This article is from Cal-Tax Digest, published
by the California Taxpayers' Association.
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June 1999

Tax reform is frequently used as a key element of campaign platforms. Some candidates, testing the waters for the 2000 Presidential campaign, are already using tax reform as one of their main issues. However, numerous polls have shown that this issue does not provide the kind of traction that excites the electorate or incites them to vote. This is a somewhat confusing phenomenon, since Americans say they want a new tax system. In fact, eight-out-of-10 survey respondents in a 1996 Charlton Research Company survey of adults said the tax system needs to be changed.

During the last several years, Charlton Research has been studying tax issues for several clients. We have found that the public's unwillingness to engage in tax issue debates centers around the framework in which taxes and money are viewed. For example, our research indicates that the public lacks a common language to discuss money. They do not talk about personal financial matters with their friends, neighbors, or even their extended families. Many Americans consider the subject of money to be taboo, or at the least one they are not comfortable discussing with others. Therefore, when policymakers talk about taxes or the economy, they are speaking at a level of abstraction and not connecting with the majority of Americans.

In addition, most Americans do not consider taxes to be their money. In fact, when focus group participants were asked to list the items in their budget, only one or two individuals in each group listed taxes. Only 22 percent of survey respondents mentioned taxes as a personal budget item. When asked why taxes were omitted, the overwhelming response was that taxes were not considered an expenditure because they are considered inevitable. Furthermore, because taxes are automatically taken out of paychecks, people do not think of taxes as their money.

Finally, the economy is strong right now, and Americans are optimistic about its direction. In recent polls, nearly eight-out-of-10 Americans describe the state of the nation's economy as excellent or good. When considering the most important problems facing the United States today, fewer than three-out-of-ten Americans mention economic issues. Instead, social issues like education and Social Security dominate the concerns of Americans, suggesting that these are the issues on which they will most likely focus. With this rosy economic picture, people are less worried about reducing taxes and more concerned about improving schools or saving Social Security.

While this environment makes it difficult for policymakers to find public support for tax proposals, it is possible to engage Americans by discussing the values that are associated with taxes. Experience has demonstrated that policies that are not based on core public values are unsustainable. Initial research revealed that lack of control, equality, effectiveness, self-reliance and justice are some of the values the public associates with the tax system. When potential candidates discuss tax reform, people are not reacting to the specific proposals. Instead, they are reacting to the underlying values promoted by these proposals, the core values they want reflected in their entire system of government. The public is not concerned about technical details. They are looking for a tax system that promotes the core values of control, equality, effectiveness, self-reliance and justice.

Control. Because the money is simply taken directly out of their paychecks and never seen again, taxes are viewed by most individuals as something over which they have absolutely no control. This conflicts with a primary American value, which is to be in control of one's life, money and the outside world.

Charles F. Rund is president of the Charlton Research Company.

Equality. The consensus is that the current system is anything but fair. According to our national survey, 71 percent believe the tax system benefits the rich or the poor, but not the middle class. The rich are seen as able to use loopholes to avoid paying taxes, and the poor are seen as the primary beneficiaries of the nation's spending programs. Eighty percent said it contains too many loopholes, exceptions, and write-offs. Finally, echoing the sentiments of focus group participants, 88 percent of those surveyed stated that no matter what their income, every citizen should pay some level of taxes.

Eighty-one percent of respondents favor modifying the current tax system so that everyone is perceived as paying his or her fair share of taxes - not too little, not too much. Thus alternative federal tax systems such as the flat tax (supported by 55 percent of those surveyed) and the national sales tax (supported by 52 percent) are appealing to people because they are viewed as leveling devices.

Effectiveness. Sixty-nine percent of respondents believed that it is not the government's size, but rather its inability to solve the nation's problems that causes Americans heartburn. Ninety-two percent believe that the government needs to be streamlined so it can spend money more effectively.

Directly related to these perceptions are people's attitudes about what they receive for their tax dollars. Focus group participants had difficulty identifying the good things their tax dollars supported. Parks, monuments, and museums were about the only things they could list. Fifty-seven percent of those surveyed believe the current system provides services to everyone, but do not feel they receive benefits proportionate to the amount of taxes they pay.

Self-reliance. People do not believe the current system promotes individual responsibility. The government is seen as the crutch people rely on to take care of their problems. Focus group participants express their anger over a system they believe promotes dependency on government welfare programs. Freeloading - escaping the payment of one's fair tax obligation - and welfare dependency were listed by survey respondents as reasons they favored changes to the current tax system.

Justice. Finally, there is a high level of paranoia and distrust toward the current tax system. More than half of those surveyed feel victimized by taxes. Half of Americans also do not trust the Internal Revenue Service. Many others admitted that the entire system causes them to spend waking hours thinking of how they can cheat the tax system.

Although the public may want change, they are just beginning to explore alternatives. They have not yet weighed the consequences of various alternatives. Debate, not decision, is needed at this point. It is essential to include discussion of the five core values when debating tax reform.

(Methodology: Charlton Research Company has conducted a number of studies on tax issues. The bulk of information from this article came from a series of seven focus groups that occurred in various cities around the nation. A telephone survey of 800 adults nationwide, with a margin of error of +/- 3.5 percent, was also conducted from March 15 through March 19, 1996. The sample was proportionate to the country's demographics, including geography, gender, party registration and ethnicity. For more information about this study, please contact Tracey Soeth at 925/274-5900.)