By Tim Lamer, Director,
MRCs Free Market Project
A recent Wall Street Journal/NBC News poll, reported in the April 9 Wall Street Journal, asked Americans which they would prefer: a candidate who advocates cutting taxes, or a candidate who favors more spending on education and child care. Only 39 percent preferred a tax-cutting candidate, while 55 percent wanted a candidate who would spend more money.
One possible explanation for the relatively low popularity of tax cuts is that they get bad press. Network news reports generally portray tax cut proposals as election-year sops to the wealthy at the expense of the poor. And viewers of the network news probably think there is no philosophical or economic rationale behind tax cuts, since they are rarely told of one.
This is the conclusion of a year-long study of tax coverage by the Media Research Centers Free Market Project. Researchers analyzed tax stories from March 15, 1997 through March 14, 1998 on ABC World News Tonight, CBS Evening News, and NBC Nightly News. The study found that:
1) There were 13 stories mentioning the liberal argument that last years cut in the capital gains tax would mainly benefit the wealthy. Only four stories mentioned conservative arguments that more middle class investors are entering the stock market every year, and that relieving double taxation would help the economy.
2) There were 18 stories which mentioned the debate over whether to extend the child tax credit in last years budget deal to the non-taxpaying working poor. Only six of those stories mentioned conservative arguments that such an extension would constitute new welfare spending.
3) In the 58 stories about last year's budget deal, only two pointed out that the deal increased the complexity of the tax code, which ran counter to 1996 campaign promises and to the GOPs supposed agenda of tax simplification.
4) In the 38 stories about Internal Revenue Service (IRS) abuses, only two mentioned the conservative argument that the only real way to rein in IRS power is to make the tax code less complicated and more neutral.
5) Fourteen stories claimed that either the GOP's focus on IRS abuses or the plans in last years budget deal to cut taxes were motivated by election-year political calculations. Only one of these stories said the same thing about proposals for new spending.
As part of everything from last years budget deal, to hearings into abuses at the Internal Revenue Service, to proposals for cigarette tax increases this year, tax issues have been prominent in the news over the past 12 months. To see how they were covered, the Media Research Centers Free Market Project reviewed all of the stories involving taxes from March 15, 1997 through March 14, 1998 on ABC World News Tonight, CBS Evening News, and NBC Nightly News. The MRCs researchers found that conservative arguments for cutting taxes were largely omitted from reporting, which led to many common debatable themes in reports across the networks, such as:
1) Tax cuts mainly help the wealthy.
The liberal claim that tax cuts mainly help the wealthy was mentioned in 13 stories, mostly during debate over efforts to cut the capital gains tax as part of last years budget deal. On the June 9 World News Tonight, for instance, ABCs John Cochran told viewers that House Ways and Means Committee "Chairman [Bill] Archer wants to give a big tax cut to those who invest in capital gains...the President thinks those tax cuts are too generous to the wealthy." CBS reporters Paula Zahn and Rita Braver outlined President Clintons objections to the GOP plan on the June 30 Evening News, also without bothering to give any Republican arguments. "Clinton weighed in today with his version of a tax cut plan," Zahn reported. "He said he disagrees with key parts of the tax-cut bills passed by the House and Senate because they give too many breaks to the wealthy and not enough to middle income Americans." Braver added that Clinton "attacked the congressional plans for catering to the rich."
And NBCs John Palmer concluded his May 3 Nightly News story by pointing out that the "budget agreement is only a framework. Congress still has to vote on the actual appropriations that will directly affect peoples lives. And there could be trouble from those who worry that the budget is weighted too much in favor of the rich at the expense of the poor."
ABC, CBS, and NBC Evening News
only 4 stories
While reporters had a responsibility to present White House arguments against the capital gains tax cut, few felt they needed to tell viewers of GOP arguments for the cut. Only four stories brought up the conservative argument that a capital gains tax cut would help more than just the wealthy. According to ABCs Bob Jamieson, for example, on the July 29 World News Tonight, many middle class people are excited about the capital gains tax cut, too. He noted that "in the last five years, as stock prices have nearly tripled, the number of people invested in the market has doubled. Half of all investors today never graduated from college. Thirty five percent are middle class or blue collar workers." And while "critics argue that this is a tax cut for the elite because most stock is still owned by the richest six percent of Americans," these "new, less wealthy investors argue it is just as important to them." But Jamiesons report was unusual. Most ignored the rise of the middle class stockholder, as well as arguments that a capital gains tax cut would help homeowners who wanted to sell and the economy as a whole.
