Americans give mixed signals on tax issues

WASHINGTON (Reuters) - The American public is divided on whether tax increases should be used to tackle the nation’s fiscal woes, a Reuters/Ipsos poll found on Tuesday.

Nearly half of those surveyed think tax breaks enacted under former President George W. Bush should be extended for everyone, including those who make more than $200,000 a year, a proposal backed by Republicans.

President Barack Obama and his fellow Democrats’ plan to extend the lower rates for those under that income threshold won backing from nearly a third of those surveyed.

Fifteen percent back stronger action than Obama has proposed -- letting all the lower tax rates expire, a view typically held by those worried about the yawning budget deficit.

Majorities of both parties said they are more worried about the deficit than keeping taxes low.

“Americans want to have their cake and eat it too,” Ipsos pollster Cliff Young said. “They want tax cuts on the one hand but they want to reduce the budget on the other.”

In sum, the poll found 49 percent favored extending all of Bush’s tax cuts, while 46 percent favored letting them expire at the end of this year for all or some Americans.

Republicans were substantially more likely to favor extending current tax rates for the wealthier income groups, compared to Democrats and independents.

The poll of 1,063 adults was conducted August 19-22 and has a margin of error of 3 percentage points.


When asked to rate their top economic concerns, the respondents listed government spending second, behind unemployment. Sixty-seven percent said they are “very concerned” about government spending, the poll found.

That finding implies the Republicans’ message about excessively high government spending is resonating with voters.

However, when asked whether lower taxes or cutting the budget deficit was a higher priority, majorities among both parties rated the deficit as more important.

“What is really confusing people, I think, is that both parties are trying to score political points while doing little to explain how any of these policies address the number one concern of voters - the economy,” said Paul Sracic, chairman of the political science department at Youngstown State University.

With unemployment stubbornly stuck near 10 percent, Republicans and several conservative Democrats argue raising taxes could derail the fragile economic recovery.

Democrats say the country can not afford the historically low tax rates any longer given the broadening deficit.

Many observers expect the debate over extension of the tax rates to fall after the November elections, given limited time in the next session and the complexity of the issue.

A bipartisan commission is studying possible fixes to the fiscal dilemma and is expected to report to Obama in December. Recent polls on the Bush-era tax cuts have been mixed.

A CNN poll last week found 51 percent back Obama’s plan to extend the lower rates for the middle class only, with 31 percent favoring the Republicans’ plan. An earlier Pew Research Center poll found more of an even split.

If taxes were raised on the top two income groups as proposed by Obama, about two to three percent of all Americans would see their taxes rise.

Editing by Simon Denyer and Jackie Frank