Redefinitions

In my last post, I mentioned how the left is always trying to redefine words and concepts. One example is subsidy.

In this post, Bill Gardner argues that Ted Cruz's health insurance is subsidized. In the pre-redefinition world, a subsidy was when the government gave you someone else's money to promote a certain activity. This is the opposite of a tax which is when the government takes money from you. The best way to describe the treatment of the health insurance exemption is that it is a different tax rate on different types of income. Direct wage income is taxed at the normal rate, while income paid out as a benefit is not taxed at all. Note, it is not subsidized. You could only call it subsidized if you believe the government has first claim to that money because it taxes wage income at a higher rate.

Here's a challenge. If the government taxed in-kind benefits at a higher rate than the marginal rate, would anyone say that wage income was subsidized? It's exactly the same situation.

I wish I could find it now, but several years back, there was an article that claimed that by keeping the gasoline tax low, the government subsidized SUVs and other low mileage vehicles. That may have been the first time I realized they were trying to warp definitions.

A few points:

Just because I don't believe it's technically a subsidy, doesn't mean I agree with it. I think we'd probably be better off if health insurance benefits were taxed at the same rate as wage income and there was no mortgage interest deduction.