My name is cj, i am a senior fellow. I am happy to be here for two reasons. One, this is a great book, too, vanessa is an awesome person. Im so happy that vanessa about a year ago joined us at the Brookings Institute in the produce this great book having been here for a short time. I will go through the formal intro of vanessa. Here is something that says a lot about her which is vanessa has written two books, coauthored the first the first one called the tea party and the remaking of american conservatism. As this book shows vanessa is a woman of very strong convictions. In her twoparty book they rather seem quite different than some Tea Party Activists and she showed an enormous capacity for understanding the people she profoundly disagrees with. And if we need that gift of empathy at this moment in our politics. Just to tell you how we will do this, vanessa will talk about this great book and her findings then i will introduce an Allstar Group of respondents who will respond to vanessa. Then i will start a discussion among all three and we will bring you into the conversation. So who is vanessa . A fellow in the government studies program at brookings. She studies taxation, shes is coauthor of the tea party and the unmaking it was named one of the ten best political books of the year by the new yorker. She is also examined the political origins of tax credit, the electoral effects of the american recovery and reinvestment act. She has testified before congress. Shes been on cnn, msnbc, shes read for many publications, not only the New York Times and the atlantic but also teen vote in her hometown she has been cited all over the place by the ap, the mpr, and she received her phd in government and from Harvard University, she has a masters degree from nyus institute of french studies. She will do a side lecture on the line people consume well on their taxes. She has a ba in french language literature from nyu. I love having you as a colleague at night love having you on the book. My goal today is to convince you that americans see taxpayers something to be proud of. I watch what people do when they vote it is something almost universally understood as a moral obligation i recognized in this political moment that i set myself a difficult task in convincing you this. We describe tax avoidance has a smart choice. With the major policies that made include tax breaks. In our federal government especially cities and states have struggled with major budget shortfalls. So in this context, how can it be that americans are proud to pay taxes . Once we come in fact a nation of happy to drown the government in a bathtub. And dont want a discount to the views of conservative americans. In fact is they calmly said my last book was a study of the tea party. Was actually there that the question i tried to answer first occurred to me. It was at a rally where i noticed how common it was for Tea Party Activists to describe themselves as taxpayers. I pay my taxes. As a taxpayer at the end of that sentence it was almost never about taxes. It was almost always about their right to be heard. Their right to participate in american politics. Even today be in a taxpayer using taxpayer is a shorthand of being an upstanding contributing citizen in many issues the tea party issues are on the american right they are in fact part of an american tradition. American keeps their status to define their community and to demonstrate their worthiness as citizens. The revolutionary thomas paine says the accumulation of personal property is to rise to him by living in society. He was on every possible of justice a part of that accumulation back from that society from which it came. So the fact that we are in society embedded to one another and the fact that we pay those debts when we pay those taxes is that we have the right to represent from our government. National womens right convection in 1966 act, women hold the best model property in the country and pay taxes. On what principle do you deny representation . That link between taxation and representation is it something the ref missionary war it continues in our politics today. 1959, africanamerican activists who integrated the beaches of miami which was extremely dangerous, they went to the shore of the beaches and brought with them their property tax receipts. It showed that they had paid those beaches belong to them like everyone else. They had paid their share and i had receipts to prove it. So the city tax has played an important role, but it is also however its americans think about tax pay. For 40 years surveys had asked about whether the tax pain was responsibility and for decades they held a constant view of that. A Common Survey question was whether every american civic duty to pay their fair share of taxes. Every year about nine in ten americans agree. I should put that in context. About 6 of americans think of the moon landing was fake. When 5 of americans believe something thats about as close to consensus as you will get. These are views that americans hold strongly. In interviews with my survey respondents i was surprised by how often i asked a boring question about taxes and i would get these bold answers about patriotism. I remember marie from california when i say that word taxes from you what is it make you think about . He said, the cost of being an american. He was a marine. Texas still make you think about that. Another person i spoke to, a democrat from florida, my last question said im interviewing you because i want to write a book about American Attitudes about taxes. If it was your book about your attitude what would be the most part chapter . I just want to remind everyone that no man is nylund. We are all in this together. I spoke to a republican in ohio, retired male man who is angry about a lot of what government does. When i asked him, how do you feel when youre filling out your income tax forms, he says, i feel i am doing my part. Whats interesting is its not just that they have these nice words to say, theyre putting their money where the mouth is. Americans as a rule are committed taxpayers by national standards. They largely play a trap pay their taxes honestly and on time and on rates higher than can be explained by enforcement mechanisms. What can be explained for the differences got tax morale, which is more or less a social norm that we share that if everyone else is chipping in, i should do my part two. So even when it comes to putting money on the table, americans are good at being taxpayers. So american c taxpaying is a Civic Responsibility and send the checks to uncle sam. Another truth, they will for tax increases. About half of states have a mechanism by which voters vote directly on legislation. Im from california, it happened so far too commonly, frankly. In the states, over the last 15 years is, to put it tax increase on the ballot. As often as not, those tax increases past. Voters are voting to raise the taxes. Its not just one kind of tax. I thought maybe this was just cigarette taxes, they are raising sales taxes, progressive taxes that fall heavily on wealthy corporations. So, if american c taxpaying is a Civic Responsibility in their voting for tax increases, wise taxation such a political controversy in this country . In short, i think the answer is that being proud is not the same as being happy. But what americans are upset about his were thinking about. I think you will be surprise. If you asked americans what bothers them the most about taxes, only 7 of people say, not that they personally pay, 14 said they are not bothered much about taxes. Im not one of those people, im amazed. At minimum the amount you play is not a primary motivator. Only 7 c thats a big problem. By contrast, three fifths of america say either the wealthier corporations, not paying their shares their number one concern about taxes in this country. Another 4 of people say they are most concerned that poor people are paying their share. This makes sense, because if we see taxpaying as a civic duty that we all share that so important that so important to be in a contributive person or country, of course we are angry when we think someone is not doing our part. Of course, it is not easy to know how much other people are paying in taxes. For instance, it is common for people to have huge misperceptions about the tax code and what effects it has. You may remember a statistic that made the rounds about 47 . This was a statistic that pretrade it accurately. About 40 of households either got back more money than they paid in her ended up at zero. 47 in the net and contacts responsibility at the end of the year. The way that was remembered or repeated is that half americans dont pay taxes. To believe that youd