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Why the "Joe the Plumber" Tax Debate Hasn't Helped McCain


The McCain campaign thought they were on to something when "Joe the Plumber" confronted Obama about redistributing the wealth. Yet, there is little evidence that this argument has actually helped them make any real inroads into Obama's support. For example, the ABC News/Washington Post poll asks likely voters which candidate they trust more to handle the issue of taxes. The McCain campaign began making the "Joe the Plumber"/"spreading the wealth" argument during the third presidential debate on October 15th. Since then, there has been no significant movement on the question of which candidate the electorate trusts more on taxes. Obama maintains about a 10% edge on this issue, just as he did before the rise of "Joe the Plumber."

taxes1.PNG

Why has the argument failed to gain traction? To take a stab at this question, I went back to some polling data I happen to have on my hard drive from a February 2003 NPR/Kaiser Family Foundation/Kennedy School of Government Taxes Survey. The survey is useful for addressing this question because it delved deep into philosophical issues about the U.S. tax system.

First off, let's start with what Americans know about the tax system. The survey revealed that only one of three registered voters said that they had heard the term "progressive taxes" and knew what it meant (that figure has probably increased during this campaign). However, while a majority of Americans didn't know the terminology, most (70%) did understand that people who make more are taxed at a higher rate than those with lower incomes.*

But how do voters feel about a tax system that redistributes wealth? Respondents were asked whether it was "the responsibility of government to reduce the differences in income between people with high incomes and people with low incomes." 37% of registered voters strongly disagreed that this was the government's responsibility while 28% strongly agreed (the rest were fairly evenly divided between somewhat agreeing and somewhat disagreeing). Thus, on first glance, it seems like McCain's critique of income redistribution should be a successful one. But let's drill a little deeper by breaking down responses by party identification.

taxes2.PNG

While a majority of Republicans strongly disagree with the idea that the government should work to reduce income disparities, independents are far more divided on the issue. In fact, nearly as many independents strongly agree that the government should be doing this as strongly disagree. Thus, once you move beyond the Republican base, the criticizing the government's role in wealth redistribution appears to be more of a wash. And at this stage of the campaign, McCain needs to win over those independent voters to gain ground on Obama.

In fact, when the McCain campaign criticizes Obama for raising taxes (or letting tax cuts lapse, as the Obama campaign prefers to frame it) for high income Americans, they may be treading on dangerous ground. When respondents to this survey were asked whether high income Americans pay their fair share in taxes, 58% of registered voters said that they paid less than their fair share. Just 18% of registered voters said that high income Americans paid more than their fair share. As the chart below indicates, this sentiment was particularly prominent among Democrats and independents. From this perspective, it is not surprising that McCain hasn't gotten much traction by criticizing the fact that Obama wants to increase taxes for high income Americans. Most Americans, particularly those beyond the Republican base, appear to think that high income people should be shouldering more of the tax burden than they are.

taxes3.PNG

Another problem with using "Joe the Plumber" to criticize the redistribution of wealth is that this argument doesn't seem to have any particular appeal for the demographic "Joe the Plumber" is supposed to represent--working class whites. The chart below shows strong agreement/disagreement for the government's role in reducing income disparities among whites making less than $75,000 per year and those making more than $150,000 per year.

taxes4.PNG

It is clear from this figure that McCain's argument should be a big hit among white voters making more than $150,000 per year. Nearly 70% of this group strongly disagrees that the government should be reducing income disparities. However, among whites making less than $75,000 per year, the argument has much less resonance. In fact, these voters are just as likely to strongly support a tax system that reduces income disparities as they are to strongly oppose it. Likewise, 64% of these voters said that high income people do not pay their fair share in taxes. The problem for McCain becomes even more pronounced since there are about three times as many whites making less than $75,000 per year as making more than $150,000.

Thus, these data indicate that McCain hasn't gained much ground with the tax argument for two reasons. First, critiques of income redistribution and higher taxes for those in the top income brackets appear to mostly resonate with Republicans (who are already supporting McCain) and they have far less appeal for independents. Second, the argument also fails because the symbol doesn't fit the argument very well. Working class whites are just as likely to strongly favor the government's role in income redistribution as they are to oppose it and most among this group feel as though high income Americans aren't paying their fair share in taxes. Thus, "Joe the Plumber's" views on taxes are not really representative of the views of the demographic he is supposed to symbolize. Ultimately, the tax arguments made by the McCain campaign may resonate with his base, but they are doing little to help him make inroads into Obama's support among independents.

