Wednesday, September 14, 2011

Obama's 'tax cut' isn't a tax cut

Perhaps this is just semantics, but words mean things and I can't find any evidence that President Barack Obama's latest jobs proposal has a 'tax cut' for small businesses.

In my mind, a cut is when what you are currently paying is reduced. Under what I've read (as his bill isn't actually in print anywhere that I could find), the President is offering a lesser rate of taxation on a new activity: for hiring a new employee, there would be a credit of varying amounts depending on the type of employee (veteran, long-term unemployed).

His plan would also reduce the rate of Social Security taxation if there is an increase in payroll. Again, this is only available for a new activity: a pay hike for your employees which raises your payroll.

He also wants to extend the tax break for the purchase of new equipment. But you have to purchase the new equipment to be eligible for the break.

These are not cuts. If you don't actually do these things, you don't benefit. But they are credits.

In Columbus yesterday, Pres. Obama said of his plan:

It will provide tax relief for every worker and small business in America.

But that's not true. Every small business in America will be eligible for the tax relief, but not all will be able to perform the activity that will give them the 'relief.'

This is the same way it was with his 'tax breaks for every American' in 2009 after he first took office. Most of those 'cuts' were just credits for specific acts - like weatherizing your home, buying a new car, buying a new appliance, etc...

Additionally, these specific proposals are designed to be short-term and only 'continue' if you continue the activity - unlike an actual tax cut which would require no action and be in effect unless (or until) a future congress changed the code.

Words are important and when a politician speaks, it's important to know what they're actually saying. In this case, we're not getting a tax cut, no matter what President Obama and his supporters want to call it.


Timothy W Higgins said...


Why should tax cuts mean actual cuts in the amount of taxes you pay when spending cuts do not mean that less is being spent?

Both of the Merriams and Webster are turning over in their graves at this atrocious abuse of the English language.

skeeter1107 said...

Perhaps they suffered from poor math education in grade school.

My experience in math class was that an attempt to explain an increase as a cut wouldn't have worked so well. It would have been marked wrong and Mom would have questions.

While I don't find it unusual that politicians would deliberately mislead, shall we say, "abandon the truth." I do find perplexing non-politicians parroting the paradox where "up is down."

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