have to forget things we know like the existence of the sales tax or the payroll taxes to pay for Social Security medicare. Yet, this false version made the rounds and i think had a big impact a few years ago. It is far from the only example of people misunderstanding how tax responsibilities are distributed. Its common for people to believe immigrants are not paying their fair share of taxes. Unfortunately, attitudes about who counts as a taxpayer replicate longstanding stereotypes of who works hard. As we remember from things like the welfare queen, we know the stereotypes about working the country are deeply racialized. Of course i travel strictly through today we see how people really pay taxes. The second part of my book talks about limits in my community. People are proud to pay taxes to support the community but they dont see everyone in america as part of the community. I also talk about the specific misperceptions people hold about the amount of taxes paid by the poor. About what policies might raise taxes on the rich and where that tax money is going. Id be happy to talk about those things in the discussion. Its not comfortable truth that we need to grapple with. Its smart, educated and politically engaged people often have misinformation about policy. That misinformation means its hard to take the values and connect them with the bright policies that would implement the things they want to see in our politics. I want to leave you with a different question. If i have convinced you that americans are not major proponents of taxation, by convinced you that american c taxpayers a Civic Responsibility, patriotic and something we must do to support one another, i would like you to take a minute to think about why it is that we do not see those attitudes replicated here, in our government in washington. Thank you. [applause] i would like to ask our panelists to come up and join me. While everyone is getting there myself to talk about the things was that the most uplifting talk youve heard of a think tank for a very long time . I wanted to read the first paragraph openness his book. It is only 182 well written pages. If you want to read them. The first paragraph is as follows. When i tell people a study americans opinions about taxation, their reactions are predictable. First a pain look usually passes across the face of as they regret asking me about my presumably dreary work. Second, he or she informs me that americans hate taxes there angry, selfish or shortsighted or prefer to be selfsufficient and therefore intrinsically antigovernment for one reason or another americans just do not want to pay governments bills. As we just her, thats not true. Want to bring special readings from the deer colic that is now in california, tom man who, many years ago wanted to perform an Organization Called taxpayers of america. When he heard about vanessas event today, he sent us a note from california saying how grateful he was we are having this meeting today. I want to introduce heather and frank and ask a broad question to each of them to give them a chance to respond. Heather, it is the executive director and chief economist at Washington Center for equitable her research focuses on economic equality in public policy, specifically employment, social policy and economic wellbeing. Her latest book is, finding time, the economics of work life, conflict published by Harvard University press. She writes for the New York Times is a debate future, she has appeared on networks, fox is [inaudible] here from some reason. Bloomberg, cnbc, pbs, she previously served as economist for Hillary Clintons transition team. And the joint Economic Committee for the u. S. Congress. The center for Economic Policy to research and the Economic Policy institute. Frank is the executive director of americans for tax fairness. He help on the organization in 2012. His previously Campaign Member for the Social Security campaign, a coalition of 320 organizations. Prior to that he managed Healthcare Campaign in support of the Affordable Care act. He also issued campaign to change to when. The labor group of Public Citizens Congress watch. He has been senior policy advisor to the House Committee on Government Operations and was issued director for Jesse Jacksons 1988 campaign. He wrote a book, keep hope alive, a book about that campaign. Mr. By asking a broad question. Vanessa, you care about equity, tell us a bit about what you learned from the book as to what this tells us about inequality and its relationship with taxation. And then frank i will ask you the same question. You said there was an important lesson you learned from vanessa. I cant wait for them to tell us what it is. But heather you can start. Thank you for writing such a great book vanessa. It was a joy to read. Good to take a moment to do one small break on her britches on the giving institution and in our first round of grant making two Young Scholars she was our first cohort. We cannot be so excited that we are able to help support this research. Its all part of the questions rent equitable growth. There were a couple of things for me very striking in the book, visavis equity. The first was the idea that people feel that paying taxes are civic duty, they think the tax system should be fair and the most part a qualitative work the sense that it should be progressive and makes the most sense in terms of fair. And its hard for folks to really how the fairness of the tax system is not just about the fairness of you pain your fair share me, but what is it youre paying for in the broader implications of Economic Growth and stability. So, one place i would like to take these ideas they work on is how do we make that link for policymakers its hard to make values from policy. Its difficult when you have this information to get policy back to values. When you the way our tax system is structured enhances equity and does not promote growth in a way that we are often told. It can also have an effect on how people feel on whether or not the tax system is fair. For example, someone we work with a lot with coauthors thomas and stephanie have done research looking at whether or not there is room to increase taxes at the top of the Income Distribution maybe the marginal tax rate falling, about 90 for percent in the 1950s to about 70 to less than 40 at the very top these race to the top, theres evidence that there could increase links to the top that could increase fairness but promote Economic Growth. Weve been told the story push by economists that we can keep taxes to the topic is that will affect the working of the very wealthy then that increases investment and thats what makes economy grow. A basic argument that we here in washington. At the same time, the tax rate at the top, there are other factors that affect whether or not people were, not just the labor supply question. Its also the question of whether or not you are using labor income versus transferring income to other kinds like capital or business income. And whether or not those tax rate change behavior. What the Research Shows is that the most important factor in having lower tax rates at the top as it changes the incentive to have higher salary. It creates the conditions for seeking that the talk topic is it creates a greater incentive for the corporate boards when they get together to give the ceo of this company to give each other these very high salaries because they get to keep more of it. Which is not leading to the kinds of productivity enhancing things we want to see. That is a complicated story there. How to connect the dots between the sense of fairness in terms of we want attack system with a people want attack system that is not only fair but doing right by their community. The way that we have been talking about taxes especially at the top sometime is about fairness and growth. How we work to change that . This is a question for you but a big thing that came out of my reading of the book. Im so glad you focused on that. Im tired of the argument we hear so often that we need to give rich people more money so they will work harder and poor people less money so theyll work harder i dont know where the logic is. Frank tell us about your big lesson here and ill ask a couple of questions of vanessa including a dear friend who is a political consultant in the audience. Will ask about a certain skepticism that i have a hunch exists in the world of political consultants. For the last five years, the had i have worn is on tax fairness. When we determine our name and our pollsters here to determine the name of our organization we did focus groups, not just to determine the name but as we started out as a six focus groups and what came through loud and clear was