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Euphemism, dysphemism, and the shaping of tax policy.

The following article is adapted from the May 17, 1993, remarks by Timothy J. McCormally, TEI's General Counsel and Director of Tax Affairs, at the 1993 Annual Conference TEI's Region IX.

I.

Thank you for inviting me to the 1993 Region IX Ovular. "Ovular" - or "ovariam"' - for those of you who don't know, is the non-phallogeneric term for a meeting or educational convocation. In a less politically correct time or place, you might call this a "seminar."

In any event, I am pleased to be here and I commend Paul Cherecwich, Vice President-Region IX, and all the session chairs for planning an excellent program. As you know from looking at your printed program, I was not Paul's first choice - or even his second, his third, or his fourth choice, but hey: I don't mind. I'm just happy to be here. After all, Bill Clinton wasn't a lot of people's first choice - or even their second choice - and look at him - he's residing at 1600 Pennsylvania Avenue and is set to stay here at the del Coronado tonight. [For more details, see "Less Taxing Matters" in the May-june 1993 issue of The Tax Executive.]

When Paul called me, I tried to get out of it, to persuade him to cancel the luncheon speech. I reminded Paul of what Plutarch had said: "A sage thing is timely silence, and better than any speech." But he would hear nothing of it. He said I had to talk in order to go on the boat cruise tonight. So here I go.

II.

Specifically, I want to briefly discuss TEI's role in the current legislative process and, if time permits, to spend a few moments explaining how TEI decides to do what it does in the technical arena.

That, however, is only the secondary purpose of my talk - a facade to ensure you get CPE credit for the luncheon. My real purpose is to return to a theme I focused on two years ago when I had the privilege of addressing this group: the critical importance of language - of semantics - in framing public policy, or even private, debate. The use of rhetoric as a weapon.

Today, I want to talk about the euphemism, and its mirror image, the dysphemism. We all know what a euphemism is - that's when you describe your out-of-work brother as indefinitely idle or as having resigned to pursue other opportunities. Euphemisms - terms that soften reality - are closely linked to political correctness. Well, dysphemism is the obverse of euphemism. It is a term that paints a harsher, coarser, blacker version of reality. Our out-of-work friend might dysphemistically be said to have been fired, terminated, or worse yet, shit-canned. Viewed neutrally, your (elderly, old, or mature) aunt may have been said to have died; your kindly mother might euphemistically say she passed away; and you, you insensitive - or dysphemistic - lout, might say the old lady kicked the bucket or croaked. Even though the same information is conveyed by all three terms, each carries different weight and perspective.

III.

What is the relevance of all this to taxes? That's a good question. I think it is this: In tax policy, and in life generally, language is a weapon. You either use it or it is used against you.

Many of you may have seen the story in The Wall Street Journal a couple of weeks ago about the language war that is going on about homosexual rights. The article spoke of the importance of semantics - citing terms for homosexuals that run the gamut from gay, to a person with an alternative life style, to queer, to much harsher terms.

Consider the difference between the seemingly objective terms sexual orientation and sexual preference. The latter implies choice and therefore is out of favor among gay rights advocates, whereas the former suggests compulsion or condition. The Wall Street Journal acknowledged that the difference between the two may seem subtle, but then observed:

Words repeated hundreds and thousands of times,

in the media and in every day conversation, create

indelible images - even where distinctions are not

always obvious.

That language is important - and the choice of terminology is not something that can be taken for granted - is what the whole political correctness debate is about. It may, to some, sound silly to say that someone is cerebrally challenged rather than stupid or terminally inconvenienced rather than dead. But the words do make a difference. We use euphemisms to create a favorable image and dysphemisms when do the opposite. Similarly, we use chair instead of chairman, companion instead of wife (or husband), and mature instead of elderly (or old) because the words we seek to replace are laden with bias or prejudice or assumptions that we hope to avoid by embracing other, more inclusive terms.

IV.

Once again, you are thinking, this isn't an ovular put on by the American Linguistics Association. It's a conference sponsored by Tax Executives Institute. What do euphemisms, dysphemisms, and political correctness have to do with taxes. More than you think, I suggest; more than you think.

