A Project of The Annenberg Public Policy Center

Fun with Semantics


Republican National Committee Chairman Michael Steele takes House Speaker Nancy Pelosi to task in an RNC fundraising e-mail for claiming that a tax increase isn’t a tax increase. But Steele adds some spin of his own, falsely charging that the tax in question falls on "middle class families and small businesses."

The RNC mailer accuses Pelosi of using "political doublespeak to mislead the American people" and links to a clip of a CNBC interview in which the speaker is asked whether allowing the Bush tax cuts to expire isn’t a "tax increase." Pelosi says it’s more like "eliminating a tax decrease that was there."

It’s tough to see the mighty fine distinction between the two. But this is hardly a new semantics battle for both Democrats and Republicans. While it would be misleading to say that Pelosi and the Democrats are implementing this tax hike or creating it – the cuts are scheduled to expire at the end of 2010 under the law passed by Republicans – those who benefited from the cuts would indeed see their taxes go up if they expire. And those taxpayers, we suspect, would call that an increase.

But Steele is wrong when he says this is a tax increase on "middle class families." Pelosi says the expiration would affect the "upper two percent," indicating that she, like President Obama, advocates keeping the cuts for most Americans but allowing the tax cut for those earning more than $250,000 a year to elapse. As we reported during the presidential campaign, the Tax Policy Center projected that 2 percent of all households would make that much money in 2009.

As for a tax on "small businesses," that misleading claim goes back to one Sen. John McCain made during the campaign, saying that small-business owners were among those in the top 2 percent of taxpayers. Some probably are, but the number is somewhere well below 1 million people. GOP claims of this sort rest on the fact that those upper-income filers report business income on their tax returns – but such income includes book royalties, freelance income and lawyers’ partnership distributions.

The RNC e-mail also claims that the House-passed cap-and-trade bill could "cause massive job losses." But as we’ve said in one of our recent pieces, according to the Energy Information Administration, the bill could result in between 0.2 percent and 1.4 percent fewer jobs than there otherwise would be in 2030 – hardly "massive" when put in context, though that’s not to minimize the impact on those who may find themselves out of work. The nonpartisan Congressional Budget Office says the net effect likely would be fewer jobs, but only by "a little."