the tax system is grossly unfair. We knew back then, prior to Elizabeth Warren running for president that we thought the system was rates. Year one election cycle to early. [laughter] that was a voting slip. Shes running for senate actually. We took her speech in massachusetts and the farmers is a focus group. This feeling about the unfairness prevails the culture. Its on both sides. It is why Bernie Sanders does well in donald trump does well. From the tax point of view is very profound and helpful. This is obvious finding was a little bit shocking to me because the only time i think about the civic duty part of it is when tax a comes around and it helps the tax march effort going on and were actually writing principles for the tax marts and i wrote the principle for what is tax day. I got into this thing about civic duty and its that time of year where its the common good. But its a language that i had not been using. We have not been using it in our political advocacy work, lopping worker Public Education work. And the reason why it was important to hear this from me, was because it is a place of Common Ground, i think, between people of different ideologies. So much of the tax debate is about the role of government. Fundamentally this flows from two believe in government or the private sector . What is your relationship to the government, what you think the government should be doing for you for communities on your behalf or whatever. The lightbulb came for me which was if we do have that kind of Common Ground talks about how far we have gotten away from that place and how this country is to be united around that Common Ground whether you are a democrat or republican. What is happened is one side has what i called the tierney of theology on taxes and on government. We cannot get through that to get that place of Common Ground it is partly our Education Program that our work reminds people that we are in this together. That taxes are something that we are proud of doing because of what it means for us. We have gotten very far away from that. We need to do more of that thank you. I want to thank you for writing the book for another reason. One year i discovered i write a column for the National Poster was falling on april 15. I cannot resist writing a column under the headline in praise of the irs. On april 15. Basically if you support our men and women in uniform you have to support the men and women of the irs. To this day, god bless them. I still get stopped by the irs because nobody chosen to write that column before. Two questions, question one is, we talked about before we came in which as you said about half the time tax increases when about half the time they lose. Under what circumstances do they tend to wind and what circumstances do they tend to lose . Is there any common or is it random . Is probably some particular aspect. The other is, you are not old enough to remember, but i am that Walter Mondale promised to raise taxes in 1984. Most democrats saw this at the time is a big mistake. Ronald reagan went after him on that. I know very few political consultancies suggests to their candidates that they cant tell voters im going to research taxes. What is wrong with that analysis in light of your findings . Obviously its the case and reasonable the voters would prefer to understand where the money that is being race is going to go. They tend to do very well when day, tax increases too well when theyre finding things people really like. Thanks most popular in American Government are local services, schools and roads and bridges and less remembered but when reminded also significant sewers and sanitation and all those things. And, of course, public safety, all issues people think taxes should pay for and are willing to pay for quite possibly and are willing to pay for, pay more to improve the services. As the real takeaways in terms of when these ballot issues do well. Make sure voters know what theyre getting in return. The second part is related to the first. I told you about how tax measures have been doing the last 15 years. About 50 of the time they pass. That is the striking change on the era of people like mondale if you look over the last 40 years theres been a very steady increase over time. In the late 70s and early 80s about one in five major to increase taxes passed with the voters. Its not that there are more measures now. It can vary up and out but more or less steady overtime. Whats changed is our success rate. Partly people are better and explaining what tax increases will do, explain what that money will pay for. And the way we are trapped by a political moment that happened, frankly, right around the time i was born which was the tax revolt. We remember this era. In california, proposition 13 that capped property taxes in the state is a very salient political memory. It has cost real problems for our school. Because its just very political memory from the late 1970s, i think think people sometimes forget its possible given the fact weve gone from one in five to one and two of his measure passing, people have forgotten that it might be the case we need to reexamine what tax attitudes are and not use the advent of the reagan revolution as a pin point for where americans are today. I did Empirical Research in 2014, the 2014 elections sort of related midterm elections. We documented as much as we could every ad that was run into congressional races, and we contracted with a service to get the information to what we found was shocking to me, was twice as many as were run by democrats against republicans as republicans ran. I usually think about who runs tax ads as republicans dashing democrats or being big tax spenders. In that race we found it was democrats and their using the tax issue to their advantage. Because it represented where the public is on this system in fairness and especially on the off shoring issue. The public feels very strongly i sense the corporations leaving america for shipping jobs and profits offshore and will to take advantage loopholes in the tax system. They feel very deeply about that. A lot of the content of these ads were. That was the first time i saw her democrats are running really full throated. Obama did as well in 2012 against mitt romney. That was a key theme in his campaign was taxing the rich. That was only the top 2 . I think we had to do, e. J. , i always criticize, to me the democrats have their hand tied behind their back in this debate. Republicans say this is theology, foundational. Democrats are sort of half in and half out. They are not full throated about it. They have a lot ambivalent about taxing corporations for lots of reasons. We can go into that. Until both parties are in the same level of passion about this thing, i think we cant quite achieve the policy changes we want to achieve spirit that be just note but ask, democrats do very well in the 2014 elections. Thats true. Is there any link . No. I dont believe there is a link. I thought you would say that but it just want to point out what the result was. Taxes were the fourth most common ads run this cycle. I was going to add, i think the debate is made even more computer of course because middleclass families havent had a raise in so long. Look over the past 40 years and you see this growing disconnect between productivity and wages and family income, we quickly, we saw this in the early 2000s, i have a lot of what im watching for this spring and summer as we go into this tax debate is how much of it will be this sheen of a small tax cut for the middle class who was struggling on top of a very, very, very, and like eight more, large tax cut for those at the top. Because its hard for folks to not adopted a real struggles the middle class is having, that would walk into that conversation as well. That makes it a little hard for those who say we want to have a more progressive tax system or we want to raise taxes, make that argument, when the other side has this little sweeter to the conversation that is based on real struggling of families. What i want to ask him each of you built on what heather just said, explore that and also, what do we learn from the nasas book . You can be so somebody sitting there. I want to come back to vanessa on something and talk about the middleclass tax cuts. Certainly were spending a lot of time talking to folks in our legislative advocacy work about middleclass tax cuts and whether it should be a big feature here. Obviously, republicans will run and say their tax bill is a big middleclass tax cut. He would do that despite the fact that half of Donald Trumps plan is it gives 6 trillion in tax breaks, half of those tax breaks go to the top 1 . Paul ryans tax plan, believe it or not, i know you want to believe it but by the tenth year, 99. 