The following article by Vanessa Williamson was posted on the Washington Post website April 18, 2017:
Many Americans wrongly believe that while they are dutifully paying taxes, a lot of other people — especially lower-income people and immigrants — are not taxpayers.
And with tax reform back on the national agenda, those misperceptions matter.
Who pays taxes in the U.S.?
In a survey I conducted in 2014 of 1,000 U.S. adults, 88 percent of respondents answered “yes” to the question, “Are you a taxpayer?” But when asked what percentage of U.S. adults are taxpayers, these same respondents typically estimated 66.5 percent.
Many Americans think that they themselves are taxpayers, but think a lot of others are not. I call this mismatch the “taxpayer gap.”
Statistics can mislead. As the cliche implies, taxes are almost as unavoidable as death. Basically any interaction with the economy — working, owning property, putting gas in your car, shopping at the store — involves paying taxes. Almost every American adult engages in at least a few of these activities.
Lower-income people, who tend to pay less federally, pay a much larger percentage of their income in state and local taxes than do higher-income people.
Why is the public so confused about taxpayers?
One source may be the statistic popularized a few years ago, most prominently by GOP presidential candidate Mitt Romney, that 47 percent of tax-filing households have no net federal income tax liability. While accurate, this is often misremembered as applying to taxes in general, implying that there is a substantial “non-taxpaying class.”
In my survey research, I have found that Republicans are much more likely than Democrats to estimate the taxpaying population at around 50 percent. A third of Republicans pick an estimate between 40 and 60 percent, compared to only a fifth of Democrats. On average, Republicans thought about 62 percent of the U.S. adult population pays taxes — but even among Democratic respondents, the average estimate of the taxpaying population was 71 percent of U.S. adults.
How Americans pay taxes also leads to confusion. Filing federal taxes is a cumbersome, frustrating annual experience for many — and so that’s what they think of as “paying taxes.” But other taxes are often less obvious, bundled into prices at the store or gas pump, included in a mortgage payment, or deducted from a paycheck without much effort or attention.
Tax misperceptions matter
Margaret Levi, a political scientist at Stanford, has argued people are willing to fulfill their civic responsibilities if they think others are doing their part — a sentiment she calls “ethical reciprocity.” Economists agree that “tax morale” — their term for the shared cultural norm of taxpaying — plays an important role in tax compliance. If we doubt that others are chipping in, we are more likely to start free-riding ourselves.
Moreover, the public rhetoric about who is a “taxpayer” reinforces stereotypes about who works hard and contributes to the community.
Most Americans imagine that recent immigrants get more in government benefits than they pay in; the reality is very different. Undocumented immigrants, in particular, are often presumed to not pay taxes — but are paying billions into Social Security and Medicare, even though they are not eligible to get anything back.