Are Tax Cuts a Political Loser Now?

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This is an edition of The Atlantic Daily, a newsletter that guides you through the biggest stories of the day, helps you discover new ideas, and recommends the best in culture. Sign up for it here.In theory, the proposition seems foolproof: Everyone hates the taxman and loves to keep their money, so a tax cut must be politically popular.But Republicans’ One Big Beautiful Bill Act has tested the theory and found it wanting. A new Wall Street Journal poll shows that more than half of Americans oppose the law, which cuts taxes for many Americans while reducing government spending. That result is in line with other polling. The data journalist G. Elliott Morris notes that only one major piece of legislation enacted since 1990 was nearly so unpopular: the 2017 tax cuts signed by President Donald Trump.The response to the 2017 cuts was fascinating. Americans grasped that the wealthy would benefit most from the law, but surveys showed that large swathes of the population incorrectly believed that they would not get a break. “If we can’t sell this to the American people then we should be in another line of work,” Senate Majority Leader Mitch McConnell said at the time. Americans agreed, giving Democrats control of the House a year later.If tax cuts are no longer political winners, that’s a major shift in American politics. McConnell’s sentiment reflected the orthodoxy in both parties for more than four decades. Ronald Reagan won the presidency in 1980 by promising to cut taxes, which he did—in both 1981 and 1986. The first cut was broadly popular; the second had plurality support. His successor, George H. W. Bush, told voters while campaigning, “Read my lips: no new taxes,” and his eventual assent to tax hikes while in office was blamed in part for his 1992 defeat. The next GOP president—his son, George W.—made popular tax cuts. Democrats Bill Clinton and Barack Obama were careful to back higher income taxes only on the wealthy.Although separating Trump’s own low approval from the way the public feels about any particular policy he pursues is difficult, the old consensus may just no longer hold. A few factors might explain the shift. First, thanks to 45 years of reductions, the overall tax burden is a lot lower than it was when Reagan took office, especially for wealthy taxpayers. In 1980, the top marginal individual tax rate—what the highest earners paid on their top tranche of income—was 70 percent; it had been as high as 92 percent, in 1952 and 1953. In 2024, it was 37 percent, applying only to income greater than $609,350. Since 1945, the average effective tax rate has dropped significantly for the top 1 percent and 0.01 percent of earners, while staying basically flat for the average taxpayer, according to the Tax Policy Center. The top corporate tax rate has also dropped from a high of 52.8 percent, in 1968 and 1969, to 21 percent, in 2024.Second, and not unrelatedly, income inequality has risen sharply. Although the gap between the wealthiest Americans and the rest of us has stabilized in the past few years, it remains well above historical averages. Voters aren’t interested in subsidizing even-plusher lifestyles for the richest Americans. That’s especially true when tax cuts are paired with cuts to government-assistance programs such as Medicare and Medicaid. Majorities of people in polls say Trump’s policy bill will mostly help the rich and hurt the poor, and they are correct, according to the nonpartisan Congressional Budget Office.Third, Republicans have argued for years that tax cuts are good policy because they generate enough growth to pay for themselves. This effect is known as the Laffer Curve, named after the influential conservative economist Art Laffer, and it allows supposed fiscal conservatives to justify tax cuts that increase the deficit in the short term. The problem is that it isn’t true. Reagan’s tax cuts didn’t pay for themselves, nor did W. Bush’s, nor did Trump’s first-term cuts. These cuts won’t either. Voters also consistently worry about the national debt and deficit, and today even liberal economists who wrote those concerns off in the past are sounding alarms, citing the cost of interest payments on the debt and concerns about the debt as a percentage of GDP.This points to a future problem: Even if voters have soured on tax cuts, that doesn’t mean they are willing to endorse tax increases. As my colleague Russell Berman explained to me back in May, Republicans felt pressure to pass the budget bill, lest the first-term Trump tax cuts expire—which voters would hate, and which could hurt the economy. (Those cuts were time-limited as part of procedural chicanery.) And few politicians are willing to run on raising taxes. Most Republicans have signed a pledge not to raise taxes. Trump’s tariffs are a tax, and he made them central to his campaign, but he also falsely insisted that Americans wouldn’t pay their cost. On the other side of the aisle, Democrats have in recent cycles vowed to raise taxes on the very wealthy but generally rejected increases for anyone else.This math won’t work out forever. At some point, Americans will have to reconcile the national debt, their desire for social services, and their love of low taxes. It will take a brave politician to tell them that.Related:Why don’t most Americans realize they’re getting tax cuts for Christmas? 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