New York Times' Headline, "Americans Favor Budget Cuts Over Raising Corporate Tax" Based on Misleading Poll
People who follow polling have known for some time that Americans tend to support cutting government spending in the abstract but are likely to respond very differently to proposals to cut specific programs. In fact, when faced with a choice between cuts in a particular government program or tax increases, Americans often prefer tax increases.
Sadly, this basic point was lost on the New York Times this week as it sought to gauge public support for increasing corporate taxes as a way to reduce the budget deficit.
Americans Love Cutting Government in the Abstract, Hate Cutting Specific Programs
An Ipsos/Reuters survey in early March demonstrates some of the common problems with polls on this topic. It included the following question: "The two main ways of reducing the budget deficit are to cut existing programs and to raise taxes. If you had to choose, which approach would you prefer?" Fifty-six percent responded that they would prefer to cut programs, while only 30 percent preferred raising taxes.
Of course, Congress does not have to choose between cutting spending or increasing taxes. It can (and is likely to) do both. This question presents a ridiculous hypothetical situation that no lawmaker will actually face. Only three percent of respondents said "both" in answer to this question, which is unsurprising given that "both" was not offered as an option. We know from other surveys that if the options include a mix of spending cuts and tax increases, a majority will choose that option.
The Ipsos/Reuters poll suggests that many of those respondents who chose spending reductions are not comfortable with many specific cuts that Congress could actually make. Those who said they preferred reduced government spending were given various options for programs to cut, and the only one garnering a majority was defense (at 51 percent). Only 28 percent wanted to cut Medicare and Medicaid, just 18 percent wanted to cut Social Security, and four percent chose "Other." (Respondents were allowed to choose multiple options.)
When confronted with a specific proposal to raise taxes and specific proposals to cut any of the significant government programs, people tend to choose tax increases.
For example, an ABC News/Washington Post poll gave respondents several options for addressing the budget deficit. Seventy-two percent supported "Raising taxes on Americans with incomes over 250 thousand dollars a year." Forty-two percent supported "Cutting military spending." Only 30 percent supported "Cutting spending on Medicaid, which is the government health insurance program for the poor." Only 21 percent supported "Cutting spending on Medicare, which is the government health insurance program for the elderly."
The same ABC News/Washington Post poll also asked "Overall, what do you think is the best way to reduce the federal budget deficit — by cutting federal spending, by increasing taxes, or by a combination of both?"
About three-fifths of respondents chose a combination of both.
New York Times' Misleading Article on Corporate Taxes and Public Opinion
None of this should come as any surprise to pollsters and people who write about public opinion and politics. So it's disappointing to see The New York Times publish a distorted story under an even more distorted headline, based on faulty polling about the federal corporate income tax.
Some of the questions were straight-forward. For example, one of the poll questions reads, "Do you think American corporations pay more than their fair share in federal income taxes, less than their fair share, or is the amount American corporations pay about right?" A majority, 56 percent, said they're paying less than their fair share, while only 11 percent said they were paying more. Twenty-two percent said "About right," and 11 percent said "Don't know."
(Other surveys, such as the Gallup Poll, have found that an even larger number of Americans believe that corporations pay "too little.")
Unfortunately, the Times survey also includes questions worded so poorly that they tell us virtually nothing about how Americans would feel about the real trade-offs that lawmakers must make when confronting the budget.
For example, one survey question reads "If you HAD to choose ONE, which would you prefer in order to reduce the federal budget deficit — raising taxes on corporations or cutting government spending?"
Unsurprisingly, survey respondents did what Americans always do — they chose unspecified spending cuts over tax increases.
Thirty-two percent chose "raising taxes on corporations," while 64 percent chose "cutting government spending."
Of course, as noted above, Congress does not have to "choose one" of these options, and we know from other surveys that most people prefer a mix of spending cuts and tax increases of some sort.
The more interesting question, the question not asked in this survey, is whether respondents would favor cuts in Medicare and Medicaid over corporate tax increases, or perhaps cuts in nutrition programs or education programs over corporate tax increases.
Given that most people believe (according to this very survey) that corporations pay less than their fair share, it's very hard to imagine that corporate tax increases would not be more popular than cuts in health care, nutrition or education.
Unfortunately, The Times made this misleading survey question the subject of the article's headline, "Americans Favor Budget Cuts Over Raising Corporate Tax."
Another survey question is quite blatantly a leading question. It reads, "Some people say the taxes on corporate profits should be increased to help reduce the federal budget deficit. Other people say taxes on corporate profits should be decreased to encourage American companies to create jobs and help them to compete globally. What do you think? Do you think taxes on corporate profits should be increased, decreased, or kept about the same?"
This wording presents a choice between increasing corporate taxes to "reduce the federal budget deficit" and decreasing corporate taxes to "create jobs." Of course, Americans care more about creating jobs than they do about reducing the deficit, so the result is predictably skewed. Thirty-seven percent said corporate taxes should be increased (a surprisingly high figure given that the question was leading respondents to the opposite conclusion). Twenty-six percent said corporate taxes should be decreased, and 32 percent said they should stay the same.
We could imagine a question worded in a way that would achieve very different results. For example, a survey question might read, "Some corporate leaders say that reducing corporate taxes will help America's corporations generate profits. Others say that the corporate tax loopholes in place today encourage corporations to shift their profits and jobs offshore and that closing these loopholes can help American workers while also reducing the deficit. What do you think?"
Indeed, respondents' answers to another question in this survey suggest that they would need very little prodding to support raising taxes on corporations. The question reads "As far as you know, when corporations receive tax cuts, do you think the corporations use the savings mostly to create new jobs for American workers, mostly as dividends for shareholders and bonuses for executives, OR do they mostly reinvest it back into the corporation?"
Sixty-one percent said they go to dividends and bonuses, while just 4 percent said new jobs, 23 percent said it's reinvested, and just 3 percent said it goes to a combination of these things.
Given that most people think corporations pay less than their fair share and spend most of their tax breaks on dividends and bonuses, a proposal to raise revenue from corporations by eliminating corporate tax loopholes would likely be popular, New York Times headlines notwithstanding.