2) Tax relief should not be only for taxpayers.
There were 18 stories about the debate over whether to extend the child tax credit in last years budget deal to the non-taxpaying working poor. But again, conservative arguments were largely left out of reports. Only six of the 18 reports mentioned the conservative argument that such an extension constituted welfare instead of tax relief.
According to Dan Rather, on the June 13 CBS Evening News, the Republican proposal was unacceptable to Clinton "because it does not apply fully to working women and especially poor women who take a tax deduction for child care." On the June 19 World News Tonight, ABCs John Cochran reported that "House Democrats sent out women members to trash Republican tax cuts which offer nothing to low-income workers, who pay Social Security taxes, but no federal income taxes." (He failed to point out the flaw in the argument that the credit was a refund on Social Security taxes paid; namely, if it was, then recipients' future Social Security income should be lowered to reflect the change, but wasnt.) Over at NBC, on the July 29 Nightly News, Claire Shipman counted it a victory for the White House that President Clinton was able to get "a $500 per child tax break that extends to the working poor." None of these stories included the argument that tax relief for non-taxpayers is welfare.
ABC, CBS, and NBC Evening News
Other reporters were more balanced. NBCs David Bloom, on the June 16 Nightly News, told viewers "that the President believes [the credit] should also go to four million low-income working families, even those that dont pay taxes. Republicans say that is not tax relief, thats welfare, and vow that unlike the fight over disaster relief money, this time they are not backing down." And Blooms NBC colleague John Palmer, on the June 29 Nightly News, included a soundbite in his story from Republican Senator Don Nickles making the point.
3) An increase in the complexity of an already mammoth tax code is not newsworthy.
Out of 58 stories focusing on last year's budget deal, only two of them mentioned that the deal made the tax code more complicated, in direct conflict with promises made during the 1996 campaign and with the Republican Partys agenda of tax simplification.
"With this new budget deal comes a whole new set of tax breaks and tax rules," NBC's Tom Brokaw told viewers of the August 5 Nightly News. "And then remember last years presidential campaign when everyone agreed the current tax code should be scrapped or at least simplified.
Well, guess what? They have actually made it more complicated." Correspondent Gwen Ifill then called the changes "tangled new rules that will prove a bonanza for tax preparers and lawyers." She pointed out that "last year Americans spent $230 billion on tax preparation," and that while "taxes may be going down the cost of doing your taxes is headed up." But Ifills report was a lonely exception to the rule.
4) The complexity of the tax code has nothing to do with Internal Revenue Service (IRS) abuses.
There were 38 stories about IRS abuses, but only two mentioned the conservative argument that the only real way to rein in the power of the IRS is to make the tax system more neutral. ABCs John Cochran, for instance, concluded his October 21 story about IRS abuses by saying that "Republicans, flush with victory, are already planning their next move, to radically simplify tax returns and further undercut the power of the IRS." Most of the other stories about IRS abuses and reform ideas were in-depth and informative, but they were missing the conservative argument that the tax codes complexity is at the root of the IRSs ability to harass taxpayers.
5) When Congress cuts taxes or investigates the IRS, it is inspired to do so by crass political calculations.
In 14 instances reporters claimed that either the focus on IRS abuses or plans to cut taxes were motivated by election-year political considerations. This was especially a favorite theme for CBS. As congressional hearings into IRS abuses began, Dan Rather told viewers of the September 23 CBS Evening News that it "was opening day on Capitol Hill for a guaranteed crowd pleaser sure to score points with the voting public." In a January 2 Evening News report, CBS correspondent Scott Pelley announced that the tax cuts Clinton would propose "will not be nearly enough for Republicans, especially in this election year. But the President is expected to remind them that fiscal discipline helped make the economy strong, and this is no time for a broad-based tax cut."
