Blame It on the Taxes?

by Dan Hopkins on April 17, 2012

in Blogs

‘Tis the season to file tax returns—but is it also the season to blame taxes for our economic troubles?

For decades, the University of Michigan’s Survey of Consumer Attitudes has been asking Americans by phone about their family’s financial situation—and about the reasons behind it. But among those Americans who report being worse off, taxes are only rarely given as the reason why.  In the average month between 1978 and 2003, about 1.4% of people whose personal financial situation got worse in the last year blamed that change on taxes. That number peaks in September of 1991, at 3.2%. And from the Figure below, it looks like such responses (shown in red) are primarily correlated with the ups and downs of the national economy.  When the economy is doing poorly, we are just a bit more likely to put the blame on taxes.  The Figure’s black line also makes it clear that it is even less common for Americans to cite tax cuts or other tax policies favorably, as a primary reason that we are better off.  In fact, not once in these 26 years does this number break above 1%.

Intriguingly, the spring is the most common time for listing taxes as the reason for a downward change.  The Figure below pools the share of people blaming their worsening financial outlook on taxes by the month of the survey.  There is a slight uptick in early spring, with the share peaking at 1.6% in March and April.  It then declines to between 1.2% and 1.4% for the remainder of the year.  Now spring is also a season of legislative activity, pollen, and lots besides, so this minor bump is not necessarily a reflection of the tax filing deadline.  But it certainly could be.

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