23 May 2012

Study Shows People View Taxes As Exploiting and Immoral

Income tax is a financial charge imposed on the income of individuals, corporations, or other legal entities. Income taxes are usually based on the total income of the individual with some deductions allowed. With corporations, it is the income of the business less its expenses (net income).

History of the U.S. Tax system

In August 05 1851, the Revenue Act of 1861 was enacted to help pay for the American Civil War. It imposed a tax of 3% of income over US$ 800. Congress repealed the income tax in 1872, but the concept did not disappear.

After the civil war, The Wilson-Gorman tariff of 1894 imposed a rate of 2% of income of over US$4000. This covered around less than 10% of households in the United States at the time. The tax was almost immediately struck down by a five-to-four decision of the Supreme Court.

The 16th Amendment of the US Constitution in 1913 made income tax a permanent fixture in the U.S. tax system. Due to exemptions and deductions attached, less than one percent of the population paid income taxes at the rate of only 1% of net income.

Dollars and sense: Why are some people morally against tax?

As the U.S. presidential election campaigns heat up, the economic debate is dominated by bailouts, austerity and, inevitably, taxation. Now a new study published in Symbolic Interaction asks why tax is such an important issue to voters and explores the moral ideas which underpin their views.

Americans are famously hostile to taxes even though they are not heavily taxed in comparison to Canadians and the British. In their study Dr Jeff Kidder and Dr Isaac Martin, from Northern Illinois University and the University of California-San Diego, explore how middle class feelings of exploitation lie behind this hostility.

"Everyday tax talk among the middle class is not simply part of a wider ideological view about economics or free markets," said Kidder. "Tax talk is morally charged and resonates with how Americans see themselves and their place in society."

Video: Disney Animation on Paying Income Tax (1943)

The researchers conducted 24 semi-structured, open-ended interviews with taxpayers in the Southern states who owned or managed small businesses to discover how they talk about taxes in everyday life. Entrepreneurs are a demographic group which is typically strongly anti-tax, while the Southern States provide many supporters for the radical Tea Party.

Respondents saw themselves as morally deserving and hard-working people, sandwiched between an economically more powerful group that manipulates the rules for its own benefit and a subordinate group that benefits from government spending but escapes taxation.

"We found that people associate income tax with a violation of the moral principle that hard work should be rewarded," said Kidder. "Our research shows that when Americans lash out at 'takeovers,' 'massive taxes' and 'bailouts,' they are looking at these issues from the perspective of a hard-working middle class besieged on all sides. Tax talk is about dollars, but it is also about a moral sense of what is right."

It is typically believed that those who are anti-tax will also be hostile to government aid for the poor and minorities. However, rich recipients of bailouts were also disparaged as people who did not deserve money because they did not work for it.

"A lot of the tax talk you will hear from politicians this election season makes no sense as arithmetic," Martin said. "But it makes sense as an appeal to the moral sensibilities of small business."

"Our research shows that tax talk is not actually about individual self-interest, but about our respondents' sense of the proper relations among groups," concluded Kidder. "It's a view summed up by one respondent: Don't take my paycheck."


Symbolic Interaction
Northern Illinois University
University of California, San Diego
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