Support for tax cuts still low

Some of the Australian Survey of Social Attitudes 2009 results are now in the Australian Social Science Data Archive, so we can start looking at some trend data.

I’m sorry to report that support for cutting taxes compared to more spending on social services may have hit an all-time low in the history of Australian opinion polling. Though the precise question varies over time, we have similarly worded questions going back to the late 1960s. In 1967 and 1969, 26% of respondents wanted tax cuts. In 2009, it was just below that on 25% (though the lack of an explicit ‘depends’ option in the 1960s means that there were ‘soft’ supporters of both taxing and spending in their totals). The three most recent surveys are in the figure below.



Question 2005 and 2009, Australian Survey of Social Attitudes: If the government had a choice between reducing personal income taxes or increasing social spending on services like health and education which do you think it should do?
Question 2007: Australian Election Study: If the government had a choice between reducing taxes or spending more on social services, which do you think it should do?

Last year I had speculated that a recession might start to turn back the pro-tax tide. This is because of my theory that pro-tax opinion is a by-product of prosperity.

So either my theory has taken a hit or we didn’t have much of a downturn.

My theory wasn’t so much about macroeconomic variables as household finances. I argued that when households are doing well they want to spend more on goods and services, including those services like health and education that are for many Australians provided by government. Conversely, when money is tight they want to promote the household budget and support tax cuts.

We had a high-income downturn – unemployment only rose slightly, and for people in work previously promised tax cuts, lower interest rates, and generous government handouts, left many more people better off than worse off. So with tax cuts already being delivered and little strain on most taxpaying households I think that the historical precondition for pro-tax opinion did not eventuate, and is therefore not evident in the 2009 AuSSA.

18 thoughts on “Support for tax cuts still low

  1. What’s shocking about this is the most recent examples of big splash spending has been such an abject failure.

    My feeling is that the fears of recession still continues and that people may be feeling we live on borrowed time.

    However if this is the way people really feel then lets have more of the big splash spending as failure and more failure will eventually come to bight us in the bum.

    What did Menckon once say: Don’t wish what you want or you may get it good and hard.

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  2. The big splash spending isn’t the sort of spending people want. People want infrastructure. Better roads/pt, better hospitals, better schools. Basically, they want things that (until recently at least) were state issues. Of course, the state governments don’t have any control over taxation thus the disappointment.

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  3. Yeah but they want other peoples taxes to pay for them, and the income tax cuts people are accustomed to getting over the last decade are quite insignificant on a year to year basis.

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  4. I wonder what it would look like if the question mentioned some explicit dollar amounts. Like would people rather the government spend $1000 extra on services or give them $1000 tax back.

    I think some people are sincerely sceptical of their own ability to spend money wisely, though. They kind of like the government being their income nanny.

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  5. “The most absurd public opinion polls are those on taxes. Now, if there is one thing we know about taxes, it is that people do not want to pay them. If they wanted to pay them, there would be no need for taxes. People would gladly figure out how much of their money the government deserves and send it in. And yet we routinely hear about opinion polls that reveal that the public likes the tax level as it is and might even like it higher. Next they will tell us that the public thinks the crime rate is too low, or that the American people would really like to be in more auto accidents.”

    ~ Lew Rockwell, Speaking of Liberty, p. 281.

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  6. I agree the interest rate cuts provided a huge boost to household disposable income. But they also would have done so in 1991. Maybe support for tax cuts is most likely to emerge after the storm has passed? For most of 2009, official forecasts were for quite a severe recession. Many of the people who might otherwise swing between preferring tax cuts and social spending would have been in fear of losing their jobs. You might get a different result this year with rising interest rates and the worst of the threat behind us. Was support for tax cuts over spending higher in 1994 than 1991?

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  7. It’s likely only going to get worse. The Whitlamite Baby Boomer hippies are leaving the workforce and entering their dotage, and after asking for tax cuts for the last thirty years they will now want to tax others so that governments can spend money on the services that they want.

    I suspect this will be demonstrated by a breakdown of results by age cohort.

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  8. Rajat – In my original paper on this back in 2004 I did look at a subjective measure as well, consumer confidence, which trended in the same direction as the social services spending question. Just checking the Roy Morgan Survey, consumer confidence dipped badly in 2008 but returned to 2007 levels by August 2009. I can’t see any statement on when the 2009 survey was done, but I know previous AuSSA surveys began in August (they are mail-out, so there would be variation in when people actually fill them in). If this is the case, then it supports my theory that the downturn had only a very temporary effect on people’s perceptions of the financial position.

    There were tax and spend surveys in 1990, 1993 and 1996 – not in the crucial recession years of 1991 and 1992. But in those three first half of the 1990s surveys support for lower taxes was near identical at around 56%.

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  9. May big tax and spend government is actually what people want?

    I think the question on tax should be more specific. Do they want income tax reduced? Or taxes in general? No one really cares about company tax.

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  10. The AuSSA question is specifically about personal income tax. In theory, that may reduce support for tax. But its spending question specifically mentions health and education, the most popular spending items. ‘Social services’ in the AES question is vaguer and may be taken to include welfare, which is much less popular. Still, the two questions seem to get very similar results.

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  11. As an East German functionary once said, if the people are thinking the wrong things they need to be replaced by a different people.

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  12. There are now more drones than worker-bees.
    When you provide welfare, extend it to the masses, it builds up a momentum all of its own – not unlike some all consuming beast that grows on its own appetite.
    Thus, the majority doesn’t want tax cuts – they want you to pay for them!

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  13. People support spending when it successfully overcomes something like a GFC.

    In any other time you can only have tax cuts if you offset expenditure cuts with them.

    Whilst there is little suport for this it has never been tried.

    I would have thought if politicians thought the public supported this they would have adopted such policies.

    Instead we have a bi-partisan policy of increasing spending and cutting taxes marginally

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  14. Peter’s conclusion is right, that politically the two major parties have been having it both ways, with increases in health and education spending AND tax cuts. But that was possible due to the unusual prosperity of the late Howard era. Now more difficult choices need to be made.

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  15. Lew Rockwell fails to consider that perhaps many people believe that they’d be happy to voluntarily contribute themselves, but that everyone else needs to be compelled, hence the support for taxation.

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  16. In a way, it is a compliment to Australian governance, since people clearly have an expectation that spending will be reasonably beneficial given the cost.

    One gets rather different results in the US: of course, they are having a particularly nasty economic downturn, so that would tie in with Andrew’s thesis about recessions and prosperity. But I still wonder if there is a connection with “trust in government” results, which are very low in the US.

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