The Loophole in the Tax Pledge

Kevin Glass has a friendly reminder for everyone as we approach what appears to be an almost inevitable tax hike for those who earn more than $250,000 a year.

[T]here's an important twist: ATR uses a current-law baseline for defining a tax increase. So if no action at all is taken on the expiring Bush tax cuts, the pledge would not be violated.

How is that possible, you say? It's easy -- and a necessary part of the pledge. If the expiration of temporary tax cuts counted against a legislator as a tax increase, then the very existence of a temporary tax cut would violate the ATR Pledge. And so would the act of voting for such a temporary measure. Only permanent cuts would count as an anti-tax position, since a vote for a tax cut that sunsets is also vote for taxes to go up again at some future date. That would mean that everyone in Congress who voted for the Bush tax cuts has also already voted for a tax increase. As well, depending on how long it takes for cuts to sunset, counting the end of a temporary cut against legislators could awkwardly hold new members of Congress accountable for something they weren't around to vote for in the first place, where the cuts were marked as a decrease. Taking an absolutist view on temporary cuts would rapidly make the whole pledge untenable.

The Bush tax cuts expire, Democrats propose new tax cuts for those earning under $250,000, and the GOP goes along with it because basic legislative pragmatism demands it. (Or so I hope.)

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Justin Green

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