Taxing the wealthy is a divisive topic in Washington, raising fundamental questions about what a fair tax system should be. Some argue that the historical concentration of wealth, and the reduction in taxes on the highest incomes
over the past several decades, have had negative consequences for our economy, democracy and national debt. Others argue that any increase in taxes on the wealthy and high-income earners will have a negative effect on investments, jobs and the overall economy.But the political debate in the nation’s capital and among the talking heads can obscure a fact that may surprise some: Republican and Democratic Americans, nationally and in the nation’s most competitive states and congressional districts, agree that taxes on the very
wealthy and the very highest earners should go up.
That finding comes from new surveys of more than 20,000 Americans conducted by our team at the University of Maryland’s Program for Public Consultation (PPC), and is part of a project examining where the public agrees across party lines in 11 competitive states and 28 competitive U.S. House districts, as well as nationally.
Respondents weren't just given the opportunity to raise or lower taxes in different areas; they were also shown how much each option would affect government revenue, using estimates from nonpartisan research institutes, including the Joint Committee on Taxation and the Congressional Budget Office.
The results show a surprising amount of common ground on how the tax system should work and how it should treat very high incomes and wealth. Whether the proposal involved taxing extreme wealth (fortunes above $50 million), capital gains or very high incomes (above $500,000 a year), clear majorities of Democrats and Republicans often landed in the same place.
Congress has not made progress on any of these approaches favored by most Americans on both sides of the aisle, nor has it actively raised taxes on any income group in decades.
Americans favor a new annual tax on large amounts of wealth
Proposals to tax large amounts of wealth – consisting of stocks, property and business holdings – have been gaining ground recently, in the United States and in many other developed economies. This turned out to be the most popular idea tested nationally and in the battlegrounds.
Support for a 2% tax on wealth over $50 million and 3% on wealth over $1 billion, estimated to raise $200 billion a year:
- Nationally – 88% of Democrats; 72% of Republicans.
- Competitive states and districts – 81-95% of Democrats; 58-84% of Republicans.
Americans support taxing capital gains the same as a paycheck
Americans do not seem to be buying the idea that, to encourage investment, the wealthy need to have a lower tax on their capital gains than other Americans pay on their wages. This was especially true for households earning $1 million or more: Bipartisan majorities nationally and in all battlegrounds favored taxing their capital gains the same as ordinary income.
Support for taxing capital gains as ordinary income for households earning $1 million or more, estimated to raise $120 billion a year:
- Nationally – 83% of Democrats; 70% of Republicans.
- Competitive states and districts – 74-92% of Democrats; 54-73% of Republicans.
Support for applying that policy to households with annual income from $200,000 to $500,000 and from $500,000 to $1 million has bipartisan majority support nationally and in most battlegrounds surveyed, but in some cases Republican support drops below half.
Americans favor applying the estate tax to more inherited wealth
The survey gave people multiple ways to change the estate tax, which currently applies only to inherited wealth over $15 million, including options to apply the tax to more inherited wealth or eliminate it completely. A bipartisan majority nationally and in most battlegrounds favored substantially increasing the amount subject to the estate tax.
Support for applying the estate tax to inheritance over $5 million, rather than over $15 million, estimated to raise $17 billion a year:
- Nationally – 71% of Democrats; 59% of Republicans.
- Competitive states and districts – 64-87% of Democrats; 38-84% of Republicans, a majority in 27 of the 39 battlegrounds surveyed.
Majorities back a higher rate on the highest incomes
The survey gave people the ability to raise or lower the effective tax rate (the actual share of income paid in federal taxes after deductions and credits) on households with varying income levels. There is bipartisan support for raising taxes on very high incomes.
Support for raising the effective tax rate on income of $1 million or more from 27% to at least 29%, estimated to raise $73 billion a year:
- Nationally – 69% of Democrats; 55% of Republicans.
- Competitive states and districts – 51-87% of Democrats; 40-60% of Republicans, a majority in 21 of the 39 battlegrounds surveyed.
But for raising income taxes on households earning $200,000 to $500,000 a year, nationally Republicans are divided, and the majority is opposed in most battlegrounds, while a majority of Democrats are in favor nationally and in nearly all battlegrounds.
So when it comes to income taxes, as well as capital gains taxes, there is some debate between Republicans and Democrats on whether there should be increases starting at the $200,000-a-year level.
But when it comes to income over $1 million, there is a remarkably high bipartisan agreement that taxes should go up.
The pattern holds across the survey: The higher up the income and wealth scale, the stronger and more durable the bipartisan support for raising taxes becomes, with support being higher for raising taxes on gains from investment than from paychecks.
These findings paint a much different picture than the one Americans often get from Washington’s debates, where taxation itself becomes an ideological matter. The question raised by these findings isn’t whether Republicans and Democrats agree on raising taxes on the incomes and capital gains of the wealthy.
It’s at what level of wealth and income that the agreement actually begins.
Steven Kull is director of the University of Maryland's Program for Public Consultation (PPC), a nonpartisan research center affiliated with the School of Public Policy. Evan Charles Lewitus is a social science researcher and associate director of the PPC.
This article originally appeared on USA TODAY: Republicans and Democrats across US agree: Tax the wealthy | Opinion
