(FORTUNE Magazine) – At a time when the nation is paying more in federal taxes than ever before, you'd expect tax cuts to be atop our political priorities. The presidential candidates certainly assume that's the case. Governor George W. Bush has made tax cuts the center plank of his platform; Senator John McCain and Vice President Al Gore call for more modest cuts; and Senator Bill Bradley promises to fight for the lowest tax rates for the greatest number of people.

But poll after poll shows the public is lukewarm to the idea. According to a recent CNN survey, tax cuts rank fifth on the list of top voter concerns, after issues like health care and Social Security. The economic climate has obviously changed, yet political leaders seem stuck in the '80s, when the public wanted tax cuts at any cost. To understand the shift in public perception, you need to look at what has happened to tax burdens and how prosperity and budget surpluses have redefined our goals. "The basic story we're seeing," says William Gale, a tax expert at the Brookings Institution, "is that while total tax revenues are rising, most families are paying a smaller share of their income in taxes." This situation is a result of tax initiatives spanning two decades. In the '80s, Ronald Reagan cut marginal tax rates twice while personal exemptions, standard deductions, and tax brackets were indexed for inflation. Then, in the '90s, Clinton increased the earned-income tax credit and introduced the child credit act. The result: 60% of American families (mainly middle- and low-income earners) are paying less in taxes.

Additionally, many now feel better off since a major share of their net worth--pension funds, home equity, and unrealized capital gains--has increased and isn't subject to income tax. Take a look at Eve Vanderweit, a 54-year-old photographer employed at Colorado State University in Fort Collins. Because of her investments and the rising price of her home, Vanderweit feels she has enough behind her to retire early. "I would never have been able to consider retiring early if my investments hadn't paid off," she says. But Vanderweit is typical of the public in another way too: She's not that interested in tax cuts. "A little more money in my pocket now doesn't matter much to me," says Vanderweit. "Benefits like Medicare are more important, so I can be secure in my retirement."

Those who are paying higher taxes--the top 20% of income earners--don't feel their burden as heavily. Clinton's decision, when he first took office, to increase the top federal income tax rate from 31% to 39.6% raised this group's rates significantly. But at the same time their earnings have soared; average real income before tax has shot up 102% for the top 1% of income earners since 1977. For the top 20% of earners, income has grown 40%--far more than for the rest of the population, whose pay has basically stagnated during the same period. These kinds of growth rates make tax cuts less urgent. This group has also substantially benefited from a drop in the top capital gains rate, from 28% to 20%, during one of the best bull markets ever.

Put these factors together, and here's what we see. For the most part, voters feel prosperous. They're not eager to dip into the budget surplus to reduce their tax burden; they'd rather set funds aside to maintain entitlements like Social Security and Medicare. "People understand tax cuts aren't costless," says Joel Slemrod, a tax expert and professor of economics at the University of Michigan. "They'll have to pay for them down the track with less spending." That realization may stem from the demise of supply-side thinking as well as the vivid memory of fiscal recklessness in the '80s. Today, as the retirement of the baby-boomer generation approaches, the preservation of these entitlements is paramount. "What would you do?" asks Gale. "Cut taxes for someone who makes $400,000 a year, or improve Medicare for an elderly woman on $20,000 a year?"

That doesn't mean the issue of tax cuts is dead--it's just dormant. After all, we're experiencing the longest economic expansion in U.S. history. If the economy sours, attitudes will change and people will want more of their money back. At that point tax cuts also make good economic sense, providing a boost to the economy when we need it most.

For presidential hopefuls like George W. Bush, the message is clear: Don't count on tax cuts to win over the public. We're savvier than that. It's not that we've stopped caring about the size of our wallets, but rather that we want them to remain flush with cash well into the future.

--Anna Bernasek