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How Do Michiganders Feel About a Tax Cut? It Depends On What They Know

In March 2017, the Michigan House of Representatives narrowly voted down a proposal to reduce the income tax. But the issue of tax cuts continues to be discussed, both at the state and federal level. To gauge citizen opinions about tax cuts, MSU’s State of the State Survey asked Michigan residents questions about the proposed tax cut in summer 2017.

The survey indicated that when residents learn who is poised to benefit most from a tax reduction — the wealthy — their support for the cut fell significantly, compared to those who didn't receive that information.

Respondents were asked three different versions of a question about the proposed reduction in the Michigan income tax. In the first version, the sample of Michigan residents was asked whether they approve or disapprove of cutting the tax rate from 4.25% to 3.9%. In response to this plain version of the question, 67.7% expressed approval. This would appear to indicate that Michigan residents have a strong preference for a tax cut.

However, in the second version, the same question was asked, but with this extra piece of information added: “It is estimated that this proposal will reduce revenues by more than $1 billion in 2018.”  When the sentence about reduced revenues is added, approval dropped to 51.8%. 

The third version added, “Those with higher incomes will see the most benefit, as it would reduce taxes for the average family by about $100, but for a family with an income of $1 million, it would reduce taxes by about $3500.” When respondents are informed that the largest benefits go to affluent households, approval dropped further, to 38.0%. 

This result is consistent with earlier rounds of the State of the State Survey, in which a large fraction of Michigan residents said they believe that high-income households should pay more income taxes, not less. The State of the State Survey, organized by the Institute for Public Policy and Social Research, is a quarterly, statewide telephone survey conducted since 1994 to monitor the public mood on important issues in major regions of the state. The full results of the 74th round of the survey are forthcoming.

The results did not reveal any big differences in terms of differences by race, gender or region. But political-party affiliation did reveal a divide.

Republicans were much more favorably disposed toward tax cuts than Democrats, regardless of the way in which the question was worded. The plain version of the question got a favorable response from 87% of Republicans and 65% of Democrats.  When Michigan residents were told that most of the benefits would go to high-income households, approval decreased to 62% of Republicans, and 16% of Democrats.

While keeping voters informed about who will benefit most from a tax cut may help dissuade voters from a reduction, successfully selling a cut to residents may depend upon avoiding those sorts of comparisons.

Charles Ballard has been a professor of economics at Michigan State University since 1983, when he received his Ph.D. from Stanford University. In 2007, he became Director of the State of the State Survey in MSU’s Institute for Public Policy and Social Research.