Taxing the Rich: It’s Complicated

After a protracted battle filled with twists and turns, Congress has, this summer, managed to pass an unprecedented tax and spending cut package, a pivotal element of Donald Trump’s legislative blueprint. Dubbed the “big beautiful bill” (HR 1), this legislation aims to slash taxes by approximately $4.5 trillion while simultaneously cutting around $1.5 trillion in federal expenditure. It stands as a potential landmark moment, arguably one of the most significant pieces of legislation this Congress will address, if not in decades. While the sprawling 1,000-page document includes various provisions, the spotlight remains firmly on the tax reductions.

Tax cuts have become a perennial topic of contention in the landscape of American politics. During Trump’s first term, the GOP, wielding control over both chambers of Congress and the presidency, managed to push through a similarly vast tax reduction initiative. Notably, the current “big beautiful bill” enshrines many of the tax cuts from 2017 into permanence. Historically, prior to Trump’s election in 2016, a unified Republican Congress enacted two significant rounds of tax reductions during George W. Bush’s presidency in 2001 and 2003. Even further back, Ronald Reagan accomplished similar feats in both 1981 and 1986, when Republicans held sway in the Senate for six years.

Across this 45-year timeline, the discourse surrounding taxes has consistently zeroed in on a singular theme: the implications of reducing taxes, particularly for high-income individuals.

For instance, during the 1980s, conservative economists posited that lowering the top marginal tax rate (which stood at 70% back then) would paradoxically boost government revenue, not diminish it, through enhanced production and employment. George H.W. Bush infamously labeled this theory—known as the Laffer Curve—as “voodoo economics” during his 1980 primary challenge against Reagan (for a detailed overview, see Domitrovic 2021 on the rise of supply-side economics). In the context of the recent legislation, Trump has parroted these claims, touting it as the most “pro-growth” and “pro-worker” law in the annals of American history (White House 2025).

However, a chorus of critics, predominantly from left-leaning economic circles, contends otherwise. Joseph Stiglitz, for instance, argues that the post-World War II experiment with “trickle-down economics” has failed to meet its foundational policy goals (Stiglitz 2015). Others maintain that the drastic reduction in the top marginal tax rate has exacerbated income inequality rather than fostering a universally beneficial “rising tide” (Piketty and Saez 2007). Further supporting these critiques, a recent study by David Hope and Julian Limberg (2022) reveals that, across eighteen OECD nations over the past fifty years, diminished tax progressivity has led to heightened income inequality without any noticeable improvement in economic growth or employment rates.

Rather than rehash these policy debates, I intend to shine a light on a less-explored aspect of the conversation: the American public’s perspective on tax cuts. Specifically, why do Americans exhibit support or opposition to tax breaks that primarily benefit the wealthy on a per-dollar basis? The crux of this analysis is that the American populace holds complex and often contradictory views regarding progressive taxation. My research suggests that preferences for raising or lowering taxes on the affluent are largely shaped by societal stereotypes about “the rich” as a collective (Ragusa 2015, 2017). In essence, the inclination to favor or oppose higher taxes on high-income Americans depends significantly on whether the public views the wealthy positively or negatively.

What do Americans think about taxing the rich?

While the wording of survey questions can influence responses, polls consistently indicate that Americans generally favor higher taxes on the wealthy. For instance, the 2024 Cooperative Election Study (CES) posed the question of whether taxes on individuals earning $400,000 should be increased, and a significant majority—69%—expressed support for such a measure. A recent survey by the Hoover Institution yielded a similar outcome, with 66% endorsing the idea of “high-income earners paying a larger share of federal income taxes.” Additionally, data from Pew Research indicates that majorities also support tax increases on affluent households; a recent survey found that 58% believe tax rates on household income exceeding $400,000 should rise, while only 19% felt these households should pay less.

It is noteworthy that the support for increasing taxes on the wealthy is a relatively recent trend. Gallup data from 1939, at the tail end of the Great Depression, revealed that large majorities opposed “redistributing wealth” through heavy taxation on the affluent. Fast forward to 1998, and Gallup found that a majority still resisted such proposals, albeit by a narrower margin (51% to 45%). However, recent Gallup polls (in 2013, 2015, 2016, and 2022) have shown a shift, with majorities now supporting higher taxes on the wealthy to promote wealth redistribution.

But why do so many Americans currently advocate for increased taxes on high-income households? On the surface, this seems like a straightforward inquiry. Intuitive answers might include economic self-interest, ideological beliefs, and concerns about income inequality. Yet, these explanations prove to be either incomplete or misguided.

