Tax policy -- who pays what and how -- is a hot-button issue. Politicians from both parties cry out for reform, yet there is little consensus about what needs to be done. And while politicians and pundits argue, everyday Americans are struggling to navigate an increasingly complex tax code.
With tax season behind us and the 2014 midterm elections ahead of us, we thought now would be a good time to find out what exactly Americans think of our current tax system and how it could be improved.
To investigate attitudes toward taxation, WalletHub.com conducted an original online survey of 1,086 Americans. The sample was designed to be nationally representative of all Americans by age, race, and gender.
- More than 80% of respondents rated the current tax code as either "complex" or "extremely complex."
- A full 44.2% believe the fairest possible tax code would have fewer deductions than today.
- An overwhelming 90% of respondents believe income from investments should be taxed at least as much as wages:
- Well more than half (57.64%) think wages and investment income should be taxed equally; 33.06% say investment income should be taxed more than wages.
- Less than one-quarter (24.31%) of respondents support a flat income tax.
- Almost two-thirds of respondents (65.10%) believe corporations should face higher tax rates than consumers.
- Americans view taxes on wages and gasoline as least fair; taxes on alcohol and tobacco seen are as most fair.
- Americans view tax fairness (61.23%) and tax equality (20.81%) as more important than whatever is best for the economy (17.96%).
Investment and wage income
How to tax income from investments relative to wages has been a major area of disagreement among politicians. Current policy taxes income from investments at a lower rate than income from wages, which means someone like Warren Buffett pays a lower effective tax rate than his secretary.
We asked respondents what they thought is the fairest possible relationship between tax rates on investment income and wages -- should tax rates be higher on wages or on investment income, or should the tax rates be the same?
- Over 90% of respondents believe income from investments should be taxed at least as much as income from wages.
- Notably, we did not see any significant differences by income, age, or education. Across groups there appears to be strong support for higher taxes on investment income, relative to current policy.