When is a tax cut not a tax cut?
The House of Representatives recently passed the Tax Extenders Act of 2009 that extends over 30 tax breaks. Extends, not creates, as I point out this week at the MacIver Institute.
However, even though the tax breaks were pre-existing, Congress has decided that the tax breaks must be “paid for” through higher taxes elsewhere. The Congressional Budget Office does not score existing tax breaks the same way it scores spending. It presupposes spending will continue as before even after the program expires, but expiring tax breaks need to be paid for under “pay as you go” rules even though Congress was not collecting that tax revenue in the first place.
As a result, while Kagen and Kind are claiming that they just voted for tax cuts, the reality is that they voted for a net increase in taxes. They have used not increasing a host of taxes as an excuse to raise other taxes.