If you call a tail a leg, Lincoln asked, how many legs does a calf have? The correct answer is four, because calling a tail a leg doesn’t make it one.
My AEI colleague Kevin Corinth is calling a tax cut spending: “Although the Family First Act is framed as tax relief, roughly half of its benefits would be in the form of increased federal spending.” The bill would expand the child tax credit, and “the extent to which the [expanded] credit exceeds income tax liability constitutes federal spending, not a reduction in taxes.”
He reaches this conclusion by not counting federal payroll taxes — which are larger for most people than income taxes — as though they were taxes at all. But they are taxes: If you think they aren’t, try not paying them. For many households, a bigger child credit would exceed income-tax liability but not exceed total federal tax liability. These households would be getting tax relief too.
Maybe it’s a bad idea to give those households this form of tax relief because of the deficit, or because it’s unfair to people with few or no children, or for some other reason. Those are arguments worth having. I don’t see any compelling reason to focus on one type of federal tax liability and say it’s the only type capable of being relieved.