A logical starting point is economic self-interest. It stands to reason that high-income Americans, representing a small fraction of the population, would want their taxes to decrease, while low- and middle-income Americans would desire higher taxes on the wealthy (presumably to fund enhanced social services). While this reasoning is plausible, the evidence supporting this hypothesis is mixed.

For example, a notable review essay by Sears and Funk (1990), titled “The Limited Effect of Economic Self-Interest on the Political Attitudes of the Mass Public,” found that attitudes toward taxation are influenced by economic self-interest only when the proposed tax change is substantial and obvious. In most instances, self-interest serves as a poor predictor of American views on economic policies, according to Sears and Funk. I encountered similar results in my own research, which indicated that income level was a poor indicator of whether Americans favored raising or lowering taxes on the wealthy (Ragusa 2015).

Diving deeper into the CES data cited earlier, only one income bracket in 2024—those earning over $500,000 annually—opposed a hypothetical plan to increase taxes on individuals making over $400,000 per year. Notably, respondents in the second-highest income bracket, those earning between $350,000 and $499,999, largely supported a tax increase on high-income earners, despite many of them facing tax hikes. Conversely, several individuals in the lowest income brackets expressed a desire for high-income earners to pay less in taxes.

The modest correlation between income and attitudes toward taxing the rich may stem from a complex interplay of intersecting ideals that dilute the impact of economic self-interest. Compared to citizens in many European countries, Americans tend to express a stronger commitment to ideals such as individual liberty, upward mobility, and equality of opportunity (Hochschild 1981).

Recent studies lend credence to this notion. For instance, a survey experiment conducted by Ballard-Rossa, Martin, and Scheve (2017) found that respondents attributing economic success to “hard work” rather than “luck” held less progressive views on taxation. Similarly, Hope, Limberg, and Weber (2023) discovered that wealth acquired through inheritance dampened support for tax cuts benefiting the wealthy. Crucially, even respondents who claimed “hard work” as the source of a person’s economic success maintained progressive preferences overall.

Another possibility is that ideological considerations take precedence over economic self-interest. Although it may seem counterintuitive, a substantial body of research suggests that Americans possess “sociotropic,” or socially-focused, views that often override their “pocketbook” motivations. In simple terms, low-income conservatives may favor a less progressive tax system for ideological reasons (e.g., limited government and individual liberty), while high-income liberals may advocate for a more progressive tax structure (e.g., to promote equality).

Polling data backs this up, revealing that Americans’ tax policy attitudes are often ideologically motivated. For example, the Pew survey explored this issue through crosstab analysis by party affiliation and income. Among Democrats, support for taxing the wealthy increased with income. In contrast, low-income Republicans were among the most opposed to taxing the rich. (A likely explanation for this seemingly paradoxical finding is the impact of education on tax policy preferences.) Academic studies echo similar ideological and partisan trends (Ballard-Rossa, Martin, and Scheve 2017).

However, an unresolved question lingers: why do so many Americans, including self-identified conservatives, support raising taxes on the rich? The Cooperative Election Study (CES) revealed that a striking 44% of self-identified “conservative” respondents and 34% of those considering themselves “very conservative” supported higher taxes on the wealthy. This indicates that ideology, while influential, does not fully explain Americans’ tax policy preferences.

A third possibility is that opinions on taxing the wealthy are shaped not by an overarching ideology—many Americans do not possess a coherent ideological framework (Converse 1964)—but rather by specific policy objectives. Many Americans express concern regarding the income disparity between the rich and poor, which may lead them to support raising taxes on the wealthy to address inequality and bolster government spending (while those indifferent to inequality prefer lower taxes for the rich).

While there is ongoing debate among scholars, the prevailing academic research tends to challenge this hypothesis. A landmark study by Bartels (2005) concluded that many Americans exhibit what he termed “unenlightened self-interest.” Although Bartels identified a correlation between support for the two Bush-era tax cuts and perceived tax burdens, he found that attitudes were unrelated to broader views on income inequality. For instance, those who expressed concern about inequality were just as likely to favor repealing the estate tax, which would widen the wealth gap. Bartels ultimately concluded that public attitudes were “ill-informed” and that they failed to grasp some of the most significant implications of tax cuts (page 15).

What about socioeconomic stereotypes?

In summary, while economic self-interest and policy views provide limited explanations for Americans’ complex attitudes toward taxing the wealthy, my research indicates that socioeconomic stereotypes play a crucial role. An extensive body of literature demonstrates that stereotypes about the groups affected by a policy significantly influence public perceptions of that policy. In the realm of economics, studies have shown that stereotypes about targeted groups shape attitudes toward welfare (see Fox, 2004, and Gilens, 1996, 1999) and social security (see Winter 2006).

