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Lower Corporate Taxes, Higher Wages? Voters Are Skeptical

Lower Corporate Taxes, Higher Wages? Voters Are Skeptical

By BEN CASSELMAN

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Representative Jim Renacci, Republican of Ohio, delivering remarks during a House Ways and Means Committee meeting on a tax overhaul plan.

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Tom Brenner/The New York Times

Republicans argue that their plan to cut corporate taxes will increase wages for American workers. A new survey suggests even the party’s strongest supporters aren’t buying that argument.

The House of Representatives could vote this week on a plan that would fulfill a longtime Republican promise to cut taxes on businesses and overhaul the corporate tax system more broadly. The Senate is considering its own plan, which differs in its details but would likewise reduce the tax rate on corporate earnings to 20 percent from 35 percent.

Conservative economists have long argued that cutting taxes on businesses would lead to faster economic growth. In recent weeks, however, backers of the Republican plan have emphasized a related claim: If companies paid less in taxes, they would pay their workers more.

The White House Council of Economic Advisers, for example, released a report last month that estimated that the proposed corporate tax cut would increase a typical household’s income between $3,000 and $7,000 a year — a claim many independent economists have dismissed as unrealistic.

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The public appears to have similar doubts, and its skepticism stretches across the political spectrum.

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In a national survey of 9,504 adults conducted for The New York Times by the online polling firm SurveyMonkey, 78 percent of respondents said they did not believe they would receive a raise if their employer received a tax cut. Even many Republicans doubted they would benefit directly from a corporate tax cut: Roughly 70 percent of self-identified Republicans — and roughly 65 percent of people who said they strongly approved of President Trump’s performance in office — said they didn’t think they would get a pay increase.

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“There’s this widespread disbelief among Republicans, as there is among Democrats and independents, that tax cuts for employers will redound to their pockets books,” said Jon Cohen, vice president of survey research for SurveyMonkey.

Americans’ views of the tax plan in general are more divided. The Times survey, which was conducted in early November, found that 52 percent of respondents said they disapproved of the plan, compared with 44 percent who said they supported it. (The survey did not distinguish between the House and Senate versions of the plan.) That is generally in line with other polls, although some have put support for the plan significantly lower.

In general, opinions of the Republican plan split predictably along partisan lines. More than 80 percent of Republicans said they supported the plan, and more than 80 percent of Democrats said they opposed it. Most Republicans likewise said they believed that they would benefit personally from the plan, while few Democrats believed the same.

The strong overall support for the bill among Republicans masks significant disagreement beneath the surface, however. The survey showed that support for the plan was much stronger among Republicans who considered themselves “very conservative” than those who considered themselves conservative or moderate. And many moderate Republicans and independents said they were less interested in cutting taxes than in reducing the federal budget deficit, a potential trouble spot for a bill that most analyses suggest could add $1 trillion or more to the deficit.

Republicans still have time to win over skeptics. Only about a quarter of respondents to the Times survey said they were paying close attention to the tax plan. But in a potential sign of trouble for the bill, people who said they were watching the process closely were more likely to oppose it — and to oppose it strongly — than those paying less attention.

“A lot of voters still have only weak views, but the people who have formed strong opinions already are quite negative,” said Guy Molyneux, a partner at Hart Research, a Democratic polling firm.

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Mr. Molyneux said there were elements of the plan, such as doubling the standard deduction and increasing the child tax credit, that generally polled well with voters in various surveys. But other elements of the plan could face more opposition. Various analyses have found that both the House and Senate bills would raise taxes on millions of middle-class families, and the House plan, in particular, would eliminate many popular deductions and credits.

Cutting corporate taxes could be a particularly tough sell for many voters. Polls have repeatedly found that Americans think corporations, and especially big corporations, already pay too little in taxes. Douglas Holtz-Eakin, a prominent conservative economist who supports overhauling the corporate tax system, said it is easy to convince voters that they should support tax cuts for middle-class families. The case for cutting corporate tax rates is harder to explain.

“If you have a complicated argument like that, you have to lay the groundwork months, years in advance,” Mr. Holtz-Eakin said. That work hasn’t been done in this case, he added.

The complexity of the argument for corporate taxes may help explain why backers of the Republican plan have leaned into a simple formulation of their argument case: Lower business taxes mean higher wages. But Vanessa Williamson, a researcher at the Brookings Institution who has studied public opinion on taxation, said voters were likely to be skeptical of that argument.

In general, Ms. Williamson said, voters tend to fall back on their partisan positions when forming opinions on complex subjects such as taxation. But they might depart from those partisan views when they directly contradict their own experience. Experience, Ms. Williamson said, might lead Americans to doubt that their employers will respond to lower taxes by raising pay.

“Once you get to people’s actual paychecks, you’re confronting them with a question where they actually have personal information,” Ms. Williamson said.

Follow Ben Casselman on Twitter: @bencasselman.

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