6 of the benefits of the tax breaks go through the top 1 , like virtually 100 of all the tax breaks go to the richest 1 of americans. The democrats want to be for something in this debate, and so they think we would be for middleclass taxes. Theres two challenges with that. It really goes to people of the likely that a raise and so the need more money in their pockets. First of all, if youre making 50,000 a year at a discount when you get an extra one dollar a day, okay . An extra buck a day. A millionaire gets 1 million extra a year year pick somebody was making 50,000 bucks gets an extra dollar a day under trumps plan. What can you buy for a buck at a . Not very much. Not even a cup of coffee. Not even a cup of coffee. Secondly is, we have a revenue gap in this country that is quite profound. We can talk economics for a minute. Think about flatline. Revenue as a percent of the Gross Domestic Product is 18 . 18 . Its been 18 for the last decade. It will be 18 for the next decade. Spending is at 21. 5 , its going up to 23. 5 . Thats mostly babyboom generation, retirees. Healthcare. So thats a five percentage point gap. You can do with republicans want to do is cut, cut, and basically not have any economic security, Retirement Security or do it my organization advocates which is to raise revenue to close at least significantly close that gap. Thats what we need to go. If you are advocating for middleclass tax cuts that gap is going to grow because its owing to become a beating game between both parties in that case. What vanessas book teaches us is, although i would like to your take on this as well, i think what your book teaches us is that your room to make those arguments that i dont think were tried hard enough to make that argument, what we dont need is another middleclass tax cut. What we need is to raise revenue. Pictures places we can take it from. It doesnt start by giving massive tax cuts to those at the top, but because we need to make these investments in the United States, i think theres a few compelling things one is we know investment in infrastructure have been and continue to be highly popular. People get into afghanistan when bridges fall down that you need money to fix them and they dont want to have trains that dont work or crash because the rails are not kept up. I think thats one, but i second buck in addition we dont talk about enough is when we talk about, when the republicans talk about wanting to cut back benefits for Social Security beneficiaries or upping the age for getting medicare are cutting families of medicaid, those are expensive that will be borne by someone. Theres two ways to do that. One is to have it socialized over our lifetimes and over all of the American People so that it is being paid for out of this fund is also secured or these other programs recordable fall directly on families which is going to have this very negative impact on families ability to be full participants in the labor force. If you have to have an aging loved one move into your home or spend more time caring for them, we know this is affecting the Labor Force Participation rates of American Workers in their 50s and 60s at the time we needed to be working and saving for retirement. At the same time it drags down some income, ask the budget even tighter but all of that will drag on Economic Growth. What we are not doing is making the investments that will make us a vibrant 21st century economy. We are not making investment in research and all the saints we should be doing. What i take from the book as we need to be doing a lot more to make those tradeoffs really concrete and less of, im an economist, totally guilty of this, the less of the abstract, you know, we need to raise taxes because its progressive. This is why we need to have their rules of the game because if were using our tax dollars to make capitalism work better, then the people benefiting most should be putting a lot of skin it again because theyre the ones are going to benefit the most. I feel like with a middleclass tax cuts the answer is, i think we need to change that conversation because theres no way to say to so many are struggling widow care about you but i do think focusing on how we will create good jobs, this is a part of that puzzle. I wanted to bring vanessa back in. I knew heather was extraordinary you are the first guilty economist ive ever met. [laughing] can i bring vanessa back in . Two things, to respond to whats been said so far. The other is i think for a lot of us, for me, everything you say about the need to contribute to, life that were all in this together, that tom paine idea that our individual success owes a lot to the society in which we live and work. Its beautifully with editing people resonate to when it comes to taxes, the word that gets used instead of all that is government. And that when you look at there are a lot of surveys that show declining faith in government, how government works, some of that is the result, you can argue, of conservative propaganda. Some of it is a sense that these are not working well for a lot of people and government is the Natural Force to be blamed. That does create a challenge for this argument, even though your own research as people still do think of taxes as paying for our common life. Sort of respond to whats been said, and if you could so take that one on, too. I think theyre very closely related questions. In my mind the argument people sometimes want to make is we should be able to recognize a tax cut results in shortage of services. Thats a connection that should be clear. The potholes in the road is because we do have the dollars needeneed to fill in that bottl. We made a choice. Their son, tax expenditure or whatever it is. You would like to be able to make that case that our schools under roads and hospitals and parks could be better if we put in the cash. The challenge in making a case is people have a very deep concern about government ways. I want to talk about what people mean by government waste. Its commonly used that americans dont understand in a macabre. If you ask a percentage of every tax door to think is wasted, the average answers about 50 . Half of all federal tax dollars are wasted in their mind. Experts will tell you it may be 7 counsel people are, what a terrible disconnect between what experts know i would average people believe. Thats how we normally talk about Public Attitudes about government waste. If you ask people what they mean by government waste you hear a different story. First of all people talk about entire programs they dont like. If youre on the left that usually the mr. Kirk if youre on the path entitlement. Thats a reasonable way to talk about ways. Its not efficiency. If we do something inefficiently, it is wasteful in the carmen parliaments. The other thing people talk about when you ask what he meant by government waste talk about what i call plutocracy. They talk about government operating on behalf of the very wealthy, on behalf of corporations and on congressman levin lies that are completely unlike average americans. Jetty optical to places as they dont look like me. They dont live like me. Thats a common thing for people to say. When you ask about government waste. What that suggest is a problem we face is people dont trust the system by which we allocate the dollars that the mayor can people are to government. When they have these profound doubts about not just the outcomes or notches up with my instep with the process, whether the process respects for the citizens, i think that crates that they challenge in people theres a tradeoff when theres a tax cut. How much does it matter if thers one more taxcut . Also having faith that contributing of dollars and boating are going to get you the government that you should have as an american citizen i think also undercuts the capacity to make that argument. I think a very fundamental, a foundational problem we have. Im sure finance Campaign Reform and Money Politics all that stuff, while the nuggets in the book is that people, and i spout this having seen pulling on it, is that a lot of people are very supportive of a flat tax in Public Opinion polls. They are the same folks who really are very animated by the tax fairness issue and they dont understand, or what they think is the loopholes are so bad the corporations and the rich are doing it. If we can get a minimum tax that they have to pay, a flat tax, they dont know what the number is, then there would be better off. Society would be better off. So the level of cynicism out there is profound. We know that. This election displayed that greatly. I think until we, you know, sort of how to get over that hump, it is sort of the flip side of College Ready to roll government. We have one part carrying government down a lot all the time, and so thats bringing down how people feel about government. So much of this, feelings about the public, the disposition of the public is there, but for the lack of trust is not able to be bridged. Just think about, if both parties were saying we ought to raise the gas tax in order to rebuild roads and bridges and Railway Systems across this country, if both parties were saying that, i think the American Public would say right on, ill pay an extra quarter, five, . 