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What’s The Maximum Anyone Should Pay in Taxes?
By David Winston and Myra Miller
In the most recent survey for Winning the Issues (July 16-18) we asked voters what was the highest tax rate that any individual in the US should pay for all taxes combined, including federal, state, local, property, payroll and wealth taxes. According to the survey, the average combined tax rate that voters said should be the maximum total was about 24%. Even among self-identified liberals who favor higher taxes, the average combined rate was close to 30%. Most business owners or high income individuals would probably be ecstatic to pay 24% or even 30% of income in total taxes. But it appears that proposed tax increases from the federal, state and local levels will send the total far higher than 24%.
A July 31 Wall Street Journal op-ed Read Joe Biden’s Lips: New Taxes listed new federal taxes under a potential Biden administration, with an estimated $3 trillion in tax increases over the next decade. As we pointed out in last week’s Discussion Points, many blue states are turning to tax increases as the solution to budget shortfalls. A proposal in the California legislature would impose additional surcharges on high income earners, resulting in a 54% tax rate in federal and state taxes. A proposal in the New York legislature would create a new capital gains tax on those with $1 billion+ in assets. These are only two examples of efforts currently underway, but in many cases, governors and local lawmakers are finding out their taxpayers may not be so compliant. New York Governor Andrew Cuomo has repeatedly tried to stave off wealth taxes with the argument that people will leave the state. Earlier this week, when discussing potential tax hikes in New York City, he offered to buy people a drink or even cook dinner if they would return to the city to pay local taxes:
“I literally talk to people all day long who are now in their Hamptons house who also lived here, or in their Hudson Valley house or in their Connecticut weekend house, and I say, ‘You got to come back, when are you coming back?’” Cuomo said at a press conference Monday. ”’We’ll go to dinner, I’ll buy you a drink, come over, I’ll cook…’” “They’re not coming back right now. And you know what else they’re thinking? ‘If I stay there, I pay a lower income tax,’ because they don’t pay the New York City surcharge.”
In addition to the wealthy looking for the exits in high tax states, a recent New York Times article estimated that one-third of small businesses in New York City may already be gone as a result of COVID. According to the article, close to half of the closures are in Manhattan, resulting from people leaving the city and tourism plummeting, and that “while New York is home to more Fortune 500 headquarters than any city in the country, small businesses are the city’s backbone. They represent roughly 98 percent of the employers in the city and provide jobs to more than 3 million people, which is about half of its work force…” In this environment, voters do not react favorably to the idea of raising taxes of small businesses. From the survey for Winning the Issues:
- Two-thirds believe that raising any tax on small business right now is unacceptable (65-19 believe-do not believe).
- A majority (56%) believes raising taxes on businesses would sink those businesses that are already struggling and cause them to go under (56-23 among voters overall).
- In a direct contrast, by almost 3:1, voters agree that raising any tax on small business right now is unacceptable because this will cause more businesses to go under (62%) rather than we have no choice but to raise taxes in order to fund budget shortfalls and to avoid cutting government services (22%).
Proposed increases in individual rates at the federal and state levels, combined with other federal increases like raising the cap on Social Security taxes, will hit individually-owned and family-owned businesses particularly hard, given that they are taxed based on individual income. With the wealthy fleeing the premises and no appetite for raising taxes to an unreasonable level, this is an economic situation that no amount of Andrew Cuomo’s home cooked dinners can solve. The only way forward is to support surviving businesses so they can stay afloat and keep people employed, keep tax rates reasonable so that people aren’t leaving the states, and longer term, generating economic growth.
Roll Call: “With silencing of speech, is America entering Orwellian territory?”
The Winston Group’s David Winston writes in today’s Roll Call about cancel culture, free speech, and public concern about the consequences of not complying with certain narratives.
