President Donald Trump is touting a cut in corporate tax rates as a direct benefit for the average American, but voters in a Morning Consult/Politico poll aren’t so sure that they will get anything out of it.
Trump last week proposed a corporate tax cut from the current 35 percent level to 20 percent as part of a framework for sweeping tax code changes. In a speech in Indianapolis, he contended that it would spur the creation of more American jobs and lead to a rise in wages.
Voters, however, have yet to be convinced by the argument that slashing corporate taxes will directly help them, according to a recent poll of 1,992 voters conducted Sept. 29 through Oct. 1, which has a margin of error of plus or minus 2 percentage points.
Forty-seven percent said they believed that reducing the corporate tax rate will not personally benefit them, compared to the 31 percent who said they believed it would, and 22 percent said they didn’t know or had no opinion.
Corporations that are seeking tax relief need to sell their idea.
Jim Manley, director at QGA Public Affairs
Asked whether a large corporate rate cut should be included in the coming tax legislation, 39 percent favored it, while 38 percent opposed it.
“Corporations that are seeking tax relief need to sell their idea,” said Jim Manley, former communications adviser for then-Majority Leader Harry Reid (D-Nev.) and now director at QGA Public Affairs. “And they have a lot more selling to do before they can seal the deal with American people.”
Lawmakers from both parties have said the benefits of a lower U.S. corporate rate, which is the highest among industrialized economies, will flow to middle-class workers because a lighter tax burden will encourage companies to remain in the United States and hire more workers.
The Business Roundtable third-quarter survey of 140 chief executives, conducted Aug. 18 to Sept. 6, found plans for hiring jumped to the highest reading in more than six years. Joshua Bolten, Business Roundtable’s chief executive, told reporters on Sept. 19 that most of the people surveyed were basing their hiring and spending plans on Republican tax proposals at that time.
When asked whether Americans would understand that benefits from the corporate rate cuts would trickle down to them, Sen. Mike Rounds (R-S.D.) said, “It’s not so much trickle down; it’s almost like a waterfall because what it actually does is it creates job opportunities that have not been there before.”
Rounds said the economic boost from encouraging businesses to grow in the United States, rather than overseas, is essential for ensuring the strength of government programs like Medicaid, Medicare and Social Security.
Voters in the Morning Consult poll were more supportive of a proposal that would facilitate corporations’ repatriation of funds to the United States through a slightly lower one-time tax on overseas profits, with almost half (49 percent) backing the idea.
By comparison, 31 percent supported the idea of removing U.S. taxes on overseas profits of U.S. companies and allowing the companies to be taxed only by the government of the country in which the money was made, while 41 percent were not supportive.
Former Sen. Ted Kaufman (D-Del.), a longtime chief of staff for former Vice President Joe Biden when he was in the Senate, said that corporate tax relief is a hard sell to individual voters given that corporations are more likely to use tax savings to buy back shares rather than hire more workers.
“The American people don’t understand why corporations need a tax cut when the corporations themselves are doing pretty well,” Kaufman said, “especially when there’s no evidence they’re going to use the money they’d get to create jobs.”
While many provisions of the proposed tax code changes received over 60 percent of support, such as the doubling of the standard deduction and a lower rate for small businesses, fewer respondents (38 percent) backed full expensing, or allowing businesses to immediately write off the cost of new investments, for five years.
Voters were also generally wary of adding to the U.S. debt burden of more than $20 trillion. Forty-one percent of voters said they would support only a tax reform bill that does not add to the federal deficit, while 31 percent said they would support a bill that added to the deficit if it met certain tax reform goals.
Lawmakers have said that the cuts, which the Senate has estimated will cost at least $1.5 trillion over the next decade, will be paid for by an increase in economic activity. The poll showed that 46 percent of respondents said they are very or somewhat convinced by this reasoning, and 40 percent were skeptical.
The GOP’s blueprint has received criticism from Democrats and some tax groups who say it favors the rich. A preliminary study from the Urban-Brookings Tax Policy Center found that some middle-income earners could see tax increases under the proposal and that more than half the benefits provided by the plan’s tax cuts would go to the top 1 percent of taxpayers.
While majority of voters (53 percent) in the Morning Consult survey said high-income Americans should pay more in taxes, 41 percent said they believe the Republican and White House tax proposal will instead allow the upper-income Americans to pay less. Another 28 percent said this group would pay more and 14 percent said taxes would stay the same.
Slightly more people believed the middle class would also pay less taxes as well (35 percent) than those who believed the middle class would pay more in taxes (32 percent), with 16 percent saying taxes were likely to be unchanged.
Amid Democrats’ accusations that Trump and his company stand to benefit from the proposed tax changes, 49 percent of voters said the president should publicly release his tax returns before any tax reform proposal moves forward.