US Insights

Here's Why Trump's Tax Plan Will Be a Tough Sell

Ross Tucker

Executive Editor Kantar US Insights

Politics 04.25.2017 / 11:00

Trump

Americans agree taxes are too high but don't see taxes as a serious issue for the country.

President Trump’s effort to tackle tax reform is unlikely to garner much excitement from average Americans and ranks at the bottom of a list of the issues they think the country currently faces. That said, Americans are unified in their belief that taxes are too high, which may be enough to breathe new life into the issue.

“The fact that even a majority of Democrats think they’re too high shows why Trump is going to push for tax cuts,” said Leon Nicholas, Kantar Retail’s Chief Insights Officer for North America. “Lack of income growth, while taxes have not gone down, is the driving factor. Health care costs have driven up personal expenditures while disposable income hasn’t grown, leading people to feel the squeeze.”

As Trump prepares to make his “big tax reform and tax reduction” announcement on Wednesday, Kantar decided to get a read on Americans’ perceptions on a variety of tax-related issues. A survey of 1,980 people conducted by Lightspeed in April found that Americans view health care and national security as the top challenges facing the country. Tax reform, meanwhile, ranked at the bottom of the list, tied with issues surrounding education and the environment.

“We’ll be having a big announcement on Wednesday having to do with tax reform. The process has begun long ago, but it really formally begins on Wednesday,” Trump said during a visit to the Treasury Department last week. Trump also issued executive orders during the event to “begin the process of tax simplification.” Trump characterized the orders as the first step in a tax reform program that would also include lowering business taxes and a review of “damaging Dodd Frank regulation.”

 

Low Expectations

Americans are pessimistic when it comes to their outlook on tax reform, with 86% of respondents indicating that they expect taxes to rise or stay the same in 2017. Among Democrats, women had a much higher expectation that taxes would go up at 70% of respondents compared with only 41% of males.

Nicholas said he was surprised to see such a large percentage of Republicans indicating they expected taxes to go up. However, Lightspeed’s survey showed that 27% of male Republicans expect taxes to go down. “The chunk of Republican males that are expecting it to go down are the ones that Trump is seeking to please,” he said.

Not surprisingly, 61% of those surveyed feel their taxes are too high while a scant 2% said they were “too low.”

Tax the Rich

The belief that the richest Americans are beating the tax system is strong across party lines. Nearly 80% of respondents said the wealthiest Americans weren’t paying their fair share in taxes. Among Republicans, 59% said the rich weren’t paying their share.

Companies in the Crosshairs

Views on corporate tax practices were only slightly better than perceptions of the rich. Nearly 75% of those surveyed said companies weren’t paying their fair share in taxes. Only 44% of Republican respondents said they believed companies were paying their fair share.

Corporate tax rates are largely viewed as being too low. Only 31% of Republican respondents said corporate taxes were too high, while 46% said they were too low.

On Monday, the Wall Street Journal reported that Trump wants to slash the corporate tax rate to 15% from 35%. Companies are expected to pay $340 billion in corporate taxes in 2018, representing approximately 10% of revenue collected by the government, according to projections made by the Congressional Budget Office in January.

Slashing the corporate tax rate would, presumably, increase the national debt. White House officials have argued that the tax cuts will ignite economic growth that will create enough new revenue to make up the difference.

Source: Kantar, Lightspeed

Editor's Notes

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