NOTE: As I was putting this post together last night, I discovered that Gallup had presented some similar findings from a recent survey. Take a look at their report, it seems entirely consistent with the findings I present here.

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* As an interesting aside, nearly half of the 70% of respondents who knew that higher income Americans were taxed at a higher rate also said that middle income Americans pay the highest percentage of their income in taxes. Only 35% of those who understood that the tax system was progressive later said that high income Americans pay the highest percentage. This discrepancy is curious and may suggest that while the public understands that higher income Americans are supposed to pay a higher rate in theory, they may also believe that the upper class uses loopholes to avoid paying their fair share in practice. This would explain why "closing loopholes" is a point that Obama frequently returns to during tax debates.

 

Comments
pbcrunch:

I don't think the argument was ever about narrowing the gap with Obama on the taxes issue, though that would have been a good side effect.

The "spreading the wealth" line especially motivates the Republican base to vote against the "socialist" Obama. With McCain apparently choosing to forgo the Republicans' 2000/04 GOTV operation in favor of an somewhat even ad war with Obama over the last few days of the campaign, McCain MUST get the Republican base to the polls in enormous numbers without ever making a direct effort to get them there in order to counter any probable increase from Obama's base.

Of course, this means that McCain has essentially written off any effort to get his soft supporters to the polls while Obama will be able to match his ad spending while having an extremely robust GOTV operation to get his soft supporters to the polls.

In a couple words: losing strategy.

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ab0si:

Brian:

Great stuff! Very interesting.

Has there been any analysis of the "undecided" vote by income? (I've seen several that show it to be heavily white and fairly heavily male, but nothing on income.)

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pbcrunch:

I don't think the argument was ever about narrowing the gap with Obama on the taxes issue, though that would have been a good side effect.

The "spreading the wealth" line especially motivates the Republican base to vote against the "socialist" Obama. With McCain apparently choosing to forgo the Republicans' 2000/04 GOTV operation in favor of an somewhat even ad war with Obama over the last few days of the campaign, McCain MUST get the Republican base to the polls in enormous numbers without ever making a direct effort to get them there in order to counter any probable increase from Obama's base.

Of course, this means that McCain has essentially written off any effort to get his soft supporters to the polls while Obama will be able to match his ad spending while having an extremely robust GOTV operation to get his soft supporters to the polls.

In a couple words: losing strategy.

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Anstoß:

Who can give me (or where can I find) an unbiased sketch of the history of progressive income taxation in America?

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mac_1103:

This discrepancy is curious and may suggest that while the public understands that higher income Americans are supposed to pay a higher rate in theory, they may also believe that the upper class uses loopholes to avoid paying their fair share in practice.

It may also suggest that many Americans intuitively understand that the progressivity of the income tax is largely undermined by regressive social security and medicare taxes. If you're in the lowest brackets, you probably pay a good deal more in payroll tax than income tax.

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Fran's Bevy:

A discussion with my colleagues (all white, middle class nurses in Boston) illustrates the new middle class distrust of the Republicans. Most of them felt that the Republicans created more tax loopholes so that the wealthy paid less than their "fair share". A couple of them confessed to voting Republican in the last couple of elections but in the words of one woman, "I can't trust them anymore. They only take care of the rich"
I think most of them feel that the Joe the Plumber pitch is the only time the Republicans will recognise the middle classes.

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Chris G:

mac_1103 I think you make a great point. It's curious that Dems haven't tried to make this argument more forcefully, it should really be front and center in the tax debate. why not talk about numbers based on the real % of income going to payroll and income tax combined?

Overall I think this analysis says as much about wording as it does about real attitudes. "Reducing differences" could mean a number of different things to a respondent, including bringing everyone down to the lowest common denominator.

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Robert:

Anstob:

Try "Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich--and Cheat Everybody Else" by David Cay Johnston. Responsible and I thought unbiased, except that the content of it's conclusions is critical, and thus appealing to liberals. So many policy arguments based on facts are.

