Tax-cut tactics

How do you sell tax cuts to people who don't want them?

How do you sell tax cuts to people who don't want them?

It seems everyone in Washington these days is trying to sell a tax cut - something that would normally make Americans pretty happy. But that doesn't seem to be the case this time. Recent polls show negative reactions to tax-reduction proposals across the board, and for the first time in decades, nearly half of Americans say they're content with the amount of federal income tax they're paying. So if the numbers are to be believed - and not everyone says they are - then one has to wonder: How, or why, does one sell a tax cut in this environment? First, let's look at the numbers. The Gallup Organization conducts a semi-annual survey to gauge the public's attitude on taxes. Since 1998, the number of people saying they pay too much has held steady at about 65%, and the number of people saying they pay just enough has hovered close to 30%. (Not surprisingly, the number of people who say they should pay more lingers around 1%-3%.) Last month, those stats suddenly shifted. The number of people saying they were paying too much went down 15 points, to 47% - the lowest level since 1961. And the number of people who thought their taxes were fine went up 20 points, to 50% - a high not seen since 1949, the same year that NATO was established. Of course, these findings created a stir among Washington pollsters. "I think we were all pretty surprised by those numbers," says Pew Research Center editor Carroll Doherty. "It's actually a bit mystifying." Chris Wilson of Wilson Research Strategies openly doubts the validity of the poll's findings, saying his firm's state-by-state polls on taxes have yielded very different results. But the numbers stand up when compared to other recent national surveys. Several major tax-cut packages have been unveiled this year - one by Bush, a handful by Democrats - and Americans are having tepid reactions to all. An NBC News/Wall Street Journal poll conducted just weeks after Bush introduced his $674 billion tax cut found that a mere 37% approved of it. The same poll showed that 42% - more, but far from a majority - preferred a Democratic plan for a cut about one-fourth the size. During this same period, Bush's overall approval rating dipped to its lowest point since September 11. So what's happening? Why is the public, in the middle of a weak economy, suddenly averse to keeping more of its own money? William Gale, co-director of the Tax Policy Center at the Brookings Institution and former senior economist at the Council of Economic Advisers, sees a shift in priorities after September 11. According to him and many of his colleagues, a public that had grown distant from their government is once again realizing the essential role it plays in times of crisis, so a willingness to pay taxes to support that government is on the rise. "I think that there's growing recognition that the nation and the economy are facing very serious problems like terrorism and trying to provide healthcare and education in an equitable and efficient way," Gale says. "Logically, tax cuts have nothing to do with the solutions to those things." Doherty and the Pew Center conduct an annual poll asking Americans to rank their top-15 national priorities. This year, expanding the 2001 tax cut ranked last. "People feel more of a need for government now, and they feel the tax burden is appropriate," Doherty reports. Tiring of tax talk? Gale sees political factors at work as well. "This administration has been pushing relentlessly on tax cuts as the solution to everything," he says. "I think it's just wearing thin. I think people are finally beginning to see that this administration is sort of a one-note Johnny." Whether that's true or not, both parties are already knee-deep in their sales pitches. So one way or another, barring any unforeseen upheavals, a tax cut will be signed into law this year. But whose plan will most resemble the final version is yet to be decided. So how do you generate public support for your particular tax-cut proposal when the public is saying it doesn't want one in the first place? "I think there's a way to do this," says Larry Haas, former communications director at the White House Office of Management and Budget, and now head of the public affairs practice at MS&L, "but you have to make it about something beyond tax cuts. If it's only about tax cuts, you will lose this debate." He urges a common-sense appeal: Address the underlying sentiment driving the stats. If the public feels the need for strong government now, brand the other guy's cut as the one that will weaken it. "A Democratic message should be: Bush's tax cut not only goes to the wrong people, but it will also threaten Social Security and Medicare, force us to cut education and homeland security, and throw our children into a deep sea of red ink." He credits the Democrats for already trumpeting the upper-class tilt of Bush's plan, but thinks they still need to connect it with its adverse impact on government. "The Democrats are dancing around all of these elements now," he adds, "but they have yet to tie all the pieces together." Focusing on the consequences Gale agrees on the need to incorporate consequences into any winning sales pitch. "If I very quickly ask you, 'Do you want a tax cut?' and if I don't present any alternatives, you will probably say, 'Yes.' But if I then say, 'Do you want a tax cut if it means less homeland-security spending and less money for Social Security?' then it becomes a real issue. I think that a lot of people, when asked, 'Is it more important to you to cut dividend taxes'" - as the Bush plan would - "'or to use that $300 billion in a way that promotes education or healthcare or homeland security?' I think the overwhelming majority of Americans would say the latter." Gale has no illusions about the Bush team not understanding this, however. Indeed, he says it is the brilliance of the Bush PR machine that the debate isn't framed that way. "The genius of the administration has been to frame the issue not as a tax cut versus government spending, but as a tax cut versus no tax cut. The timidity of the Democrats in not being able to say, 'Hey, there are some possible uses for this money other than tax cuts,'" has left Bush firmly in control of the debate, he believes. But there are those who are pushing Bush to sell his tax cut the way you sell every tax cut: by promising more money in your pocket. These are inevitably the same people who disregard the new polls altogether. "I don't think the polls really mean anything," says Stephen Moore, president of the Club for Growth, an anti-tax group with growing cachet in DC thanks to an aggressive, unabashed media and lobbying operation. "The only poll that really matters is the one that took place on November 5," he says. "And that was a resounding vote of confidence in Bush's handling of the war on terror and his call for expanded tax cuts." Moore's group calls Bush's tax cut "a little small," and is pushing its own "super size" version. Polls be damned, they say, tax cuts are good business - and politicians who waste their time worrying about backlash from voting for one are, well, wasting their time. "No question, it's more politically popular to be cutting taxes than to be raising them," he says, laughing off the suggestion that the opposite could ever hold true. "I don't think the President or the Republicans have to feel squeamish or even apologetic about being the pro-tax-cut party." He offers evidence: "The last election was a lot of Democrats saying we shouldn't cut taxes and Republicans saying we should. For the first time in years, Republicans picked up seats while their party held the White House. That's a pretty strong sign that tax cuts are still pretty popular." Ultimately, Moore believes that when it comes to taxes, voters will say one thing to a pollster and another at the polls. He insists, "Nobody in American history ever lost an election for cutting taxes." ----- Tax-reduction proposals President Bush Size $674 billion over 10 years Centerpiece Eliminate taxes paid on stock dividends, acceleration of 2001 tax cuts Sales pitch Bush intends these cuts to stimulate the economy in the long run, using his own supply-side sales pitch. He says he wants to "lay the groundwork for future growth and future prosperity" House Democrats/Rep. Nancy Pelosi Size $100 billion over 10 years Centerpiece $300 tax rebate per person, fast relief for small business Sales pitch The primary Democratic plan focuses on being smaller and more stimulating to the economy in the long run. The plan itself is headlined: "Create Jobs Immediately/Fiscal Responsibility/Fair to All Americans" Senator Daschle Size $141 billion over one year Centerpiece $300 tax rebate per person, $40 billion to state and local governments Sales pitch Daschle's plan is similar to several Democratic proposals. He claims he wants to "give our economy more confidence and more demand in the short run, and more savings and responsibility in the long run" Senator Edwards Size $120 billion over one year Centerpiece $500 energy tax credit, aid to states and local governments Sales pitch Presidential contender Edwards is attacking Bush's tax-cut plan as fiscally irresponsible, saying that he'd rather give money directly to those who need it most: the middle class

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