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Most Americans are in the dark about their tax bill, but think Trump's plan won't help

  • Americans lean toward the belief their taxes will go up under the president's tax plan, according to new polls by CNBC.
  • But most people don't even know what they're paying in federal income taxes in the first place.
  • More people have an opinion on the tax plan than have actually heard about it, the polls showed.
Taxes
Anne Rippy | Getty Images

Most Americans don't know much about President Donald Trump's new tax proposal but don't think it will be in their favor. That's the conclusion of polls run by CNBC since the GOP unveiled the framework for a tax reform bill in late September.

Responses to this week's CNBC All-America Economic Survey suggested that voters lean slightly toward the belief that their taxes will go up under the new plan. CNBC ran two additional surveys that confirmed that belief but found more details and nuance in Americans' understanding of taxes and the framework's effects.

Most people don't even know what they're paying in taxes in the first place. And if you ask them to guess their tax bracket, their answer doesn't match up with reality. Even more strange, our polls found that a lot of people say they haven't heard of the new tax plan or its details but assume it will hurt them anyway.

CNBC commissioned two different firms to run this analysis: Reconnect Research, which conducted a phone survey, and marketing company Fluent, which conducted an online poll. Each company asked slightly different questions, but the overall results matched up.

Americans don't know what they pay in taxes

Trump's tax proposal, at nine pages, is undeniably light on details. Standard political promises such as tax relief for the middle class and small businesses are mixed with more specific proposals such as doubling the standard deduction and repealing the estate tax (aka the "death tax").

Even without concrete details on the administration's tax policy, Americans would find it hard to estimate the reform's effect on their own tax situation simply because they don't know what they pay in taxes to begin with. By a factor of 2-to-1, respondents to both the polls said they don't know what they pay in federal income tax. Democrats were slightly more likely to admit not knowing, according to Fluent's poll.

On top of that, when asked to guess which tax bracket they were in, people were off. About 60 percent of respondents to Reconnect's poll said they pay "around 20 percent" or less of their income in taxes, but the facts show, most people pay a lot less. More than 75 percent of returns filed with the IRS had marginal tax rates of 15 percent or less, according to data from 2015.

One percent of respondents said they pay 50 percent of their income in taxes, despite the fact that the top marginal tax rate is 39.6 percent. Put that all together and we find a public that simply doesn't know what its starting point is for taxes.

They have an opinion anyway

Both the Reconnect and Fluent surveys asked people if they knew about the proposed tax plan and then asked if they thought the plan would mean their taxes went up or down.

The results were from both polls were similar. A lot of people did not know about the plan, but they still had a strong opinion on it. Despite not knowing about the plan, people on average expected their taxes to go up as a result.

A quarter of respondents to Fluent's poll said the plan would hurt them, with only a fifth saying it would help them. That was largely split on party lines, with 7 percent of Democrats and 41 percent of Republicans saying the plan would help them. Among both parties, half of respondents didn't know what the effect would be on their returns.

The details need to be worked out, but Trump advisor Gary Cohn famously said in September that a family making $100,000 could save around $1,000 with the new tax plan. With that money, they could "renovate their kitchen" or "buy a new car," he said. But bigger refund checks might not be the economic boon Cohn thinks.

A third of people say they would pay off bills if they got $1,000 in tax savings, according to Fluent's poll. Twenty percent said they would save it, and only 12 percent said they would "spend it" or "buy a car."

The ultimate effects of the tax plan are equally split on party lines: 50 percent of Republicans say the tax plan will stimulate the economy and help the middle class, while only around 10 percent of Democrats agree, according to Fluent's poll.

There was one sign of bipartisan agreement: Only 10 percent of Republicans and 6 percent of Democrats believe the taxes they currently pay are put to good use.

Reconnect's poll was conducted by telephone on Oct. 2 and 3, 2017, among 1,004 adults in the U.S. It has a margin of error of 3 percentage points. Fluent's poll was conducted online on Sept. 30, 2017, among 1,570 adults.