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ab0si:

Anstoß asked:
Who can give me (or where can I find) an unbiased sketch of the history of progressive income taxation in America?

http://www.tax.org/Museum/1901-1932.htm
is a decent place to start.

Please note: Teddy Roosevelt (McCain has many times declared him to be his political hero) was more responsible than any other person in instituting it in the U.S.

Going further back in time, that other famous communist, socialist Adam Smith (ya, the Wealth of Nations guy) wrote in favor of it.

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tjacobits:

The question you reference regarding differences in income doesn't say anything about using taxes as the method to reduce the difference. We can't really draw conclusions from a question that doesn't ask about taxes.

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Mike:

However, while a majority of Americans didn't know the terminology, most (70%) did understand that people who make more are taxed at a higher rate than those with lower incomes.

One of the problems with the question is that the best informed know that isn't actually true. As Warren Buffett has noted repeatedly, he pays a smaller portion of his income in taxes than does his secretary. This is the result of two factors:

  1. When we talk about "taxes" in this sense we are confounding what we call "Income taxes" with the wider category of taxes on income (FICA). FICA is charged solely on earned income (income from wages and self-employment), but not on unearned income (income from savings and investments, including capital gains, dividends and interest), and
  2. Capital gains are taxed at a lower rate than other forms of income. (Note, this isn't a "loophole". It's a deliberate and clearly delineated feature of our tax structure).

What we have in America, when it comes to national taxes on income, is actually a hill-shaped tax curve.

Since this is a venue on polling rather than tax policy, I guess my comment is that I'd have a problem with the follow-up question about whether I "knew" that those with higher incomes paid a higher tax rate. I doubt there was a "They don't" response....

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Dan M.:

One thing that is often forgotten is the fact that the income tax is only part of the tax placed on individuals. I know, as an independant consultant, that my marginal tax rate falls about 12% when I get above 100k in income. Tax is tax. Thus, the marginal tax rate for incomes of 250k is often/usually higher than that for incomes of 90k.

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sempervirens:

While I understand the point Mr. Schaffner is making here, and certainly agree with the premise of a progressive tax system, I find that this analysis underscores the dangers that wording presents in polling.

I would never argue that the purpose of a progressive tax system is to "reduce the differences in income" between high and low income earners. (Yes, I cringe when B.O. uses the "spread the wealth" line, because I think it entirely misses the point of taxation.)

Those of us in the high-end tax brackets should pay higher taxes because we can afford to. The question on "do high income earners pay their fair share" gets closer to this point. As citizens of our states and nation, we have an obligation to pay for it: roads, services, social services, defense and the like. Since we don't live in some mythical "everyone is truly equal" society, it naturally happens that there are members of society who can't afford to pay full fare. That's where it's vital to have high-income earners pick up the slack.

One of the biggest issues I have with the anti-tax crusaders is this: Do they have any idea what would happen to our society if we simply cut away the safety net and social services? How rapidly we might devolve into violence and chaos (and shortly-thereafter, fascism) is frightening to contemplate. While I can certainly agree with those who don't like supporting members of our society who REFUSE to support themselves, I accept my responsibility to support those who CAN'T support themselves.

Even Adam Smith --in terms of Christian charity -- avocated what I call "humane capitalism" -- economic competition is vital, but those who are unable to compete need to be treated with human respect.

While "spreading the wealth" may be one of the practical effects of progressive tax rates, I find it counter productive -- both psychologically and morally -- to think of it that way.

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IronHorse:

Basically since the conventions, McCain has been using bits and pieces of Obama/Biden sound bites to his advantage. Lately, we've seen both McCain and Palin note that the ceiling for Obama's tax plans have dropped from $250K to $200K to $150K and back. In truth, if you listen to Obama enough, he has said that if you are filing a joint return and you earn $250K you will not see an increase. If you earn under $200K you will see a savings, and that savings would be greater if you earn $150K.