Increasingly, tax and economic policies are driven by language. Euphemisms are employed as a form. of fiscal alchemy to transform tax increases into something else - something more politically palatable. In the 1980s, it was the Republicans who called ketchup a vegetable and taxes either revenue enhancers or user fees. Taxes weren't increased; loopholes were closed; corporations and "the rich" were made to pay their fair share.

Today, the screw has turned, and it's the Democrats who control the dictionary. Originally, the President was blunt, if somewhat dissembling. He said people would have to sacrifice. But that didn't go down smoothly because sacrifice suggests pain, and voters don't like pain. So then people were asked to make contributions, which carries with it the illusion of voluntariness - just as we voluntarily make FICA contributions every pay period.

In addition, what look like taxes to you and me were transmogrified into reduced spending - which is how the Administration described the proposal to increase the percentage of Social Security benefits subject to tax, and premiums - which looks like what we will pay for health care. With such linguistic sleight-of-hand, such literary legerdemain, it makes you wonder whether the Dave that Kevin Kline is playing in the new Ivan Reitman/presidential lookalike film is David Copperfield - the magician.

Euphemisms are only part of the equation. Dysphemisms are also employed. The Administration's tax proposals are replete with loaded language - terms like excessive compensation or excessive accumulation of foreign earnings; we hear complaints about the undue influence of lobbyists, about runaway plants, about lavish meals and tax-subsidized country clubs; we are bludgeoned with arguments about the need for foreign corporations to pay their fair share. About curtailing unintended benefits; about the inequity of the rich getting richer; about the need to close loopholes and the like.

Consider just one little example from this year's bill - the proposed amendment of section 163(j) relating to earning stripping. The President would extend section 163(j) to related-party guaranteed loans. Such loans would be characterized as related-party indebtedness. How does the Administration characterize this proposal? As an enhancement of existing law. Enhance means to make better, to improve. How could any right-minded individual oppose an enhancement? If you accept the nomenclature - the words like enhance, improve, simplify, or reform - you are well on your way to losing the battle. The people who title tax legislation know this well - that is why in the last twelve years we have had the Economic Recovery Tax Act, the Tax Equity and Fiscal Responsibility Act, the Deficit Reduction Act, and the Tax Reform Act.

What's more, the opponents of the President's proposals are painted with dysphemistic brushes: the President embraces alliteration reminiscent of Spiro Agnew to denounce the prophets of pessimism and the guardians of gridlock. Each of these phrases has an intended purpose and, unless challenged, the users of the loaded language - or is it pushers? - will likely be closer to achieving his goal.

Don't get me wrong. I don't think any one party or group has a corner on the market. In fact, the rhetoric seemed simply to have switched with the election results. Now it's the Republicans who bemoan the deficit (and chant the mantra tax and spend, tax and spend) and the Democrats who talk about investment and who champion the Deficit Reduction Trust Fund, which just months ago they denounced as an accounting gimmick when President Bush proposed it. And the Senate Republicans, faced with the Democrats' flip-flop, did the only thing they could - they flip-flopped!

The Jabberwockian - does any of this make sense - nature of the whole process is perhaps best illustrated by the story of why - five months into his Presidency - Bill Clinton still didn't have an Assistant Treasury Secretary for Tax Policy. As you know, in early spring the President nominated Les Samuels to succeed Fred Goldberg. The Republicans, however, put a hold on the nomination because they don't like the distributional tables that the Clinton Administration proposed for their budget. The Treasury used family economic income - a euphemistically sounding term - which encompasses certain non-taxable items such as tax-exempt interest, Social Security, Veterans benefits, and imputed rental income from owner - occupied homes. The Republicans do not like that measure - they dysphemistically say it skews or distorts the effect of the President's proposals on the middle class. They prefer adjusted gross income, and they held Les Samuels's nomination hostage for a while to make their point. What they neglected to tell us, however, is that for more than two decades - including the terms of four Republican Presidents - the governing measure has been family economic income.

That brings me to another concept or condition that seems to have affected not only tax and economic policy, but public discourse in general. That is the concept of schadenfreude, which I believe is German, or possibly Yiddish. No, it's not the newest Volkswagen advertising slogan. Rather, it is an term meaning the enjoyment one obtains or derives from one another's trouble or discomfort. For example, right before the election, when Democrats cheered the economic figures showing the recovery remained stalled - that was an example of schadenfreude. Of course, now, the shoe is on the other foot, and I think of the term whenever I see Bob Dole, Newt Gingrich, Phil Graham, or Robert Novak on CNN.