From a theoretical perspective, stereotypes function as heuristics, simplifying the thought process surrounding complex policy issues. Within this literature, deservingness stereotypes emerge as particularly influential. In essence, the concept of deservingness pertains to whether individuals believe the targeted group has “earned” a particular benefit from the government.

I investigated this possibility using survey data that prompted Americans to describe the wealthy in open-ended responses (Ragusa 2015). Unsurprisingly, the survey elicited a variety of responses—common descriptors of the affluent included “highly educated,” “hardworking,” “good job,” “arrogant,” “inheritance,” “luck,” “political influence,” and “drive expensive cars.”

My analysis indicates that these stereotypes significantly influence views on taxing the wealthy (controlling for ideology, income, education, and various other factors). Statistically, the impact of socioeconomic stereotypes appears comparable to that of ideology. As one might expect, respondents who characterized the rich positively were more inclined to suggest they should pay less in taxes, while those who used negative descriptors were more likely to advocate for higher taxes on the affluent.

Ultimately, Americans stereotype the wealthy—similar to other societal groups—and these stereotypes help reconcile the seemingly contradictory opinions regarding tax policies targeting high-income earners (for example, why there is significant support for higher taxes in theory, alongside a notable number of self-identified conservatives favoring tax hikes on the wealthy). Notably, the survey revealed that most respondents held at least one negative stereotype about the rich, while a follow-up study indicated that modern media framing increasingly emphasizes the wealthy as a group (Ragusa 2017).

It is essential to recognize that not all stereotypes carry the same weight. Respondents who described the affluent in dispositional and prosocial terms were the most likely to support tax reductions for this group. In the literature, “dispositional” refers to whether a targeted group is deemed responsible for their circumstances (e.g., the rich became wealthy through hard work), while “prosocial” pertains to whether the group is perceived as a net benefit to society (e.g., the rich are job creators). Conversely, Americans who held situational and antisocial views of the wealthy (e.g., asserting that the rich gained their wealth through inheritance and are selfish) were the most inclined to advocate for increased taxes on the rich.

Implications

A key takeaway from this analysis is that Americans possess a mix of complex, often irrational, and frequently ill-informed opinions regarding tax policy. Bryan Caplan’s insightful book The Myth of the Rational Voter (2008) delves into this issue in greater detail, presenting a compelling case for Americans’ struggles to make sound economic decisions. In essence, Caplan argues that a downside of representative democracy is that voters often receive the policies they desire—albeit unenlightened outcomes. It’s not merely that people lack information; Caplan demonstrates that individuals form their policy opinions based on a blend of ideology, emotion, and biased reasoning rather than fundamental economic principles.

However, one aspect of Caplan’s thesis that appears incongruent with attitudes toward taxing the rich is his assertion that voters’ biased decision-making leads to the enactment of popular yet economically unwise policies. After all, reducing taxes on the wealthy is generally unpopular, yet Congress recently enacted such measures (as was the case during Trump’s presidency in 2017). How can we make sense of this apparent contradiction? I propose two possible explanations.

First, Caplan asserts that there isn’t a perfect “1-1” correlation between public desires and legislative outcomes. Issue salience plays a critical moderating role. When the public holds strong beliefs, they are more likely to secure their preferred outcomes (even if these beliefs are irrational or misguided). Conversely, when voters’ beliefs are weak, lawmakers enjoy greater leeway, making it less likely that such policies will pass. Given the preceding analysis, it is reasonable to conclude that voters possess rather malleable and thus weak positions regarding taxing the wealthy.

Secondly, it’s conceivable that Americans actually don’t desire higher taxes on the rich, despite their verbal support for such measures in hypothetical scenarios. While support for tax increases on the wealthy may appear robust in abstract discussions, follow-up questions often reveal considerably lower levels of support for raising taxes on high-income individuals and households.

For instance, the Hoover Institution data referenced earlier indicated that 66% of respondents wanted high-income Americans to contribute a larger share of federal income taxes. Yet, a follow-up question revealed that 73% preferred a top tax rate that is lower than what high-income earners currently pay. Similarly, Ballard-Rosa, Martin, and Scheve’s (2017) research found that while people may favor a more progressive tax structure in theory, their actual preferences for hypothetical tax rates do not significantly deviate from current rates.

In conclusion, the American public’s stance on taxing high-income earners is intricate and often contradictory, even in light of strong support for higher taxes on the rich in theoretical discussions. Given the pivotal role taxation plays in domestic politics, this presents a troubling reality, suggesting that the public may be ill-equipped to fulfill one of their fundamental civic responsibilities.

References

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