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Stop calling them tax cuts

Posted by Richard on September 17, 2010

I saw a Nancy Pelosi soundbite tonight in which she claimed that Republicans were blocking a "tax cut for the middle class" unless Congress also enacts a "tax cut for the wealthiest Americans." I believe it was Orwell who said that if you let your opponent control the language and define the terms, you'll lose the debate. We're not arguing about cutting anyone's taxes.

The phrase "Bush tax cuts" gets over 10 million hits on Google. I use it myself all the time. But it has distorted the debate, and it's time to reclaim the language. What's on the table is whether tax rates go up or not — not whether they go down.

The Tax Foundation has a nice explanation of why the Bush tax cuts (there I go again) are expiring:

During the legislative fight over tax cuts in 2001, Senate Republicans could not predict with certainty that they would reach the 60-vote threshold of support that would have enabled them to make the tax cuts permanent. As a result, when Congress passed the first of many tax cuts during the last decade in May 2001, it passed it as a reconciliation bill which needs only 51 votes. That was the so-called Bush tax cut, formally known as the Economic Growth and Tax Relief Reconciliation Act (EGTRRA, pronounced egg-tray).

Reconciliation was devised in 1974 as a way to for the Senate to deal more effectively with budget bills, but it soon became a technique to limit amendments and debate. In 1985, the Senate added the so-called Byrd rule to reconciliation. Named after Senator Robert Byrd, the rule forbids a bill passed under reconciliation from, among other things, altering federal revenue for more than 10 years. Any senator may object that a provision violates that stricture, and if the presiding officer agrees, a vote of 60 senators is required to overturn the ruling.

Overall, 62 senators supported H.R. 1836 as amended by the Senate, thereby sending it to conference. In the end, 58 senators voted in favor of the conference report.  Nevertheless, because the bill was passed under reconciliation, revenues further than 10 years in the future could not be changed. And so, on December 31, 2010, all of EGTRRA will expire and revert to 2001 law.

The 2003 tax cuts mostly accelerated the original tax cuts, but also put in place new tax cuts for dividends and capital gains. The 2003 tax cut, known as the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) was also passed under reconciliation.

So, in a nutshell, here's what happened: In 2001 (and again in 2003), Congress voted to cut tax rates through 2010 and to raise them again in 2011. Republicans, Libertarians, Tea Party members, most economists, and the majority of likely voters are calling on Congress to rescind the 2011 tax increase and leave tax rates as they are today. That's not a tax cut. That's simply maintaining the status quo.

Believe me, I'm all for really cutting taxes. What the President keeps bragging about doesn't count — those aren't tax rate cuts, they're targeted tax credits with two purposes: behavior modification and rewarding his allies.

But for right now, the subject being debated is whether to allow the largest tax increase in history to take effect on January 1, at a time when unemployment is at near-historic levels and most businesses large and small are already afraid to invest in the future and hire new employees. The subject being debated is whether to administer a potent poison to an economy that's already extremely ill. 

So let's quit talking about "extending the Bush tax cuts" and use more accurate language: we want to stop the tax increases. 

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