V.

My point is not to condemn the use of euphemism and dysphemism, to decry schadenfreude, or to take up the cudgels with Rush Limbaugh concerning political correctness. To wail against Orwellian double-speak would be akin to wailing against sin or negative advertising in political campaigns: in a Sunday sermon (or on a Sunday talk show), it might sound good, but it's one or two steps away from reality.

No, my point is to stress the need to identify, segregate, analyze, and then attack the problem. To respond to the rhetoric, not with ad hominem attacks, but with objective analyses and real-world examples. That's where TEI comes into play. We pride ourselves on calling a spade a spade, not a shovel, and not a soil-removal implement. At TEI, we regard ourselves as a modern-day Diogenes - the person who wandered up and down the shore with a lantern, looking for an honest man - or, more colloquially, as the kid in The Emperor's New Clothes who says, "Hey, that guy with the crown is naked!" Sometimes our candor may not be especially welcomed, but I believe our credibility has remained intact.

VI.

Okay, let's take this fairly loose philosophical framework - a desire to call a spade a spade - and fit it into what TEI has been doing on the 1993 tax bill. Consider TEI's activity on three issues: the foreign royalties provision, the proposed limitation on the deductibility of lobbying expenses, and the so-called service industry noncompliance initiative, under which you would have to file Forms 1099 on payments made to corporate service providers.

On the royalties provision, TEI has hardly been the principal player, or a decisive one - though we are pleased to claim at least partial credit for what the Ways and Means Committee did last week in dropping the proposal from the President's plan. But, I believe we contributed to the outcome by helping to frame the debate in terms of how it fit with the purposes of the 1986 Act and to deflate the Administration's dysphemistic "cross-crediting" defense of its proposals.

On the lobbying deduction, TEI hammered away while many other groups choose to husband their resources and devote their time to other issues. TEI argued, for example, that it was improper to chip away at the ordinary and necessary standard in section 162. We said that lobbying was not a four-letter word, and we talked about the First Amendment and about why public input from "lobbyists" was necessary to avoiding future debacles such as section 89, the "car logs" fiasco, and the luxury excise tax. (We made similar arguments concerning corporate salaries, club dues, and meals and entertainment.) Although we might not be successful on all or any of these, the Institute believe it is important to fight the good fight on questions of policy and principle.

Last but not least, the corporate 1099 proposal. This proposal is the one on which TEI has devoted most of its attention - not because it is the most compelling proposal, but because hardly anyone else seems to care. The IRS and Treasury argue that the proposal is necessary to enhance compliance - that word again - enhance. But they neglect to point out that the burdens would be imposed in the first instance not on putatively noncompliant payees, but on the already-compliant payers.

Secondly, the IRS argues that lifting the current exemption on corporate 1099s would be easy to implement - a simple flip of a switch on a computer. But it doesn't work that way, does it? For example, how can you easily distinguish between service and non-service payments in your vendor file?

Finally, although the IRS says it wouldn't think about asking payees to reconcile their 1099s to their books or tax returns, the cynical (or paranoid) among us are worried. TEI is making all these arguments, but hardly anyone else is. To have any chance of success, we need more voices in the choir. We need your help.

VII.

The common thread among these proposals and the Institute's activities in general is that we scrutinize not only the effects of the provisions but the way in which they are presented and defended. We challenged the runaway plant rhetoric of the royalties provision, the lobbying-is-a-dirty-word aspersion of the lobbying provision, and the "close-a-loophole; it's-as-easy-as-pie" rationale of the corporate information reporting proposal. Believing that the devil is in the details, we have tried to get to the details. It's not easy. On corporate 1099s, the legislative charge is one-sentence long and the description in the Administration's and the Committee's documents is very, very short and very, very general. We need to throw open the windows and let the sun shine in.

Sometimes TEI is criticized for its emperor's-wearing-no-clothes apostasy, but our constancy and persistence has often paid off. Like a baseball player, our batting average needn't be too high for us to be successful.
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Author:McCormally, Timothy J.
Publication:Tax Executive
Date:Jul 1, 1993
Words:2541
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