The comments about "sharing the wealth" are ludicrous, because they are made in reference to Obama's intention to change the code for those earning $250K or more back to the same percentages used in the Clinton era. IOW, we're talking about a progressive tax code, something that we've used for nearly 100 years since the days of the "robber barons" where the disparity between the rich and the not-so-rich had grown far too wide. I say ludicrous also because McCain himself supports a progressive tax code and there's a wonderful YouTube clip of him trying to champion it.

http://www.youtube.com/watch?v=3htTdAh3vg4

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boaster:

In terms of actual dollars paid, high income Americans do pay more, but when you factor in FICA they pay a lower percentage.

For example, someone may be in the 28% tax bracket, but when FICA is factored in at 15.3% (for a self-employed plumber, for example), their tax rate becomes 43.3%.

Someone making $1 million may pay 36% assuming no deductions, but they don't have to pay FICA on their income above $100K so, technically, the tax system is regressive, not progressive.

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SC:

One item overlooked in the analysis is the perception of Joe the Plumber himself. Some (mostly those that already support McCain) view him as something of a minor everyman hero. Others may not be so enamored, or even turned off by Joe, especially after the news that he's not licensed, in arrears in his taxes and is unlikely to be negatively impacted by the proposed tax increase (how many 2-man construction/plumbing outfits net $250,000+ annually?)

So tying his tax policy to the very name and persona of "Joe the Plumber" may have negative consequences for the how people view the policy. If people are unfavorably disposed toward Joe, then tying a tax policy to his image isn't going to be helpful to the perception of the policy. It'd be akin to a candidate tying his new health care policy to Jack Kevorkian.

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sempervirens:

It seems clear to me that -- for most voters -- good ol' Joe has clearly overstayed his 15 minutes of fame. Yet, the McCain camp can only continue to kowtow to the under-educated, knee-jerk reactionaries he represents because, let's face it, they have no appeal to anyone else.

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I see that all of you posters are very knowledgable in the tax system. I would like to represent as someone who has been at the bottom income bracket.

There was a time when I was a single mother of three small children and sadly I never got child support.

When faced with the dire task of raising 3 small children, when I had not worked professionally, was daunting. I was ill prepared for raising 3 children.

I could have burdened society and gone on aid. However, I chose to lift myself up and face the battle.

For all the years of raising my children, I barely made ends meet. Had there been a financial crises, such as a child becoming ill or even the car breaking down, I don't know what we would have done.

In 7 years, I tripled my income. Now, I am doing well. The point of this is, I've been poor. And my heart goes out to all the people out there who are truly suffering and are trying their best to survive.

I do not make over $150,000 per year. And yet I would gladly pay more taxes knowing that I'm making struggling people's lives more livable. It is humane.

There are children and disabled suffering. This should not be. Not in this great nation. What is a nation if it has no heart? The wealthy should never lose their ability to have compassion for those less fortunate.

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IronHorse:

Joe The Plumber appeals to many because there is the perception that he's just an average guy trying to make it and Obama had some negative news for him.

But in truth, he makes $40K a year as a unlicensed plumber, his boss has no interest in selling his business that does about $150,000. And of course, with the current economic crunch Joe isn't going to get a loan when he's already owing money for back taxes. Maybe he shouldn't have had that expensive laser hair removal done? Heard it was several thousand dollars?

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IronHorse, makes you wonder if Joe The Plumber (and that's not his real name) is on someone's payroll other than his plumber boss? We should also mention that Joe the Plumber was quick to get a public relations person, sign up for writing a book, and announce he's thinking of running for public office. Almost sounds like a payoff. Aren't under the table gifts illegal in the political arena?

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CaptainJJack:

I think the primary reason this has not resonated is that the tax rates are effectively the same as in under Clinton and less than under Reagan.

People recognize the recklessness of the past 8 years, and that it, at some level, has contributed to the current crisis just like the Reagan deficits ultimately caused the crisis of 1990.

The Latin American economies often do what Bush did with the deficit spending. They are called Banana Republics for a reason, and there is no special reason why the US should be exempt.

There is no free lunch, ESPECIALLY when the source of the funding is now from China and Japan.

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peterap:

Excellent comments all...

But I want to add that, at the most basic level, the argument has not helped since Joe admitted that he would do better under the Obama plan. Pretty much undercut his whole argument. Ridiculous that the right wingers are getting all bent out of shape about Joe being "investigated" especially when one notes that nothing about Joe's presentation is true. It's all fabrication and avoids the point made here that we all have to share in fixing this country.

