Tax season may be behind us, but with the 2020 presidential election on the horizon, the word “tax” looks set to remain central to U.S. political debates in the weeks and months ahead. And for most Americans, there are few words they dread more; nothing unites Americans like their collective dislike of taxation. The funny thing is, this hatred of taxes is particularly acute in the United States—other countries have taxes too, but it seems as though non-Americans don’t dislike paying them quite as much. What is it about America that drives this aversion to taxes?
We can find some answers in the behavioral science of taxation.
First of all, it is much easier to hate something you don’t fully understand. In the United States, the goods and services that the government provides are not made particularly salient to people, as Cardi B famously made clear last year. It seems as though in the United States, unlike in some other countries, the government appears absent in the lives of its citizens, even when it is not. This happens in two ways. First, research shows that many Americans are simply unaware of their government’s role in core federal programs like Social Security and Medicare, to say nothing of its more opaque roles in important activities like encouraging research and innovation, fighting disease, and monitoring food safety. For example, a 2008 Cornell Survey Research Institute poll showed that 57 percent of respondents said they had never participated in a government social program. However, 94 percent of these same respondents reported being the beneficiary of a program provided by the state, with the average participant benefiting from four government programs.
What is it about America that drives this aversion to taxes?
This phenomenon, which political scientist Suzanne Mettler of Cornell University refers to as the “submerged state,” is arguably exacerbated by the government’s inability (or lack of desire) to broadcast their efforts. Michael Lewis highlights one such example in his recent book, The Fifth Risk. Specifically, when the U.S. Department of Agriculture provided loans to small business owners during the Obama Administration, Secretary of Agriculture Tom Vilsack arranged for the checks to prominently display the funding source—“UNITED STATES GOVERNMENT.” However, his decision was met with pushback from many local government officials, particularly those from areas where “government” was a dirty word. Lillian Salerno, the former Deputy Undersecretary of Rural Development, recalls that “in the red southern states the mayor would sometimes say ‘Can you not mention that the government gave this?’” Clearly, taking ownership for federal programs, even when beneficial, is a political minefield for the U.S. government.
Second, many of the U.S. government’s efforts are hidden from public view by their nature. For example, much of what the government does is actually about preventing bad things from happening, which is something no one ever sees. For example, consider food safety, fighting terrorism, investing in systems to detect natural disasters, and keeping planes from colliding—these are things you only notice when things go terribly wrong. Successful government efforts in these domains are essentially invisible. Disaster prevention does not just happen by itself, and it is not cheap. But it is hard for citizens to see and appreciate this work, so they go on complaining about the government even when it may have just saved their lives.
So if you are like many other Americans, your aversion to taxes may stem in part from a lack of appreciation for what the government actually does for you. Surely, the U.S. government (like any other large organization) has many inefficiencies. However, when so much of what the government does is “submerged” from view, it is no wonder that citizen perceptions lean away from an appreciation of what government does and toward a desire to dismantle it.
The process of actually paying your taxes is comically difficult in the United States. This is not an accident.
That said, even if you do understand and appreciate the role of the government in your life, the process of actually paying your taxes is comically difficult in the United States. This is not an accident. Indeed, while many may be familiar with the idea of a nudge, the complexity of tax filing can be thought of as an example of nudge’s evil little brother—a “sludge.” That is, filing taxes is a process that is (arguably intentionally) more complicated, confusing, redundant, and annoying than it needs to be. For example, much of the information you provide when filing your taxes is information the federal government already has, from your name and address to your salary (in the comfortable majority of cases). Given that, why can’t tax filing be made simpler, by eliminating redundancies and making forms less confusing? Surely that would save all of us time and money.
The reality is that (at least) two politically powerful groups have a vested interest in making tax filing as “sludgy” as possible: tax preparers and anti-tax interest groups intent on lowering taxes. Why? Well, tax preparers clearly benefit from an intentionally complicated tax filing process—it is good for business. In 2003, the IRS cut a deal with tax preparation companies like Intuit (TurboTax) and H&R Block, whereby it agreed to not create their own free filing system if those companies provided a free-filing option for lower-income Americans. Earlier this year the agreement was almost made permanent by Congress after lobbying by these same interest groups. This proposal should worry taxpayers. ProPublica recently uncovered the ways TurboTax and H&R Block actively hid free file options in search results. With only 3 percent of eligible filers taking advantage of the free file option, this might explain the exceptionally low take up rate.
Meanwhile, anti-tax lobbyists (like Grover Norquist) also benefit from the sludges gumming up the tax filing system. Specifically, when taxes are more frustrating, people are more opposed to the general idea of taxation. This drives movements to reduce taxes more and more, achieving the aims of the anti-tax lobbyists, but not necessarily those of the American people at large.
When taxes are more frustrating, people are more opposed to the general idea of taxation. This drives movements to reduce taxes more and more, achieving the aims of the anti-tax lobbyists, but not necessarily those of the American people at large.
In short, social science research tells us that at least part of our tax aversion stems from the opacity of government processes and the pernicious effect of sludges in the way we file taxes in the United States. To make matters worse, there are powerful special interest groups who are keen to keep the system opaque and sludgy.
It does not have to be this way. We could do more as a nation to make clear to citizens what their tax money is used for. Indeed, a better understanding of where tax money goes may help people appreciate what the government does and identify areas of wasteful spending where it exists. And surely simplifying the tax filing process through public policy, including offering easier free filing and autocompletion for simple returns (as proposed by presidential candidate Elizabeth Warren, for example) could represent a huge improvement in our collective quality of life. April 15 need not be Americans’ least favorite day of the year—if our leaders can make taxes more transparent and easier to file, it could just be another sunny spring day.