Patterico's Pontifications


Supreme Court to Ninth Circuit, President Obama: No, the Government Allowing You to Keep Your Own Money is Not the Same as Spending

Filed under: General — Aaron Worthing @ 10:12 am

[Guest post by Aaron Worthing; if you have tips, please send them here.  Or by Twitter @AaronWorthing.]

You might remember a statement from Obama that I labeled this The Most Offensive Line in the State of the Union:

The bipartisan Fiscal Commission I created last year made this crystal clear. I don’t agree with all their proposals, but they made important progress. And their conclusion is that the only way to tackle our deficit is to cut excessive spending wherever we find it – in domestic spending, defense spending, health care spending, and spending through tax breaks and loopholes.

(emphasis added.)  And I had this reaction at the time:

You got that?  When you are allowed to keep your money, that is considered “spending” by the Federal Government.  Because in reality all of the fruits of your labor belong to us, the government.

And prior to that the Ninth Circuit tried to codify this principle into law in Arizona Christian School Tuition Organization v. Winn.  I ignored the “all your money is belong to us” angle to the story, but Althouse dragged it out a bit, asking “[i]f the government gives tax credits for donations that may go to religion, is that essentially the same as government spending on religion.”  I, on the other hand, pointed out that even if Judge Reinhardt and the 9th Circuit were right on that question (big if), and we treat this as a government expenditure, it’s still basically the same issue as a voucher, which has already been declared constitutional.

Well, today the Supreme Court announced its decision in that case and interestingly enough, they kept the issue to standing only and specifically stated that allowing people to keep more of their own money in taxes is not the same as spending:

It is easy to see that tax credits  and governmental expenditures can have similar  economic consequences, at least for beneficiaries whose tax liability is sufficiently  large to take full advantage of the credit.  Yet tax credits and governmental expenditures do not both implicate individual taxpayers in sectarian activities….  The distinction between governmental expenditures and tax credits refutes respondents’ assertion of standing. When Arizona taxpayers choose to contribute to STOs, they spend their own money, not money the State has collected from respondents or from other taxpayers.

And of course, shock of shocks, the four horsepersons of the left disagreed:

The majority reaches a contrary decision by distinguishing between two methods of financing religion: A taxpayer has standing to challenge state subsidies to religion, the Court announces, when the mechanism used is an appropriation, but not when the mechanism is a  targeted tax break, otherwise called a “tax expenditure.”1

And that footnote reference at the end leads here:

1“Tax expenditures” are monetary subsidies the government bestows on particular  individuals or organizations by granting them preferential tax treatment.   The co-chairmen of the National  Commission on Fiscal Responsibility and Reform recently referred to these tax breaks as “the various deductions, credits and loopholes that are just spending by another name.”  Washington Post, Feb. 20, 2011, p. A19, col. 3; see also 2 U. S. C. §622(3) (defining “tax expenditures,” for purposes of the Federal Government’s budgetary process, as “those  revenue losses attributable to provisions of the . . . tax laws which allow a special exclusion, exemption, or deduction from gross income or which provide a special credit, a preferential rate of tax, or a deferral of tax liability”) S. Surrey & P. McDaniel, Tax Expenditures 3 (1985) (explaining that tax expenditures “represent government spending for favored activities or groups, effected through the tax system rather than through direct grants, loans, or other forms of government assistance”).

Thankfully that reasoning was rejected.  But besides the smile of schadenfruede that this opinion brings, it occurs to me that in reading our tea leaves on Obamacare that this might be a sign.  There is a metaphorical similarity between arguing that the government allowing you to keep your money is the same as the government giving you money, and saying that refusing to engage in economic activity is economic activity.  Of course nothing can be set in stone, but it seems that Justice Kennedy, who wrote the majority opinion, is rejecting these attempts to manipulate the language to a fit a totalizing trend.

[Posted and authored by Aaron Worthing.]

24 Responses to “Supreme Court to Ninth Circuit, President Obama: No, the Government Allowing You to Keep Your Own Money is Not the Same as Spending”

  1. they reversed the Ninth Circuit?


    redc1c4 (fb8750)

  2. red

    i know, i know. dog bites man.

    Aaron Worthing (e7d72e)

  3. there’s still way too much social engineering and rent seeking done through America’s banana republic tax code – tax code fiddlings are not the way grown-up countries order their affairs – they’re the way brokedick loser countries order their affairs

    I have links.

    happyfeet (a55ba0)

  4. If a tax break really were government spending, then it would be unconstitutional to allow a tax break for a charitable donation to a church.

    Some chump (4c6c0c)

  5. some

    yeah, scalia made that point in the oral argument. its nutty.