10 in gas taxes. Thats not the dynamic where in. Go ahead. Two things. First of all, specifically aggression of the guest expert when these problems up taxing visibly which came before. Th. The complexity of the gas ta, because its not obvious, its folded in with the price and a very so much by state unknowns can think that it makes a hard for people to make a reasonable calculation about whether a gas taxes high or low. Theres a real challenge on that which i think is something we should talk more about. Bad example spurkits a good example a good example for that reason. Alongside that, this question of how do you make people believe that their democracy can function when i very obvious ways which the democracy is not functioning, is one of the great challenges right now. One thing you point out, one of my favorite charts in the book is, its in the preface on page 14 where he showed the successive tax increase in state ballot measures for action passing over time, and it goes up. So state ballot measures have been more likely to pass over time. One of the questions come if you dont mind if i ask vanessa a question, one of the things i think this conversation gets that for me is it seemed like from a new book people really, they value things they can feel and touch. That would push us to having more of his conversations at the state and local level, which is not what we usually talk about here in washington d. C. , that it seems like people are raising taxes, increasingly in favor of these Ballot Initiatives yet we were having this conversation washington. Once you are, bass and all the folks you talk to, is that a good reading of your book . What comments . As exactly right. First of all peoples use of other states are the views of other local school. Everybody thinks a local school is great but National Schools are failing. We are as a tribal. On the one hand it is true that you do think state and local welcome of course people can feel they have a bigger say. They all have a bigger say. It is mathematically true if nothing else. Thats the case. At the same time you face the challenge we are tribal and with sordid ourselves politically and geographically so that you hit up against the problem of you build your little enclave where i look out for me and mine. That is the more general challenge that i alluded to at the end of my talk. Spent time type of the positive side. In politics we dont talk much about patriotism in that sense of what i going to sacrifice. Its an oldfashioned Start Talking about our political life. Whats interesting to me in my interviews is open as to come up with their own language. If you ask people about the subject if talking point at ready that have heard a lot. One thing your lot is they dont want taxes to punish work. It captured an important sentiment but they all have the same words. Just as many people talk to me about, more people because almost literally everyone talk to me about this idea of community and tax issue i am responsible for my commute. They all had to voice a talking butter. Some people talk about caring for the neighbors or theres no man is an island. They had to fall back on what ever metaphor syncopal to get it to discover what i call will ship. The sense that were in it together. Its not, in our politics now to give people the language to make it, to have a shorthand. The sentiment is there but they dont have a shared language to express that. I think thats an important part of the role of politics. Gives them a language to express that. That sparked something in me. And by the way we have mics going around the room. I want to invite our pollster friends to ask the question, too. You talked about civic duty and the like, and what a maybe think of is asked him what your country can do for you, ask what you can do for your country. John f. Kennedy said that in 1961. That was the high point of the greatest generation. It followed a period when americans actually believed that government had helped them in the depression and at one world war ii. And that there was a kind of Public Confidence in collective endeavor that we have been losing, starting around 1968 or 70, where you want to date that, but i think we can see, i guess part of it is how in the world we are to get that back if we dont want of a world war and thats the way to do it. May be with an unusual time but there really was i think a civic sense where people felt a palpable stake in common endeavor. They thought it was in their interest. It wasnt just an altruistic thing. I would just like to toss that to the panel and then open it to questions. Ill be brief. I think one of the challenges of course is the 1968, early 70s early 70s was also the low point of inequality in the United States. Many of the reasons why people lost their faith and trust in government, and theres a lot of them and one of them was the nixon era and what happened in vietnam but it was also about large swaths of our society which had been excluded from Economic Growth wanting in. Racial justice movement, the feminist movement. Now were in this era where we have inequality that is higher than it is ever been in the United States or just as isa was right before the Great Depression in the 1920s. 1920s picked this massive pulling apart and i think what you do see is people talking but that is a problem. You saw that on all sides of the political spectrum in this election. Many of the trump voters frustrated that somebody, americas growing but they are not seeing any of the gains of growth. Now you have this flip side of that, together which is the frustration that somebody is getting something and people are not. I think that is our challenge today to figure out how you can take the negative experience of inequality and make that into something that we have a common purpose rent. That would be my two cents wor worth. Though a question to vanessa about it. I think i hope lies with whats called the rising electorate which is essentially obama coalition, millennials, single women, people of color, very diversified population, young folks, people who i think have a different attitude about a government ban the current dominant cohort that is out there. As we know are callous, i think in 2020 is rising electoral would be the biggest voting block. He came close this last cycle. They have a much greater Comfort Level with the government. They are much more communally oriented, much more engaged through the wired world i guess you would say. They are comfortable, more comfortable with government spending. I think theyre feeling a heck of a lot less secure than, economically, then previous generation. A lot of us are still living with payers. Ive got a couple of kids comig up in college. I wonder if they we coming back. Anyway thats kind of my hope, and i doubt if vanessa, in the quantitative work youve done, if youre teased that out or not . I think this is a really critical question. I think that im hesitant to feel confident about demographic destiny just because i know that America Political recitations have been structured historically and to this day to limit the power of maturity. It was fundamentally a part of the plan originally in our constitution continues to have its effects most obvious in the last election but most general i would be hesitant to put my confidence and simply having the most potential voters because i think that its quite clear and number of states they wanted to change who can vote before they are willing to let the majority rule. But alongside that on the broader question of how to create this sense of shared fate, that may be what that generation had. At the end of the day we had to defeat the nazis. We all had to do together. We appended to this contraction in our economy. People work closer together. He just couldnt buy yourself into life that had nothing to do with other americans. I had my own take on this and i think that there is Something Like a world war that we face, and its part of a change. I know that sounds maybe a little bit like we will never convince conservatives that Climate Change is a big deal. Its causing droughts in rural america. Every