ATR June 2021 Qualitative Research Report – Federal Taxes and Spending

[see slide deck for best messaging, quotes, key points]

This research was conducted online and in-person within the United States from June 17-23 among registered voters by HarrisX. Six in-depth interviews (IDIs) were conducted, and two focus groups were held in Richmond, Virginia.

Qualitative research is intended to help us understand how voters think and talk about subjects individually and within groups, which may not be necessarily representative of the broader voter population but are directionally valid.

The research included 26 registered voters and a mix of age, gender, race, education, political affiliation, marital status, household income, and occupation.

[see slide deck for best messaging, quotes, key points]

Key findings:

Raising taxes on small businesses and large corporations hurts everyone

“[they will] just leave altogether and go to China where labor is cheaper, and laws don’t matter.” – Traycee, Democrat

  • Working families lose when taxes are raised because the increased costs are passed along to them in increased prices for goods and services and fewer job opportunities.
  • Wealthier participants said they would lose because they would get smaller bonuses from their companies.
  • Economy-dependent voters worried that increased taxes might impact the ability to keep their job, while those who were not as sensitive to the economy felt shielded from any direct job impacts.
  • Some felt that the performance of their retirement accounts would be hurt by increased taxes, particularly on large publicly-held corporations while others said the impact would smooth out over time.

Tax fairness and fair share are empty phrases

“I don’t like the euphemism fair share and what is fair share? Who is to say what is fair share? I say look at the definitions because there’s a smokescreen a lot of times.” – Elizabeth, Independent

  • The phrases are too political and inside-the-beltway for the voters we interviewed.  They don’t resonate but they do want the system to be fair for everyone, which includes no double-taxation on capital gains or taxes on assets passed upon death.
  • Most voters defined fairness as small business and larger companies paying a tax burden around what they pay themselves
  • Voters believe that most small businesses and larger companies take deductions fairly and do not fault them for doing so as they are legal.  They don’t believe it is fair to tax specific industries unless they have a negative impact, like on the environment.
  • However, voters who are married and own assets believe the tax code is so complicated that they cannot take advantage of their own tax situations without software or hired accounting help.  Most who reported shifting from doing their taxes alone to working with a professional saw higher tax refunds.

Voters are more concerned about government spending

“I don’t agree with spending past your budget. If you spend past what you’re bringing in, you’re in trouble.” – Michael, Democrat

  • Regardless of party affiliation, most voters believed that the problem with the federal budget is not on taxes but on inefficient government spending.
  • Most wanted to see the federal budget return to pre-pandemic levels, particularly on unemployment insurance, as many had stories of people not working because the were paid more to stay home.
  • Voters support core infrastructure investments for roads, bridges, rail, airports, and even broadband, but generally reject broader investments in social spending.

A minimum global tax rate on corporations won’t work

“Other countries are going to do what’s best for them. Some would [pay the global minimum corporate tax], because of mutual interest with the United States. Most would not.” -John, Republican

  • A global floor for business taxes is a loser because few believed it was fair or that other countries would enforce it.
  • Most voters do not have a framework for understanding if the United States has a higher, lower, or about the same tax burden for corporations than other nations or if others incentivize their businesses to work in other countries.
  • On the one hand they recognize that some countries like China and Japan have an advantage over the United States in manufacturing and selling goods and services.
  • But they prefer tax structures that fostered competition rather than unenforceable global tax rates on corporations.

Voters don’t believe Biden will keep his promises on taxes

“I think he’d like to do it, but I don’t think it will happen.” – Pat, Democrat

  • Few voters could pin down what President Biden means by his promise to not raise taxes on anyone making less than $400,000, in part because they don’t believe it.
  • There is a general belief that Biden will break his tax pledge because the programs he is proposing cost too much and will require increasing taxes more broadly.
  • Some voters said that Biden will not be able to hold the line on taxes because of the broader infrastructure spending aside from how it is traditionally defined.
  • Others lament that increased taxes just means more wasteful spending on things that don’t directly benefit them.

Few trust the IRS with their personal data and are wary of increased audits.

“They should hire more phone operators to help you, not make you feel like you’re going to get audited.” -Lauren, Independent 

  • Although voters dislike the IRS they rate its performance in the middle of federal agencies (not bottom).
  • But voters do not trust the IRS with their data because they do not think they have the expertise to secure it and are now seeing breaches everywhere.
  • Voters almost universally dismiss the proposal on the IRS being allowed to tax inflows and outflows of their bank and Venmo accounts.
  • Noteworthy: voters do not want the IRS to step up enforcement on individuals but on larger corporations.  However, they overestimate how much waste, fraud, and abuse there is adding up to unpaid taxes that could be remedied with greater enforcement.
  • Voters were broadly supportive of increasing IRS customer service staff who interact with them but reject increasing the budget by $80 billion and adding 87,000 new IRS agents is too much.