Other networks had a similar take on reforms of the IRS and the tax code. On the October 20 World News Tonight, Peter Jennings reported that "in Washington, where every politician knows a good target when he sees one, the Republican Party has taken aim, in a most emphatic way, at the Internal Revenue Service." He opened the next evenings broadcast with this comment: "We begin tonight with the effort to overhaul the Internal Revenue Service. Benjamin Franklin once said that nothing is certain but death and taxes. We might add to this the certainty that politicians will always use the issue of taxes for political gain when they can. In Washington today both the Republicans and the Democrats think they have something to gain by a major overhaul of the IRS."
Tom Brokaw began a September 24 Nightly News story by saying, "Senate Republicans have put the IRS under hot lights for its abuses, and not incidentally because its also a very popular target with voters."
In Washington today
both the Republicans
-- Peter Jennings
While it is not unreasonable to assume that politicians are motivated by political considerations, only one of these stories, by CBS correspondent Sharyl Attkisson on the January 4 Evening News, suggested that new spending proposals might also be the product of base electoral impulses. "Both parties may find it hard to resist the temptation to push for tax cuts or new social spending to curry favor with voters," Attkisson said. Of course, there are also principled, philosophical reasons for cutting taxes, which all network newscasts avoided.
6) There were many facts about taxes in the U.S. that many viewers would have found interesting, but nonetheless were left unmentioned. For instance:
* Taxes are consuming an increasing share of family budgets. According to the Tax Foundation (www.taxfoundation.org), a median-income, two-earner family pays roughly 38 percent of its income in taxes to their federal, state, and local governments. This is up from 37.3 percent in 1996, and 27.8 percent in 1957. Not coincidentally, this typical familys saving rate has declined from 6.2 percent to 3.6 percent over the past 30 years. Payroll taxes have become especially onerous, climbing from "about 1.5 percent for the median two-earner income in the mid-1950s to about 7.3 percent this year." The foundation notes that "taxes now claim a greater share of the median two-income familys budget (37.6 percent) than food (9 percent), clothing (3.8 percent), housing (15.7 percent), and transportation (6.7 percent) combined."
* The increasing tax burden is contributing to the stagnation of workers wages. Dean Stansel, a fiscal policy analyst at the Cato Institute (www.cato.org), argues that one of the primary reasons workers wages are not growing faster is that "taxes and government mandates on employers have been expanding steadily, crowding out the amount workers can put in their pockets and spend as they choose."
Ironically, the total amount employers are paying for their employees has been rising, Stansel notes, but this increase is eaten up in the employer share of the payroll tax, unemployment insurance taxes, workers compensation, and "the skyrocketing costs of complying with government regulations and our hopelessly complex tax code." These taxes are hidden from workers because no mention of them appears on pay stubs or in network newscasts.
* The wealthiest Americans pay the most in income taxes. "Americans at the upper end of the income scale continue to bear an increasingly large share of the total federal individual income tax burden," says Tax Foundation economist Patrick Fleenor. Using Internal Revenue Service data, Fleenor found that in 1995, the latest year for which such data are available, the top one percent of income earners paid 30.2 percent of the total individual income tax burden, while earning 14.6 percent of all income. The top 10 percent of income earners paid 60.5 percent of all federal individual income taxes, while making 40.2 percent of all income.
The bottom 50 percent of income earners, on the other hand, earned 14.5 percent of all income but paid only 4.6 percent of all federal individual income taxes. Moreover, Dan Mitchell of the Heritage Foundation notes that in the 1920s, 1960s, and again in the 1980s, the wealthiest taxpayers shouldered more of the tax burden as their tax rates fell. The reason, Mitchell argues, is that "incentives to hide, shelter, and underreport income are reduced" as tax rates are lowered.
One reason these important facts never made it into network news reports is that economists favoring tax cuts were virtually locked out of tax stories. Until network reporters become more persistent in getting both sides of the story, and in interviewing experts from both sides, viewers will remain uninformed about the issues surrounding the debate in Washington over taxes.
Sources for REPORTERS to Call for Tax Stories
Bruce Bartlett National Center for Policy Analysis (202) 628-6671
Patrick Fleenor or J.D. Foster Tax Foundation (202) 783-2760
Dan Mitchell Heritage Foundation (202) 546-4400
Stephen Moore or Dean Stansel Cato Institute (202) 842-0200
Alan Reynolds Hudson Institute (317) 545-1000
Murray Weidenbaum Ctr. for the Study of American Business (314) 935-5676