farmer notices of that. Climate change is flooding rivers. Its flooding our coasts. Its doing damage to our cities and rural people. It is a danger to people in every economic level, and undoubtedly most dangerously to the poor, but Hurricane Sandy let us all know, right, that new york is one city. Looking forward what i would say is that we can identify that as a shared risk. It might be, could be Something Like a world war ii level commitment. Now my true level of pollyannaish optimism. I catastrophe before you have assured of those. Maybe we should just start a cable channel that shows nothing but 1940 movies, you know . Or weather disasters. There you go. Lets see. We have a bunch of hands up. This is great. Lets start in the back. The lady in the back, please. Im like jumping out of my seat, so excited about this conversation. Elizabeth the gains. Ive been working with your colleague bruce katz on this notion of new american localism as i kick off what were calling the childrens funding project you can too quick facts and the question. I tracked 14 ballot measures on the local level in places like rural ohio, suburban kansas city, et cetera. This november where 11 of those places elected to tax themselves to pay for Childrens Services. People literally come out of the pulsing iphoto for trump and about for the Childrens Services fund. Thats very promising to me. The other thing is that there are eight Children Services council in florida. Many of them had to go back for reauthorization. First time around some ten, 15 years ago they can write about half the vote and pass. This time then the accountability structures in place. People trust him like he talked about, and they are winning between 7682 . And property tax lord of voters. So question, children are very popular. You talk about children in your book and any advice for me as i kick off this to project . Well, thank you for a great question. I shouldve talk more about that actually picked it is one of those things that does cross all kind of divides. The frequency with which people safe our children, they dont have kids who live in the house. They meet all our children and that is an amazing commitment. You see that in the commitment of people without children to Public Education and being willing to find more to schools because after we need to look after our children. It is a real point of commonality. Defeated bond issues in places where you have the face of a century on all the population is good to not in school anymore . Yes. I mean come it works both ways, it doesnt always these things as i say, my statistic is a 5050 shot. No guarantee. I love the line of original sin is only empirically verifiable doctrine of the christian church, i think as long as important about human frailty. Thank you your rick rybak with just economics. Was very interested, along with everything ive heard from all the panelists, learned a lot. Very interested in the remarks about peoples perception of tax fairness related to come whats relationship between what i think and what i get . I wonder if our tax mechanisms dont play into that peer what i mean is that we tend to rely a lot on general taxes, for example, sales taxes. The nice thing that politicians love about the sales tax is you can raise it by infinitesimally small, but people have no concept of how that money gets spent. I think in particular that when it comes to water and sewer most of us pay a per gallon fee for the water we drink or the toilets we flashback it seems kind of there the more you drink for the more you flush the more you pay. We could pay for water and sewer with a sales tax but if we get d what people at any incentive to conserve water . When they see a leaky faucet day they see the water going down the drain. But if we pay for with a sales tax, with a caught up by something they did need to to compensate the Water Authority for what theyre wasting . Probably not. Im wondering if theres maybe a lesson for politicians that if you want the public to understand and support taxes, we have to create some better linkages between what people are spending and what people are getting, and that would mean maybe moving away from general taxes towards maybe things like user fees and Value Capture where people pay sort of in proportion to what they get. Thats a good question. I forgot who wrote it in democracy journal with which i have an association, we had a good piece on this of tax receipts that when people get the refund they also ought to get an accounting like one page account to come here by the way is what your tax money went to. This is what is spent on. Im not sure it would revolutionize everything but it would be a very good piece of Public Education so people get where it is distributed. Im curious, the use of the question is an entirely different question but its related to the issue of knowledge. I think they were basically two questions. One is a question of making benefits visible. That clearly is an important thing for government to do. There are many ways that can be done. For instance, with a tax receipt at the federal level of tax receipt shows mixed success but where it is shown success is on Social Security. Some of you have at some point received a green statement about your own sources good benefits. Im amazed how often people remember having received those but it had a measure, they did that as a randomized trial, just be able to say, it measures the impact of people find out, a statement appears a much it into Social Security, heres what your benefits are going to look like. If you keep paying him like this, this is what will happen. It increases peoples knowledge from it increased their confidence in solstice could. A lot of misinformation about whats happened with solstice could do. To the extent we can make that benefits the government visible, thats important for two reasons. One, because would be good for people to know what benefits they receive a so they can judge about it also because people are not just consumers, they are citizens. Theyre supposed to go back and say why the government is doing a good job. It needs to be obvious. When t they do social policies n the tax code, we often lose that connection. Thats a crucial issue. The second point you make was about feeforservice basically, benefits principle. We can disentangle those. Many place a feeforservice is a good idea, gas taxes, particularly for things we would like people to do less of. At the same time i think having every tax dedicated to a particular purpose, personal sometimes that is pretty regressive. It falls very heavily on lower income people. Secondly, it doesnt get, create a place for our democracy to make those decisions. At the end of the day thats what we would like rick would like to build to trust our democracy to allocate money from a general pool. I would prefer that fundamentally than believe we need to have each and every Service Paper simply because we couldnt trus trust in you lawms to make those judgments. I think there are two issues going on, both which are very important. Theres a question in your company and would want to come in, some of the united way and big philanthropy declining as people get more money to very particular things that they want. My understanding is one of the net effects is less money into going across towns fro some ricd to poor parts of town, and that you need some general fund that is not user fee based testing richer to pour to achieve sort of a level of parts of town that dont have a lot of money to spend. That goes with the rest of this but it is a larger part of the story. Did you guys want to come in . I want to come to the site of the room and then i look at some other voices on the side. I want to comment on the question that you just raised about people knowing what benefits in the tax cuts, the benefits they are receiving. This is one question i feel like is that social scientists to understand this but policymakers dont. Or that is been my own personal experience is that i find it difficult to explain the folks doing policy why that really matters or have found a lot of pushback on that. I want to make a bit of a plea that anybody in the room or listening or watching on television thinks theres evidence that i come something we should talk about a little more because i think too often theres, how to do something really efficiently which may not gel well with showing people the benefits theyre getting but is also sometimes pressured to do things through employers or hide them in the tax code which doesnt secure that for people pick it please you with that honor that constituency, people dont understand. It would be nice as were having the tax debate over the next few months there were more voices rising up and having a conversation about how important it is for people to see with the tax dollars are going. So just a little plug for all of you thinkers and doers out the there. I think a really good think tank could you work on that. I think it would lead, it would lead to much more vulcanization of a pollux that we have now. Thats absolutely wrong direction to go. The taxes as to help share the wealth. Ill use the redistribution word. It is 12 redistribute wealth. It we got into tax for that, the folks are going to lose by the folks are most in need. Unless we do a wealth tax. Okay, yes, to redistribute wealth, okay. You could have a user fee on wealth. Im just saying. Its an idea. [inaudible] im sorry . [inaudible] thank you. Sounds like henry george. Please. I have a question about the Public Perception of fairness and when people talking about fairness, is it a notion that the system is good but its been hollowed out . Or that the system itself is not working . In other words, is 39. 