Calling tax cuts "earmarks" is very unhelpful and completely wrong from a fiscal conservative perspective. There is no such thing as a “tax earmark.” Earmarks are spending. There are appropriations earmarks. There are authorization earmarks. There are no “tax earmarks.” To claim that there are puts tax deductions and credits (which is what we’re talking about here) on the same par as bridges to nowhere. Was the creation of HSAs a “tax earmark?” How about the home mortgage interest deduction? One might call for lowering the rates and broadening the base, but we should not fall into the trap of equating tax cuts and spending increases. That’s how some Senate Republicans got in such massive trouble over health care last year and energy this year vis-à-vis taxes.
This is precisely the same logic that Treasury’s Stanley S. Surrey used in the 1960s to create the “tax expenditure” concept. This faulty doctrine treats tax exclusions, adjustments, deductions, and credits as if they were the same as a federal appropriation. They are not. They might not be ideal tax policy, but they are federal revenue reductions—not budget increases.
I would exempt from my statement the outlay effects of refundable tax credits. Those are, indeed, spending and could rightly be sullied with the term “earmark.”
It’s this confusion between tax cuts and spending increases that I’ve found is the number one cause of well-meaning offices slipping into Taxpayer Protection Pledge violations. When I see things communicated that would contribute to this confusion, I try to jump all over it.
12 comments:
Wooden arrows for kids? Wool research? How stupid do you think the American people are?
Let's not get held up on technicalities. As reported, if the sky was falling, and we had to do something to prop it up...where did the time for debate on wool research come from?
If it is an emergency, treat it as such. If not, don't blow smoke just to slip in billions more of useless earmarks and tax breaks.
Hi Guys!
Fine and good on the definition of an earmark.
But can you take these tax cuts one by one and explain how much they cut, and in what way, and for whom (which voter constituency or special interest group), and which House members will likely benefit in the form of approval ratings from happy constituents?
If these tax cuts are intended to buy votes, I want to see which ones. "Transparency!"
Someone from the Hill just emailed Rich Lowry with this (it's up on the Corner but it's relatively brief so I'll cut and paste):
Those “earmarks” (none of them are spending, they are all tax relief) are not part of the underlying economic recovery bill; they’re part of the tax relief bill that will be attached to the economic rescue bill.
The same tax relief bill, by the way, that the Senate passed 93-2 (two Democrats, Carper and Conrad, were the only ‘no’ votes) a couple weeks ago with the same, exact provisions and that the House refused to take up because it didn’t raise taxes to “pay for” the tax relief.
Also, those provisions, while providing tax relief, have not been defined as fitting the guidelines of a “limited tax benefit.”
And I don’t recall a single person objecting to the bill or defining any earmarks in the bill when it passed the Senate with the vote of every Republican (and all but two Democrats) that was present for the vote.
Thank you for injecting some reason and common sense into the hysteria making the rounds of conseravtive blogs. I have looked at the bill with my own eyes, and I cannot find any pork or earmarks in the usual sense of the term. Oh that the posters/commenters at HotAir or RedState would do the same.
Pork is pork is pork. Of course, it involves government spending. The revenue loss to these sweetheart tax breaks will have to be made up elsewhere.
E!,
Here's a link that should explain most of your questions for you.
http://www.house.gov/jct/x-69-08r.pdf
Tax cuts are not the same as spending. To maintain that position is simply absurd.
Don't let Congress fool you into thinking that the FairTax is bad for you. It's bad for them, because it puts control of taxation in OUR HANDS, not theirs! Bailouts of any kind would be impossible. As a matter of fact, they would be unnecessary. We would never have been in this mess.
It's good for us because we would be able to keep 100% of our wages, and they would only be able to increase taxes by keeping wages higher. Higher wages means more money to spend, which means more revenue!
Michael,
The FairTax still takes out of your wages, it just takes at a different point. To say otherwise or that the government could only increase taxes by getting wages higher is just silly.
The only way to get a FairTax would be to eliminate the Constitutional allowance of the income tax. But if you can get rid of that, why even bother putting something in its place?
And if you are dead set on taxing off of consumption instead of income, why go the convoluted route of the FairTax. Just move to a flat rate income tax that exempts savings and investment. It has the exact same effect and is a hell of a lot simpler.
Well said "The Waterman." I definitely agree with your last point.
Waterman,
Taxing consumption would mean a flat rate sales tax, not an income tax, right?
I would suggest that is the simplest form of taxation, with exemptions on regressive items like food.
It has the added benefit of being completely transparent. For once, we would get much closer to seeing total government tax.
One issue with it other than the investment in the current system is the lack of record keeping needed to extend tax subsidies to so many people the tax credits have wrought.
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