax burdens are excessive.