6 or 35 for corporations, are those fair top marginal rates but we dont like the ability to hire advisors and lobbyists to lower your effective tax rate . Or is there some deeper value that people are responded to that they think no, 50 is a good rate . Income taxes unfair or something more fundamental . Thats a great question. Theres several parts i want to talk about all at once. First of all as a general rule americans support progressive taxation, Something Like 70 of americans. You can asset question giveaways. You can ask it as percentage or as does advocate progressive result in a way. You you can shift the results, you get a lot of polls try to push one way or the other but overall americans support a progressive tax rate. There is some serious gaps in peoples policy nose. Use of the phrase marginal tax rates. That is an entirely nebulous idea in the common understanding. That is, people did not understand the next tax rate only applies to the income you earn above the tax rate below. One time taxes at 90 of the very top they think thats nice on your whole income. Thats a very common misunderstanding that any cuts support for high tax rates because thats how it is perceived. One thing of the interest is find out a way to explain that quickly. I find it several times in my book so thats a policy problem enginein terms of explaining how income tax system works. Frank made this point already set people like to graduate income tax in principle. They think people should pay a large percentage, not a large amount. But they also commonly believed that our Current System is undermined by the polls. So that what results on that is a willingness to trade lower rates for closing the loopholes when clarity on most of a scientifically to which is lowered revenue. They think you close a few loopholes and will have all this new money and is not going to be a problem if they lowered the rate. On the corporate site is closer to accurate but on individual side, but yes, thats a common misperception. Its part of the call for flat tax. People like that for several reasons. One, because a flat tax sounds like equal commitment from the citizens. Talk about something citizen to pick would be great if that the burden could be shared equally . Thats one motivator behind a flat tax. If you asked him to talk about they talk consists out of a flat tax. Thats an emotional impetus of a flat tax. Secondly, we will do flat tax with no loopholes, those guys are not think any of those fancy rates youre talking about the schedule end up having to pay. Maybe well come out ahead. I think thats largely how that is understood. People have a lot more confidence about broad symbolic ideas like the rich should pay more than what the numbers should be. I think another example of that question of offshore and people have said money being hidden overseas, it resonates with this single, patriotic to do. The fact theyre hiding the money outside of the country that makes perfect sense. Those are the kinds of policies that stick with people because they fit with the emotional understanding of the. When you go too far down the road of specific numbers you have to provide so much information that its almost impossible, youre not getting their opinion in the wild anymore. Youre getting their opinion with a certain set of facts. One question and a followup, i think when we got, used to be we would get these newsprint tax forms in the mail, like with all of the forms you didnt fill out, i dont get those anymore but i thought and those they had a pie chart of our tax dollars went. Also my other comment is if you had this big pamphlet and at all the tax tables in the back i think made it easy to understand okay, thats how i learned what marginal tax rates meant. Of course im an economist, i i thought the whole thing was interesting. I just point out in a small way that was way to educate people, that we dont do anymore. How was a the information and maybe there are other ways that we could be doing that. How much time do we have left . Ten minutes. Let me bring in a couple of people at a time. The gentleman in the back has been waving his hand. And then i know there are a couple of people farther up, write it. Let me take care of the side on this rent. You start and then i will bring the mic up here. The ricoh. How do people feel about using the tax code to sort of behavioral engineer, encouraging certain behaviors, discouraging others . Great question. Im a little disappointed we dont have Grover Norquist on the stage and a bathtub. Funny as this unkind to get a set up an event with grover. I want grover and vanessa on the same. If youre watching, make sure you bring a bathtub. Great prop. I just want to say i think a lot of what vanessa is talking about is narrative. I dont think that we have created a narrative about taxation that people can understand and gravitate to. And narrative that weve got now is all topsyturvy. For 30 or 40 years weve been told, when the narrative has sunk income when we give people at the top the money that we will all benefit at the bottom. The really think that is trickledown quite frankly is misery. What needs come for example, i dont think most people know this, but Companies Like walmart and mcdonalds actually have seminars to tell their people look, if you cant make it on the salary that we are paying you, here are some Government Programs you can go to. The loans are worth 40 billion waltons pick we are subsidizing their employees to wear subsidizing their wealth with our tax dollars. If thats a insulting and if it doesnt get peoples are up, then theres no hope for this country. Propose attack specific on companies that a tax to subsidize wages or benefits. The gentleman right behind there. We will take those three. The discussion of fairness has been around the rich and the poor tax rates, loopholes, shelters, fair share. Has there been any consideration or licensing, about tax simplification . Equal treatment before the law such as, for example, getting rid of all exemptions, credits, deductions, special treatments in the tax system, treating all income as income regardless of its source or, you know, of its source. I only say this because i look at the tax for every year, and if you did that for me, my taxes would be on a postcard because the irs knows all my sources of income. They know the rate that im supposed to owe and you know, that actually would impact a huge majority of people who pay wages and have their taxes withheld. Thats a book in question, which is about using a text editor, pushing one other idea, president obama talked about this in his campaign and none of the tax preparing firms like it, which is that in fact, most people based on a short form and you could actually send people a bill on their taxes when they wouldnt have to fill out anything. On this tax implication, the people who complain are the people who get the most damn benefits out of the tax system. And if all those things were not there, they would pay in many cases i hire tactics and its a very odd, i think simple vacation is harder than it looks. But anyway, look, all three of these questions are good. If you look at your reasons, the messaging, talk about narrative, messaging that the republicans, the paul ryan used on his blueprint was they always led with simplification, okay . They are not talking a getting rid of making the system fair i getting rid of loopholes. They certainly coopted our language on that. This application can appeal to everybody but fundamentally its uses all the loopholes. Its the folks at the top. I think with half of a narrative that is successful and that they tax fairness narrative. I i think with trouble on the other half of the nerd