Job Loss Prospects Erode Support For Tax Increases

Job Loss Prospects Erode Support For Tax Increases

When Americans take into account the possibility of job losses, their support for tax increases softens.

Raghavan Mayur
Raghavan Mayur

Larry Kudlow, the former Chief of the National Economic Council under President Trump, summed it up nicely in his television show on Tuesday: It’s so easy for a pollster to ask a voter something like “Well, why not tax the rich or rich corporations or rich investors or rich inheritances?” A lot of voters will shrug their shoulders and say, “Sure, go get them.” But when it turns out that there's an economic cost in the form of lower jobs, then opinions change.

Raising taxes is never a popular measure. On one hand, taxes are necessary to fund government services and reduce the national debt. Many argue that higher taxes result in a shrinking economy and fewer jobs. With job sensitivity hovering at 54% last month, the prospect of limited job opportunities is worrisome.

There are merits to both sides, but a grim employment scenario drastically affects how Americans feel about a tax increase.

Larry Kudlow collaborated with the latest TIPP Poll to gauge Americans' opinion of the proposed tax hikes.

First, the survey asked if respondents support increasing corporate tax, capital gains tax, and estate tax.

A follow-up question asked if they would support the same tax increase if it resulted in the loss of jobs. The survey found that numbers supporting the hike dropped significantly across the board.

Larry Kudlow's presentation of the results on his Fox Business television show can be viewed here. Additionally, his column from the New York Sun is available here.

Corporate Tax

Corporate tax accounted for about 7% of federal revenue in 2019. The TIPP Poll asked over 1,400 Americans whether they supported or opposed a corporate tax increase. A fair share of respondents answered in the affirmative. The data reads:

  • 60% Support
  • 25% Oppose
  • 15% Not Sure

Further analysis shows that while 75% of Democrats support the hike, only 56% of Independents and even fewer, 48% of Republicans agree. 70% of those with a college education and almost an equal portion, 69% of those with above $75000 income welcomed the move.

At the mention of job losses as a result of the proposed tax hike, support fell drastically. The data shows:

  • 44% Support
  • 42% Oppose
  • 13% Not Sure

While support still stood at 60% among Democrats, 61% of Republicans and 44% of Independents opposed the move. Loss of support was seen among the high-income and college-educated demographic groups.

IBD/TIPP Mention Of Job Losses Reducing Support For Raising Taxes

Capital Gains Tax

Asked if they support or oppose increasing capital gains tax, far fewer respondents favored the move. The data reads:

  • 47% Support
  • 33% Oppose
  • 19% Not Sure

Half the Republicans opposed the move, as did 40% of Independents. Less than one-fifth, 18% of the Democrats were not in favor of such a hike. Again, the college-educated and those with incomes above $70000 were mostly in favor of the move, polling 57%, and 55%, respectively.

When asked to factor in job losses due to the capital gains tax hike, support eroded considerably. The poll shows:

  • 37% Support
  • 47% Oppose
  • 16% Not Sure

The 14 point rise in opposition is also reflected among the Republicans and Independents whose opposition numbers rose to 65% and 52%, respectively.

The tax increase that got the least support in the TIPP Poll survey was the Estate Tax.

IBD/TIPP Mention of Job Losses Reducing Support For Raising Capital Gains Tax

Estate Tax

Though estate taxes apply only if the deceased person's assets are worth $11.70 million or more at present, not many Americans want the state to benefit from the death of a loved one. The TIPP Poll recorded a significant portion was opposed to an increase in estate tax.

  • 28% Support
  • 58% Oppose
  • 15% Not Sure

If the estate tax hike resulted in job losses, the already low support base slipped further. The numbers read:

  • 26% Support
  • 60% Oppose
  • 14% Not Sure
Mention Of Job Losses Reducing Support For Raising Estate Tax - By Ideology and Party

In The End

To recover from the pandemic and regain lost momentum, Americans need jobs and opportunities for a fresh start.

Instead of letting tax raises fester as a divisive, bipartisan issue, economists, analysts, and the government should come together to create a way forward that balances the long-term and short-term goals of the nation and its people.


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