    Aaron Worthing (e7d72e)

  6. 5-4 showa how critical it is to block any Obama appointment to thee The Court. If one conservitave Justice is replaced, The Constitution becomes totaly useless to free men.

    johnnycab23513 (3a4381)

  7. It isn’t your money if the tax credit isn’t limited to the amount of taxes you would otherwise owe. In this case, you’re not getting back your own money but rather a cut of someone else’s tax payments.

    And apropos of your point, I thought the GOP made a huge mistake years ago when they didn’t force through a change in the way the budget was calculated, to eliminate the fiction that a decrease in the amount of increased spending was a cut, and the view that tax deductions and lowering the tax rates was a ‘cost’ to the government.

    steve (369bc6)

  8. steve

    tax cuts are not costs, they are a reduction of income.

    And the tax credits don’t allow you to get back more money than you put in, in this case.

    yes, if they hand you free money and call it a tax credit, its spending. but we don’t have it here.

    At all times our government should remember that this is our money, not theirs.

    Aaron Worthing (e7d72e)

  9. I didn’t say tax cuts are costs, but they are treated as such on Capitol Hill… and they provide great talking points to the Democrats who can rail about how much it costs to give tax cuts to the rich.

    steve (369bc6)

  10. > but they are treated as such on Capitol Hill

    So… you want them to mislead us and to think of our money as theirs?

    Aaron Worthing (e7d72e)

  11. AW: on the contrary, please (re)read the second paragraph of #7.

    steve (369bc6)

  12. “I didn’t say tax cuts are costs, but they are treated as such on Capitol Hill”

    steve – Political messaging does not alter the underlying facts.

    It is only an expenditure if it is a donation to something the left does not like.

    daleyrocks (9b57b3)

  13. steve

    then i misunderstood you, sorry.

    Aaron Worthing (e7d72e)

  14. daleyrocks: no, the ‘nonpartisan’ Joint Tax Committee treats every tax cut, deduction and credit as a ‘cost’ to the US Treasury, and not just those favored by the left.

    BTW, another GOP screw up was failing to eliminate the static analysis of tax cuts and spending, the process by which a 10% hike in rates invariably leads to a 10% increase in tax revenue.

    But I don’t blame GOP leadership back when they controlled Congress, they were too busy doing the people’s business such as passing health care entitlements and porking out as much money as they could to be bothered with such philosophical issues such as the ones I mentioned.

    steve (369bc6)

  15. What else is new?

    When have liberals/Democrats ever not believed, that everything ought to belong to them…including other human beings?

    To them any money we don’t pay in taxes to their government is basically money we’re stealing from them!

    Obambi’s opinion surprises me not one iota.

    Dave Surls (25956c)

  16. “daleyrocks: no, the ‘nonpartisan’ Joint Tax Committee treats every tax cut, deduction and credit as a ‘cost’ to the US Treasury”

    steve – I was not talking about them and the JTC is not who the minority on the SC cited in the decision either.

    daleyrocks (9b57b3)

  17. steve – No reason for you or anybody else to fall victim to the politicized messaging of the debate rather than its substance merely because that is how Washington chose to frame it decades ago. That framing does not change the underlying facts or substance.

    daleyrocks (9b57b3)

  18. “…the fiction that a decrease in the amount of increased spending was a cut…”

    That’s like…uh…”lying”…, isn’t it?

    “…and the view that tax deductions and lowering the tax rates was a ‘cost’ to the government…”

    That only works if you are drunk on the power that comes with being able to “legally” being able to force others’ compliance at the point of a gun, and leave no recourse. Only then do some consider all property theirs to do with as pleased.

    GoodMojo (0d56df)

  19. steve, it would require a complete repeal of the ’84 Budget Act to do what you desire; though, that’s not a bad thing.
    But, Congress would stand on its head to maintain their ability to force the President to spend funds, since repeal would bring back the ability to impound appropriations that the President doesn’t wish to spend.

    AD-RtR/OS! (965f73)

  20. “Horsepersons of the left”?

    Heh. You left out that one of those is a wise, Latina horseperson.

    Beldar (cd529f)

  21. Beldar

    congratulations on being the only person to notice that line and call it out. :-)

    Aaron Worthing (73a7ea)

  22. It is noteworthy that in an amicus brief (PDF format), the Obama administration took the position that “No, the Government Allowing You to Keep Your Own Money is Not the Same as Spending”

    Michael Ejercito (64388b)

  23. Further sloppy thinking is the use of “tax preferences” and “loopholes” as if they meant the same thing. They don’t. A tax preference is an intentional act. Congress intends a specific result. A loophole is an unintended result, which enables the sharper knives in the drawer to reduce their clients’ tax burden without being charged with tax evasion.

    BarSinister (a9e7f6)

  24. Yeah, that horse is amazing.

    SPQR (26be8b)

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