Paradox in Tax Poll

Rasmussen just released its latest poll on voters' attitudes towards taxation. It comes as little surprise that a full two thirds of the nation's voters think we are overtaxed. But with 47% of Americans paying no federal income tax at all, this part comes as a bit of a surprise.

Lower income voters are more likely than others to believe the nation is overtaxed.

While such individuals may still pay sizable amounts in local sales or property taxes in some jurisdictions, the earned income credit means in effect that they basically get back whatever they pay in federal employment taxes. That those who pay the least are most likely to think the nation is overtaxed does not bode well for attempts to correct the system and show how invasive a sense of entitlement can become.

What level of tax is seen as acceptable when voters are asked to take into account services at all levels of government?

75% of voters nationwide say the average American should pay no more than 20% of their income in taxes. However, the latest Rasmussen Reports national telephone survey finds that most voters (55%) believe the average American actually pays 30% or more of their income in taxes.

In fact, for 2009 taxes paid at the federal, state and local level were about 25% of GDP while total government spending was a full nine points higher at 36% of GDP. It has been suggested that some of this discrepancy is because people tend to see the total difference between net and gross pay as tax. This includes not only taxes like FICA and Medicare but also non government related amounts such as 01K contributions and the employees' share of medical insurance.

The poll highlights the biggest problem facing the nation today: The inability of most voters to connect how much tax has been collected from them with how that money is spent. Polls show that spending on popular entitlements like Social Security and Medicare is greatly underestimated, as is spending on national defense, while other spending, the so called fat in the budget, is consistently over estimated.

In Fiscal Year 2009, 50% of all federal spending went to national defense, Social Security and Medicare. When the cost of veterans affairs are included, that number grows to 53%. Five percent (5%) paid interest on the federal debt, and 42% was used for everything else in the budget.

However, only 35% of voters believe that the majority of federal spending goes to just defense, Social Security and Medicare. Forty-four percent (44%) say it's not true, and 20% are not sure.

Americans may want to pay only 20% of their income on all forms of tax, but it is uncertain they fully understand the level of services that number can provide and how that level of government spending would change their life. Alas, the government encourages this. Payroll taxes are called contributions and we each receive an annual summary of our accrued benefits when we retire. A further bit of slight of hand is how the reduction in a recipient's annual cash Social Security benefit is called a premium for Medicare coverage.

Scott Rasmussen says it best:

"Given the amount of political chatter about the budget in recent years, it is almost beyond comprehension that neither party has seen fit to highlight the basics, so that the American people can make reasoned choices on the fundamental issues before them."