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Drmare:

I agree with what I've been reading so far but no one has mentioned what I see as an important factor: the resonance of "redistribute the wealth" with those who aren't wealthy. Depending on who you are, it can be a good plan (“You’re going to take the money from Warren Buffet and give it to me”) or a bad one (“You’re going to take my money and give it to someone who didn’t work for it.”) I imagine that the Obama campaign market-tested this phrase with focus groups and knew before it got used that a group they wanted to woo (in their case, people making under 150k a year) really liked it. Those who made more may not have liked it, but those folks weren’t the target for the line, so their negative response isn’t an issue for Obama. So far, I'm being obvious, right? Here’s my point. Catch phrases are powerful; once heard and assigned a meaning by the listener, that meaning is in stone, and any attempts to transform it are just so much babble. Mental processing models (Petty and Cacioppo, Elaboration Likelihood Model) tell us that once you hear something that you like, you are likely to quit listening and begin thinking about related ideas rather than attending to what follows (this is called generating related cognitions which is a pretty unwieldy phrase; I add it hear to give some legitimacy to my argument). Many McCain supporters make over 250k and thus don’t like the phrase so McCain et al thought they saw opportunity in the phrase to re-cast it negatively for the non-wealthy as well (a group they are trying to convert) but in using the same words, they shot themselves in the foot. Those processing models tell us at least some of McCain’s non-wealthy audience, upon hearing “dedistribute the wealth” are off on their own day dream about having more money in their pockets. They are already thinking, "Yeah, give it to me." McCain’s efforts to redefine it get lost in the audience’s own inner thinking.

For this to work, McCain needed to change the wording in ways that would demonize the non-wealthy’s initial understanding, maybe trying "redistribute YOUR wealth." The new language would encourage additional attention to McCain’s explanation and thus have a better chance of working. I think McCain's fatal flaw in his campaign has been his continued under-estimation of the discipline, thoughtfulness, planning, and care of the Obama team. Of course, Obama is smart and articulate and it's possible that "redistribute the wealth" was an impromptu phrasing, but I'll bet not. I think McCain got trapped by his own campaign's impulsive pounce on what they saw as a verbal slip.

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Double O:

"This discrepancy is curious and may suggest that while the public understands that higher income Americans are supposed to pay a higher rate in theory, they may also believe that the upper class uses loopholes to avoid paying their fair share in practice."

Capital Gains is the largest source of income for most people making over $250,000/year. The fact is that capital gains is flat, and is at a lower rate than most people's income tax rate. Thus people are correct in thinking upper income people pay a lower tax rate.

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Dave from Houston:

Obama ran occasional TV ads in Houston, TX this year. This is in contrast to 2004 when Bush ads simply pummelled Kerry here for weeks. Kerry put all his resources into Ohio -- and lost. The Obama-Dean 50 state strategy is much more intelligent. Numerous ex-red states (though not Texas) are in play. Obama only needs to win a few of these to win the electoral college. Meanwhile, Texas Democrats continue to catch up every election.

As far as "socialism" is concerned, since when is redistribution UPWARD perfectly okay and redistribution DOWNWARD socialism?

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Lukas:

There is also some more recent data from the 2006 General Social Survey which strengthens this analysis and explains why McCain's argument is not resonating outside his base.

51% said it was a responsibility of government to "Reduce income differences between the rich and poor";
47% said it was not a responsibility. (The "strongly" believes split 28%/21% in favour of redistribution). (I suspect that the 2003 figures referred to in the article were observed at a more favourable time for Republican ideology than now.)

15% thought that taxes for high income earners were too high;
53% thought they were too low.

But 55%thought taxes on middle income earners were too high;
4% thought they were too low.

Similarly, 60% thought taxes on low income earners were too high;
5% thought they were too low.

McCain, by opposing greater tax cuts for low and middle income earners in favour of the wealthy, is going against mainstream American values.

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Lukas:

Sorry, I forgot to add a URL to my previous posting.

You can see this information from the 2006 US general social survey at:

http://www.thearda.com/Archive/Files/Codebooks/GSS2006_CB.asp

Lukas

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