November 12, 2014
Zachary Goldfarb raises this possibility in a Wonkblog post today. Certainly there is evidence that many voters were unhappy about stagnating incomes, and the payroll tax increase associated with the end of the payroll tax holiday in 2013 contributed to this stagnation.
However as a practical matter, it appears that few people noticed the tax increase at the time it took place. While 28.9 percent of respondents correctly answered a poll saying that their payroll tax was increased in 2013, 19.8 percent said that their taxes were increased in 2014, when there was actually no change in their tax rate. If the 2014 answer gives us the percentage of the population who would have said their taxes increased regardless of what happened, less than 10 percent of the population recognized the tax increase in 2013.
The implication is that voters were upset about income stagnation. The tax increase contributed to this stagnation (although it was just reversing a prior tax cut), but the tax increase was not directly the cause of voter anger because people did not know about it.
The piece also at one point dismisses the idea of any further tax cuts, commenting:
“given the long-term fiscal problems facing Washington, that seems fanciful.”
Actually the sharp downward revisions to projections of health care cost growth in recent years had made the projected deficits even for the long-term considerably smaller than they had been prior to the downturn. There is no economic reason that these projected deficits should preclude stimulus to the economy now, even though many may use them as a political excuse for their opposition.
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