A majority of the electorate (52 percent) identified with the statement that “true free speech and freedom of belief do not exist in this country today because of political correctness and potential consequences such as losing a job for not conforming to beliefs and narratives being promoted by the media, academia and elites.” Only 34 percent agreed that “free speech and freedom of belief exist in this country” and felt free to speak their minds and express their personal beliefs in the workplace and social settings.
Across party and ideology, the only ones who felt free to express their beliefs at work or in social situations were, not surprisingly, liberal Democrats, by a 51 percent to 38 percent margin
Read the full piece here.
Roll Call: “Trump and Biden’s 2020 challenge: 3 percent or bust”
In today’s Roll Call the Winston Group’s David Winston writes about polling and election results with some historical perspective.
When looking at presidential polls, there is a number that matters — 3. I call it the 3 percent factor. When the race is at or under 3 percent, the head-to-head ballot test in national polls is not necessarily a clear predictor of who will ultimately win the presidency, and state polls are probably a better indicator of the race. But history tells us that when one candidate’s lead goes above 3 percent nationally, the size of the lead is likely to produce both at least a plurality in the popular vote and a win in the Electoral College.
Read the full piece here.
Roll Call: “As budget blues set in, get ready for a Democratic food fight”
The Winston Group’s David Winston writes in today’s Roll Call about the coming budgetary constraints soon to face many blue states and cities in the wake of COVID-19.
What mayors and governors, especially in blue states and cities, are discovering is that with no economy, you have no funding for government and the many services it provides — some necessary, some not so much. Democrats in charge of most of the country’s biggest cities for decades as well as blue-state governors notorious for their high-tax, big-spending budgets have finally run out of road to kick the can.
Read the full piece here.
Roll Call: “Women say it’s time to reopen America — safely”
The Winston Group’s David Winston writes in today’s Roll Call about the shift in attitudes- particularly among women- toward reopening.
Women now see that the country not working is not working. Their kids not being in school, missing key learning time, is not working either — for them, their children or their families. A majority has come to the conclusion that neither they nor the country can continue like this.
Read the full piece here.
Roll Call: “America shows its resilience”
In the interest of adding something positive to the political debate, the Winston Group’s David Winston writes in today’s Roll Call about some of the good news we have seen from the past couple of weeks’ headlines, and some of the reasons to be optimistic.
What makes this country great are its people. You can see why America works. When we turn things over to Americans in tough times, they are resilient. It’s the spirit of the country that has always seen it through difficult and even deadly times. We don’t give up. We never have.
Read the full piece here.
Roll Call: The politics of confusion tests both Trump and Biden
The Winston Group’s David Winston writes in today’s Roll Call about the increasingly volatile and confused electorate, and what it may mean looking ahead to November.
It is possible that 2020 may see a rerun of two presidential candidates with very high unfavorables and, as a result, many voters having a negative view of both. This is not a choice voters want to make again. Both Biden and Trump are facing a volatile electorate that has come to understand the need for strong leadership, even if they don’t completely understand what’s happening to the country and why.
Read the full piece here.
Roll Call: “A new normal for America”
The Winston Group’s David Winston writes in today’s Roll Call about the major sociological disruption caused by the coronavirus and the new normal into which we are entering:
Beyond hardcore partisans, people are much more interested in who can lead in this new normal, not the color of a face mask or the appropriateness of a golf outing. Life for most Americans is much more serious than the less-than-serious media’s idea of news, and they are looking at their world through a new lens, wondering what a post-pandemic America will look like and knowing deep down that it can never be the same.
Read the full piece here.
Roll Call: “Is the California special election a bellwether of things to come? The GOP hopes so”
The Winston Group’s David Winston returns to his column for Roll Call this week to write about the special election in California and its potential implications for the fall:
Mike Garcia exceeded expectations as a candidate. So did the party in a diverse district in one of the most difficult states for Republicans. It’s clear that Republicans overperformed in California on Tuesday and that means winning 20 House seats in November isn’t outside the realm of possibility.
Read the full piece here.