which is what you want to do with that money, what do we need to do, how do we need to make america better . Whats the role of government . Thats where things fall apart for us here maybe to stop as david. Thats when more challenging because of all the stuff people are hearing about government and on the left and on the right about how the system is rigged. Its really working draft of the rich and corporations or on behalf of the unions. Its that problem. Thats going to have to shake itself out. When the pendulum swings back, swings to the more liberal progressive side, i think that will shake out. What about using the tax code to get things done . I think heather talked about this already. The more couple could you make the tax code, even if there are benefits to working people, benefit you like to see people have for Child Tax Credit or things like this, the more competent you make the tax code, and makes it hard for people to see whatever is doing and convinces them taxes are complicated. If taxes are complicate i know whos getting the real deal. Its the people have the accounts and the lawyers, not me. In a survey people will check different boxes but in an interview setting feel the almost possible to disentangle. People go straight to the complexity of filing their own taxes to the certainly rich people were not paying their share. I have member my deduction here and there at every income level, earned income tax credit, college, all these things. Everyone has to remember the own Little Things and every time they reminded that someone fancier than them with a better account is Getting Better deductions. It creates loopholes in rates in all these things. People are experiential learners. Right now the lessons their learning are leading them to some very rough edges about how our tax policy works. We need to think about that when we are constructing the systems. And trust, it would be nice to respect them and given the information they need to make decisions as citizens. Theres an irony because you take away the water deduction, every homeowner will be three or if you take away thi the state l tax deduction, everybody in the hightech states will be furious. Its in the eyes of i cant resist putting on the spot. One of my favorite pollsters and aldrin in the audience. And then one last question before we close. Vanessa, you talked about the positive value associate with identify ones self as a taxpayer. A lot of the policy bites that breafrank and other groups wille involved in will be dealing incense with reverse scenario, that is, try to stop efforts to give new Tax Advantages and breaks to corporations or high income individuals. Im wondering anything youve heard in your interviews would give guidance on the kind of language to describe companies are wealthy individuals who attempt to reduce the tax burden or avoid their Tax Obligations entirely, what is the negative language, though sort of reverse of civic virtue . Thats a great question. So i think theres a truly great Political Science work done on a people understood or misunderstood the bush tax cuts which i would have as recommended reading for him to want to think about what the politics are likely to be this time. One challenge is people are very busy and so any people are trying to mislead them about how taxes work. Its not that surprising at the end of the day smart educated people have wrong ideas about how tax policy works. Thats a big challenge. Closing loopholes and sounds good and its that easy for people to get a clear answer and what that means for the overall budget and that easy for people to draw the connection between the tax cut here and the service that dont exist in my community over there. Those are real challenges. But at the same time part of this tv is just about having the courage to talk about taxation. I think often people dont have the courage to talk about taxation. If we think we should have a democratic form of government, taxes are how we pay for it. It is in a democracy are shared investment in our government. I think having the confidence, the courage of your conviction about why we raise money in the first place and what that is supposed be doing. The equity supposed be creating or the service is supposed to be paying for is i think people can tell when you dont believe what you are saying. So to me rather than come i dont think its not finding the purpose perfect set or to say. I think its about believing in when you say. I think on the particular fight in the next few weeks i would expect that the overseas question is one that will present with people and thats on the right and the left. The idea that companies took their jobs overseas another want to keep the money overseas, that is offensive to people who are paying the taxes and cant hide the money in the Cayman Islands or wherever else people imagine that money is hiding. I think it also resonates with a large idea that tax bank is something facet is due to support document and the country. If youre not doing that it implies you dont share our values, that youre not doing the patriotic thing. I think that something that is both true and resonates pretty easily with people. Will any taxpayer feel terribly excluded if i end on time . If theres an urgent question out that you ask a thin we will go ahead. You, put your head down so i will reward you for that. Thank you. You talking beginning about how americans how thats kind of like shorthand for lichen upstanding citizen. Weve seen a special in this last election and the backlash against people who they dont kind of label as a taxpayer, even though the evidence is exactly contrary to that, that undocumented person pays more in tax and the receiving benefits and its kind of like almost ignorant to the fact completely. I guess what would you say, what would you attribute to this kind of change and i guess whats the future of the . To think will be improved or get worse . I think that is one of the most fundamental questions we face, not just on taxation but just in general. Thank you for asking it. You are exactly right, that americans, we believe that undocumented immigrants are not paying their fair share in taxes. But at the end of the day immigrants are doing yeoman to work to prop up solicitor and medicare for which theyre not qualified to receive. They also like all income people pay disproportionately in sales and use taxes, and all the taxes the fall heavily on the better you have this annoying process want you to think about them. Yes, thats a countrywide and thats a misunderstanding. I dont know anything would be very hard to find out whether, i dont think just telling people the facts when theyre responding to an emotional reality for them. Theyre responding to an event that predated. Im not sure coming back with fax about the health of our sociasources greases is way to e of those minds. What in this case what were seeing is our understanding of tax policy is a mere or the division in our society. Those divisions are pretty fundamental and without them for a long time. There was his idea of the welfare queen. This is who benefits and taxes and as a pagan. That was a racialized idea. We are seeing a similar rhetoric about a different ethnicity now with this document immigrants are not paying taxes. I think that is a deep divide in this country. I think i would like to say that providing that information about tax policy was going to bridge that divide big step i think is a bridge that divide suddenly no one will ever wonder who the taxpayer is. That is when you know that weve crossed across that i think fundamental challenge that we face, which is building a fair economy with a multiethnic community. Thank you. [applause] i want to close what are the nice things about a social scientist do these interviews and then people wonder a fair account of all these i intervie. She has an appendix where she sort of summarizes all of her interviewees. I want to give patsy the last word. Patsy is a 58yearold registered nurse from sacramento, california, and heres what vanessa wrote. Ask if it is ethical to find legal ways to avoid paying as much as taxes. Patsy says hell no, its not. Pardon my language. She says keep every thing going as should. So that we can continue to have lost up help and the people following diseases and immunizations for our kids. Otherwise, we would be screwed. Thank you very, very much, Vanessa Anne Frank and heather. [applause] [inaudible conversations] usa today Campaign Finance reporter. Host congressman buck, thanks so much for joining us. Lets get right to the heart of the matter. Tell us why did you decide to write a book with this really interesting title, drain the swamp, how washington corruption is worse than you