Saturday, September 24, 2011

Piling it on: Another Orwellianism

It startled Brigitte yesterday to hear, on a rebroadcast of a hearing by the Senate Finance Subcommittee on Fiscal Responsibility and Economic Growth, tax exemptions and loopholes defined, by various high-level witnesses as, tax expenditures. This morning she asked me to define “tax expenditures.” Okay. That sounds like a rather weird question, but I knew she was going somewhere interesting. So I began in my usual down-to-earth way saying: “Well, checks the government writes to pay soldiers, buy tanks, Social Security, pay its bureaucracy, maintenance of national parks…” Brigitte stopped me. And she told me what people, like one-time Fed Chairman Greenspan, and others, defined as “tax expenditures.” The things she included did not sound like expenditures to me.

“It’s another of your Orwellianisms,” she said.

I went on a hunt. Sure enough. I found the matter explained on Deliberately Considered (link). Here is the relevant paragraph:
Are tax expenditures an entirely different matter? The Congressional Budget Act of 1974 (Public Law 93-344) defines tax expenditures as, “…revenue losses attributable to provisions of the Federal tax laws which allow a special exclusion, exemption, or deduction from gross income or which provide a special credit, a preferential rate of tax, or a deferral of liability.” That is, in plain English: tax expenditures are lost tax revenues caused by special exceptions to tax laws. By law, a list of “tax expenditures” must be included in the President’s budget in a section titled “Analytical Perspectives,” prepared by the Office of Management and Budget. The list for 2012 includes 173 “tax expenditures (p 241 – 251),” which total over one trillion dollars for the fiscal year beginning October 1, 2011. As objective as this may sound, the list and estimates of “cost” is actually quite subjective, because analysts posit the starting point of the tax baseline.
Congress was dominated by the Democrats (both houses) in that year. The motivation behind this phrasing could, presumably, be pinned down sharply with lots of research. But never mind that. Here is a simple case of using a word to mean roughly the exact opposite of what it has traditionally meant.

You cannot expend, meaning spend, money you don’t actually have. To view as expenditures money that you have not collected—and have not collected because laws in place prevent you from collecting them—that is not a tax expenditures.

Behind this lies some kind of really strange logic, certainly intended in some ways to confuse. That is the issue, always, when the meaning of words is arbitrarily changed by those with authority enough to make the concept stick more or less.


  1. This type of linguistic perversion seems to have always had the assumption that there would be a group of "initiates" who would maintain in the future the ability to understand what was being said.

    It seems not to have worked out that way. One gets the impression that a number of elected people in the government do not interpret "tax expenditure" as a "lost and foregone forever opportunity of revenue".

  2. Yeah, "tax expenditures" sounds like a term created by the Democratic Party. Leave it to my folks to use a four-syllable word when they could've gone with something pithier like "tax looting."

    I think the general intent was to get people to think of the sorts of tax breaks, shenanigans, and loopholes that riddle the tax code as something that costs money instead of just being a freebie giveaway, presumably because you will need to replace that lost revenue to maintain your budget balance.

    Congress being Congress, that hasn't stopped them for a moment from pretending that these things were all freebies.

    I don't know that I have the stamina to read the list of 173 items cited by OMB, but my guess is that if you proposed them as actual expenditures on a blank sheet of paper today, people would think twice about spending money on a lot of it. But heaven forbid that we "raise taxes" by getting rid of the assorted bits of corporate welfare that have been cemented into law by vigorous lobbying.


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