As Congress and President Obama prepare to cut government spending and increase revenue sufficient to avoid the so-called fiscal cliff, Americans are divided on specific revenue-raisers currently under consideration, according to results of the latest United Technologies/National Journal Congressional Connection Poll. The survey shows that, on balance, Americans are open to reducing key tax deductions and credits for those earning more than $250,000 a year, but there is only limited support to reducing those credits for all taxpayers.
The Congressional Connection Poll was conducted by Princeton Survey Research Associates International, which surveyed 1,001 adults Dec. 6-9. This latest in a series of national polls tracking the public’s priorities for Congress—and its assessment of Washington’s performance—during most weeks that Congress is in session this year has a margin of error of plus or minus 3.7 percentage points. The new poll focused on the various debt-reduction proposals being considered by the lame-duck Congress as it attempts to avoid the fiscal cliff—a combination of automatic spending cuts and expiring tax breaks set to be triggered at the start of the new year.
Respondents were asked about four common deductions and credits, and whether, as part of a plan to reduce the deficit, they should be reduced for all taxpayers, only for those taxpayers making more than $250,000 per year, or for no taxpayers.
Though short of a majority, 41 percent of respondents said they think the interest deduction on home mortgages should be reduced for all taxpayers. That compares with 21 percent who think the mortgage-interest deduction should be reduced only for higher-income taxpayers, and 31 percent who oppose reducing it for any taxpayers.
The results for the other three credits mentioned were similar: 41 percent think the tax exemption for employer-provided health insurance should be reduced for all, while 19 percent favor reducing it only for the wealthy, and 30 percent do not favor reducing it for anyone. Additionally, 42 percent think the deduction for state and local taxes should be reduced for all taxpayers, 19 percent would reduce it for those making more than $250,000 a year, and 31 percent think it should not be reduced for any taxpayers.
A slightly higher percentage of Americans—37 percent—oppose reducing the deduction for charitable donations for any taxpayers. Still, 38 percent support reducing it for all taxpayers, and 19 percent think it should be reduced only for the wealthy.
Democrats are slightly more likely to prefer reducing these credits for wealthier taxpayers, while Republicans were more likely to say that they should not be reduced for any taxpayers.
Americans surveyed are also split on the idea of capping the number of deductions taxpayers can claim. Asked if, rather than limiting individual deductions, respondents would prefer to put a ceiling on the total number of deductions taxpayers can take, a quarter say they favor imposing such a ceiling on all taxpayers, 36 percent support a cap on those earning more than $250,000 per year, and 31 percent do not support imposing such a limit on anyone. While it is fair to say that a majority would entertain the idea of a deduction cap, it is also true that a majority would not support imposing that cap on all taxpayers.
Democrats lean toward imposing the cap on the wealthy, with 49 percent choosing that option. Republicans and independents are more likely to oppose a cap altogether.
The poll’s final question concerned tax rates for capital gains and divided income. Respondents were told that this income is currently taxed at a lower rate than earned wages and then were presented with two arguments: “Some say those lower rates are necessary to promote investment, which encourages jobs and economic growth. Others say that these lower rates are unfair to workers who receive most of their income from wages.”
A slight plurality of respondents leaned toward the argument that the lower rates for capital gains and dividends should be maintained as part of a deficit-reduction plan, the poll shows: 48 percent supported maintaining the rates, while 42 percent favor taxing dividends and investment income at the same rates as wages; 10 percent were undecided between the two options.
Republicans were significantly more likely to favor maintaining the lower rates on capital-gains taxes. While 64 percent of Republicans thought those rates should be held lower, 28 percent said they should be taxed the same as wages. Nearly half of the self-identified Democrats surveyed (49 percent) leaned toward taxing capital gains at the same rate as wages, while 43 percent thought the tax rates should be held lower. Independents were split down the middle, with 45 percent favoring each option.
Half of respondents under age 30 favor taxing investment income and wages at the same rate, compared with 37 percent who would tax investments at a lower rate. But the 50-and-over set strongly favors the lower rate for investments, 54 percent to 36 percent.
Previously released results from the latest Congressional Connection Poll showed that Americans were most concerned about cuts to entitlement programs such as Medicare and Social Security during the fiscal-cliff debate; that a majority thinks the sequester’s mandatory cuts evenly divided between domestic and defense spending are a “bad idea”; and that half of respondents would blame all parties to the negotiations—Obama, Republicans, and Democrats—equally if Congress fails to reach an agreement on deficit reduction.
This article appears in the December 12, 2012 edition of NJ Daily as Poll: Public Wary of Home-Deduction Trim.