Newspeak, Doublethink, and Taxes

By Jeff Harding

“It’s a beautiful thing, the destruction of words.”

George Orwell's 1984

Here’s a bit of good news for your weekend: the Obama Administration is not going to raise your taxes. However, if you are taking advantage of loopholes in the tax code, which, as everyone knows, are bad things, they are going to be closed. Since it’s really the government’s money anyway, they are just getting it back where it belongs. It’s not a tax raise.

The Obama Administration plans to implement universal nationalized health care. They estimate this plan will cost about $1 trillion over a decade. They will set aside $634 million over ten years for a reserve fund to pay for about half of the cost. The balance of the cost will be borne by payees.

It seems that they have underestimated tax revenues. 

Officials said that upon further analysis they realized that they had overestimated savings and tax increases proposed in February to help pay the bill. … The spending cuts, originally estimated at saving $316 billion, would actually save only $309 billion, a White House official said. The tax increases, originally estimated at $318 billion, would actually raise $267 billion. That leaves a gap of $58 billion over 10 years.

The Obama Administration has been working very hard to raise revenues for their social programs. They are doing it in a way that does not upset their tax base which includes the majority of people in America, whom, as the Left has cleverly convinced them, are “have-nots.” That leaves the “haves.” The Administration now has a task force led by former Fed chairman Paul Volker working on ways to squeeze more money out of us.

They have come up with a way to raise another $60 billion a year to make up their shortfall. The first “loophole” they are going to close has to do with the death tax (aka, the estate and gift tax). They will require assets to be valued the same when they are inherited and then when they are gifted. If you value an asset at a low value when it is inherited, you won’t be able to make a subsequent gift of it at a higher value.

The second “loophole” is that you’ll have to do 1099s for corporations, as you now have to do for individuals.

Let’s start with the facts. A “loophole” is something that the government allowed taxpayers to do that they now don’t like. When they passed these tax bills these kinds of provisions were called “incentives” or “productivity enhancements” or “saving small business” programs. When they fall into disfavor, or, as in the current case, it’s a cash grab, they use pejorative terms for the same provisions.

The Administration is raising taxes. It’s not “closing a loophole.” The word “loophole” suggests that the government is doing something good by stopping someone from getting away with something. Which leads me to the quote in the first paragraph of this article. The phrase comes from Symes, a despicable character in George Orwell’s novel 1984. Symes worked for the Ministry of Truth eradicating meaning from words so that the government, by giving its own meaning to words, could control one’s thoughts.

In the polite world this rather transparent attempt at propaganda is called “spin,” which implies a Madison Avenue twist to selling the Administration’s message. But when the government employs spin, is it not called propaganda? All political parties and politicians do this, so the Obama Administration is not the first one or even the most egregious one. But aren’t we really talking about lies? Why do we allow ourselves to be fooled by this word gimmickry? They are trying to control our thoughts.

This is just the start of “not” raising taxes. First, their estimate of tax revenues is based on assumptions about an economic recovery. They expect the economy to start recovery by Q3, 2009 with complete recovery by Q2, 2010. I think this assumption is wrong. Thus, their anticipated revenues will be less than expected. 

Secondly, the program will be vastly more expensive than they project. I will make a simple statement and ask anyone to rebut it: Has any new welfare program run by the government ever not exceeded their cost expectations by several factors? The cost of the new health care system run or administered by the government will be vastly more expensive than budgeted.

Congress has a long history of dramatically underestimating Medicare costs. “At its start, in 1966, Medicare cost $3 billion,” wrote Steven Hayward and Erik Peterson in a 1993 Reason article. “The House Ways and Means Committee estimated that Medicare would cost only about $12 billion by 1990 (a figure that included an allowance for inflation). This was supposedly a ‘conservative’ estimate. But in 1990 Medicare actually cost $107 billion.”

The unfunded long term liability of Medicare is now estimated to be $36 trillion.

They are going to close a lot of loopholes.