Friday, April 15, 2011

Obama Invents a New Phrase "Tax Expenditures"

'Tax Expenditure' is a bit of double speak which translates to 'tax increases'. It also lets you know exactly who Obama thinks owns your wages. The logic behind the term Tax Expenditure is as follows; the government is entitled to 100% of the money you earn making a living, any money they let you keep is money that was rightfully theirs, hence the money you keep is money the government is giving to you or is an expenditure. Lessening that 'expenditure' means keeping more of what you earn in the form of increased taxes.

Conservatives and Libertarians take the opposite view. You are entitled to the money you earn. Taxes are a person being forced to give some of their money to the government. Taking less taxes is in no way generous because the government is not entitled to it.

As with people calling themselves 'progressives' instead of 'Liberal', hopefully the use of 'Tax Expenditure' will make people cringe even more than talking about tax increases. While the effect may be the same, it is the element of deceit along with what it reveals about the person beliefs that will put people off.

"Obama is a born again deficit cutter. He wants, according to his speech at George Washington University this week, to slim down nation's deficit by a whopping four trillion dollars in the next twelve years. To achieve this miraculous goal he has a top secret weapon. It is called the "tax expenditure."

Now tax expenditures are not new, they have been around for many years, only we knew them by a different name. The old- fashioned name which is heretofore banned from the lexicon is: tax increase.

But everyone knows tax increases are bad, so Obama and his team must be thinking that if they changed the name the voters wouldn't notice.


  1. Ian Dubrowsky4/16/2011 3:30 PM

    Most people read Ayn Rand when they are 14 and grow out of it, they move on to actual philosophy by the time they are 16. Others do not.

    Federal spending was consistently above the long-term average of revenue in the Reagan years, in stark contrast to the small government agenda of Jimmy Carter and Bill Clinton. Of course a lot of this is national defense. But spending is spending, and traditionally the defense channel is one of the main ways we do social welfare policy in the United States. See, for example, the GI Bill. And even though we remember Social Security as a key element of the New Deal welfare state, the program as we know it was really created in the 1950s rather than the 1930s.

    I think the right way to think about the current debate is this. We have a fairly settled view in the United States that one important function of the government is taking care of elderly people. We also have a fairly settled view in the United States that one important function of the government is ensuring that people have health insurance. We also have a fairly settled view in the United States that we like being an unusually low tax country. We also also have a fairly settled view in the United States that we want to maintain a uniquely expensive posture of global military hegemony. These are straightforwardly incompatible goals. Large, regionally significant states such as China, India, Brazil, and Nigeria are growing faster than we are putting pressure on military hegemonism. The share of the population composed of elderly people is rising. And the productivity of the health care sector is increasing more slowly than the productivity of the economy as a whole. This leaves us with a lot of adjusting to do and a actually serious debate needs to be had.

    When you cut from medicare and social services, not to pay down the debt, but to finance a previously untenable tax cut for millionaires and billionaires- then you are simply shifting the tax burden from the rich on to everyone else. These tax cuts were really designed as a form of expenditure, but even if you don't believe they should be called that - to make the metaphysical leap that because an official in the government feels like there must be a practical and responsible way to close the gap between revenue and outlays comes from a rooted belief that the federal government owns everything you make is absurd. Thankfully most Americans know that is insane.

  2. @Ian Dubrowsky - The type of actual growing up you reference actually occurs when the Liberal and Communist children leave college, get a job, and start paying taxes.

    I encourage you to look again at the spending levels for the various presidents (keeping in mind particular circumstances), and cross reference it with which party controlled congress.

    As to what we can all agree on; I do not think there is a consensus in American that we have to 'take care of old people'. Instead it is that we should help people in truly desperate situations who can not help themselves. Think feeding people who legitimately can not work vs giving flat screen televisions to people who just do not feel like earning a pay check.

    I agree that we can no both cut government tax revenue and increase spending. I am not convinced that lowering taxes would lower that revenue (once again I encourage you to look at the Laffer curve). We should both cut spending an create an environment which is conducive to economic expansion.

  3. Ian Dubrowsky4/18/2011 12:28 PM

    Right, and then they realize that they are living in a 21st century gilded age, where all of their other friends out of college are either working in the finance industry, unemployed or going to "law school" for three years because they have parents that will pay for it. After which they will also not find a job. But it's ok because the marginal tax rate for the 400 richest Americans is three percent lower than what it was in the 90s! hooray.

    Right, and still massive expansions in welfare spending (just called "defense")

    There is actually a very broad consensus that an important government function is the welfare of the old. That you disagree with that just reflects how outside the views of most Americans, and how extreme, you are. That's why you are concerned about the myth of the "welfare queen", and not concerned about the actual welfare queens- the top richest americans who all depend on the government and decades of public investment for private profits and the politicians in their pockets.

    Once again, I encourage you to look into the Laffer Curve a little more critically.

  4. Ian Dubrowsky4/18/2011 3:23 PM

    Just a coincidence, I was reading the Wall Street Journal's reliably far right wing opinion page today- and guess who was featured? Arthur Laffer! The predominant author of the old big lie of tax policy, that reductions in US income tax rates would increase revenue. And today we find him touting another big lie, this one about loopholes compliance costs:

    "In a study published last week by the Laffer Center, my colleagues Wayne Winegarden, John Childs and I estimate that these costs alone are a staggering $431 billion annually. This is a cost markup of 30 cents on every dollar paid in taxes. And this is not even a complete accounting of the costs of tax complexity."

    You may be wondering what this has to do with reducing tax rates for the rich. Laffer proceeds to explains:

    "A tax reform to a simple flat-rate tax with no deductions would significantly reduce the current complexity inherent in our progressive tax system, which is full of loopholes, exemptions and special interest carve-outs. Based on the estimates from our new study, if a static, revenue-neutral flat-tax reform were to reduce the tax complexity in half, the long-term growth in our economy would increase by around one-half of 1% per year."

    All the work here is being done by the proviso “with no deductions.” It’s quite true that a flat rate tax with no deductions would significantly reduce complexity. By the same token, a progressive tax with no deductions would reduce complexity. So would a calculus-based system with an infinite number of brackets and no deductions. That’s because eliminating deductions reduces complexity and economic distortions. Moving to a straight proportional tax is just something rich people like because it means they’ll pay less. The one has nothing to do with the other.

    But he is even more full of shit then that. Of course, complexity is not "inherent in our progressive tax system." It's inherent in any tax system. There's absolutely no reason to believe that, once the progressivity of the income tax is eliminated, politicians would not continue to create loopholes, tax credits and other deductions. It will probably never be possible to go through a tax day without having right-wingers attempt to convince us that we could make our taxes easier by shifting a higher proportion of the tax burden off the rich and onto the poor and/or middle class.


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