Poll: Americans underestimate how many people pay zero income taxes

Back in 2012, Republican presidential nominee Mitt Romney's campaign suffered a blow when a tape was leaked of him grousing that 47 percent of Americans don't pay federal income tax. It was one of the biggest gaffes of the presidential campaign, but a new poll conducted by Ipsos for NPR suggests that many Americans forgot it.

The way Romney characterized those who don't pay federal income taxes is what got him in trouble, but the figure was roughly true. The new poll, however, shows that a majority think that the share of Americans paying no federal income tax is far lower.

The poll gave respondents four options -- 39 percent said that only 11 percent of Americans pay zero or negative income tax, and 31 percent said that only 27 percent pay zero or negative income tax. Only 21 percent got it right -- right now, around 45 percent pay no federal income tax.

The poll, released the day before Americans' taxes are due, delved into what Americans know and what they believe is wrong with the U.S. tax code -- and what they know is limited and at times contradictory. But this isn't just about pointing out what Americans know and don't know. Rather, there could be important policy implications to Americans' misperceptions about the tax system. For example, this question dovetails with questions about what people think the lowest-income Americans' tax rate should be.

Americans underestimate the share of Americans who don't pay federal income taxes

Given four choices of how many Americans pay zero or negative federal income taxes (11, 27, 45, or 63 percent), fully 70 percent of poll respondents chose the options under the correct answer, which was 45 percent. Some of these people simply have no taxable income, and others get money back as a result of refundable tax credits like the Earned Income Tax Credit. (Of course, these people might pay other taxes, like payroll taxes, as well as whatever sales and property taxes their states impose.)

Two-thirds of Americans believe lower-income people pay too much income tax (with heavy partisan differences -- around 8-in-10 Democrats, 6-in-10 independents, and half of Republicans agreed with that statement). In addition, 60 percent of Americans believe taxes should be lowered for people making $49,000 or less (again, with Democrats and independents being somewhat more likely than Republicans to say those taxes should be lowered).

Taking these two ideas together -- that people (mistakenly) think very few of their fellow Americans pay zero federal income tax, and that a majority of Americans think low-income people pay too much in income tax -- there are a couple of possible conclusions.

One is that if more Americans knew how many others do not end up paying federal income taxes, they would say tax rates should stay the same or even be raised.

Then again, it's possible that Americans nevertheless would think their poorest fellow citizens do need more money, regardless of how the current tax code looks. That might mean they would advocate expanding the EITC or other tax breaks.

When it comes to taxes paid by the rich, things get complicated.

We posed the following statement to people as a true or false question: "For the highest earners, the percent of federal income taxes they pay now is significantly higher than it was in 1980."

In retrospect, there are multiple ways to interpret this question.

If "percent" is taken as "rate" here, the answer is "false." In 1980, the top marginal income tax rate was 70 percent. Today, it's 39.6 percent (something about half of Americans know, per our poll).

But if "percent" is taken as "share" here, the answer is "true." That is, the share of federal income tax revenue that the richest Americans pay has gone up since 1980.

How does that work? As the Tax Policy Center's Roberton Williams explained to NPR, the share of income going to the rich has climbed in a big way over the last few decades.

So how Americans think about this could affect what they think should happen to the top tax rates on the richest. In 1980, the top 10 percent brought in 32 percent of all adjusted gross income, according to the Tax Foundation. In 2013, it was 46 percent. For example, many Americans also believe taxes should be raised on the richest. The top tax bracket starts at $418,400 right now.

The poll shows that 70 percent of Americans believe taxes should be raised on people making $250,000 to just under $1 million, and that 75 percent believe they should be raised on people making $1 million or more.

That's already a sizable majority, but depending on whether people knew tax rates on the richest had indeed fallen (or, alternately, that the rich now pay a higher share in taxes), it could change what they think should happen to those marginal rates. (Of course, it's also possible that historical rates wouldn't affect their views at all.)

Those views differ widely by party; Democrats are much more likely to believe that taxes should be raised on the rich than Republicans.

Americans also appear to have strong views on how people earn their money. We asked people to what degree they agreed with this statement: "The tax rate on income from work should be lower than the tax rate on income from wealth."

Across the board, regardless of party, Americans agreed -- 75 percent said they did, including 77 percent of Democrats, 71 percent of Republicans and 84 percent of independents.

This is another result that might make the richest Americans squirm. The rich tend to earn their income in a different way from most other Americans. Besides paychecks, many make money from capital gains -- income they get from selling investments like stocks. Most of those capital gains are taxed at a rate far below that top income tax rate. (People at any income level of course can have those kinds of investments, but capital gains are overwhelmingly concentrated at the top of the income spectrum.)

The top rate that the highest-income Americans will pay on most capital gains is 20 percent, around half the top marginal rate for ordinary income.

Americans overestimate how important income taxes are to government revenue

About half of the poll's respondents (with very little variance by party) said they believe 75 percent of the federal government's revenue comes from personal income taxes. In reality, it's just under half.

Of all the taxes Americans pay, income tax probably requires the most thought. After all, payroll tax comes automatically out of each paycheck. Sales tax is imposed at the cash register. And so on.

So maybe it makes sense that Americans think all that work they put into filling out their forms ends up doing the lion's share of funding the government.

What else we learned

Beyond all this, there were a few more fascinating findings in the poll.

Phrasing matters. One thing we learned is that using the phrase "death tax" instead of "estate tax" seems to make people more opposed to that tax -- but, interestingly, that effect appears to be by far largest among Democrats.

Sixty-five percent of all people said the "estate tax" should be abolished, compared to 76 percent who said the "death tax" should be. However, among Democrats that swing was far larger: only half said they wanted to abolish the "estate tax," but 71 percent said the same of the "death tax."

The estate tax affects fewer than 1 in 500 estates. Many opponents of the estate tax -- who have tended to be Republicans -- use "death tax" as a euphemism. This shows that to the extent that that phrasing helps them, it could be helping them pick people up across the aisle.

On tax policy, views aren't always all that partisan. Democrats are often seen as the party that wants a more progressive system -- Hillary Clinton, for example, ran for president in 2016 with a tax plan that would have ramped up taxes for the ultra-rich.

But in our poll, nearly half of Democrats -- 45 percent -- agreed with the proposition that "federal income taxes should be cut for all income levels."

Likewise, Republicans -- the party that has spoken of "makers" and "takers" -- were split roughly evenly on the idea that tax cuts for the wealthy lead to economic growth. (Democrats and independents tended to disagree -- that is, to say that tax cuts for the wealthy do not lead to that growth.) Incidentally, it's not at all clear that this is true; one recent comparison of tax rates and growth rates across advanced economies found no strong linkage between the two.

These are only two examples, but they suggest that partisan messaging in Washington on some specific issues doesn't necessarily filter down to Americans.

Americans agree: Taxes are too complicated (but that's no reason to cheat). There are a few more areas where Americans tend to agree across party lines: nearly 9 in 10 believe the tax code is too complicated, three-quarters say it's not OK for people to underreport income on their taxes, and 77 percent say their own personal federal income taxes are too high.

In addition, 72 percent knew that taxes are due on April 18. For those remaining 28 percent, it might be time to file that extension.

The poll was conducted online on April 11-12, with a sample of 1,010 adults age 18 or older. For all respondents, the poll has a credibility interval of plus or minus 3.5 percentage points. The credibility interval is plus or minus 5.7 percentage points for Democrats, plus or minus 6.1 percentage points for Republicans, and plus or minus 8.3 percentage points for independents.