Sunday, November 21, 2010

George Orwell, call your office

One of the "usual suspects" that Congress rounds up when preparing tax legislation is "closing loopholes."  You might think from the phrase that loopholes get into the tax code by accident, they are drafting errors spotted by diligent accountants.  Not so; every loophole has been inserted quite deliberately.

Apparently, the juice has been drained from the word "loophole" after so many years of repetition.  The deficit commission needed an alternative, one that would instantly convey "badness."  They tried "tax expenditures," but that was too complicated, plus it gives away the game that Congress puts these into the code on purpose, for a purpose.

So, what's another phrase we could use?  Doesn't have to be accurate, just instantly recognizable as something we don't want?

"Tax earmarks." I am not kidding.

From Tax Notes:
Commission Co-Chair Erskine Bowles said November 18 that based on the week's discussions, the commission will refine the draft proposal he and Co-Chair Alan Simpson released the previous week, and that the final product would focus on what he called "earmarks in the tax code." 
 Uh huh.   Prominent examples of tax earmarks that were snuck into the tax code at midnight without a vote when no one was looking include the home mortgage deduction and the exclusion from income of employer provided health insurance.   Yeah, those must be earmarks.

1 comment:

JLM said...

The Senotor sounds silly, but you can trace the origin of the silliness. If income from growing corn is taxable but corn-growers in your state feel hard-pressed, a Congressperson might "earmark" a special exemption for "my-state-corngrowers).

From Wikipedia:

"An earmark is a legislative (especially congressional) provision that directs approved funds to be spent on specific projects, or that directs specific exemptions from taxes or mandated fees.***

Earmarks can be found both in legislation (also called "Hard earmarks" or "Hardmarks") and in the text of Congressional committee reports (also called "Soft earmarks" or "Softmarks"). Hard earmarks are binding and have the effect of law, while soft earmarks do not have the effect of law but by custom are acted on as if they were binding."