@GazaAli said:
@mattbbpl said:
Haha, that's OK. It took me two days to fully understand this as well.
In the household analogy, the point of raising the rent $50 while offering a $50 credit AND charging a $50 "utility bill processing fee" is that I can charge him more while claiming I didn't raise his rates. If that sounds ridiculous to you then you're in good company. There's really nothing more to figure out on that front - it's a shell game allowing him to raise taxes while claiming he didn't.
With all due respect to samusbeliskner, his explanation is wrong. It's not like mail in rebates, no one has to due anything to get the credit, and the credit is, in fact, applied at the price time the "fee" is incurred, which is why money for either never exchanges hands.
Maybe we're hung up on the "point" of the shell game? On the point of raising taxes while claiming that you didn't? The pledge Jindal signed is created by an extremely powerful lobbyist, and nearly all national Republican politicians sign the thing. If they sign the pledge and break it, they are hammered in political ads by the group and typically see a significant drop in large-donor funding. Given the importance of never raising taxes to the GOP base and the reliance of politicians on large donors, that's a poison pill for a Republican attempting to run for president which Jindal was preparing to do at the time.
I feel we're starting to get somewhere so don't bash your head against the wall just yet. I now can say that I fully understand the ploy: it's nothing but a shell game to circumvent the pledge Jindal signed.
More importantly however, I agree that we're (rightfully) hung up on the point of the shell game. I still don't understand what Jindal gains at the end of the day. A potential Republican candidate wouldn't want to break the pledge or be accused of raising taxes for that wouldn't fare well with his constituents, or his donors. But why is he going to all this trouble? It sounds that he collects money that he offers right back without the money even changing hands. What gives? Am I looking at this from the wrong side? Is it possible that the tax credit he offers in lieu of the levied fee isn't actual money expended for the purpose? Or is it possible that a tertium quid is the party that incurs the financial burden of this ruse?
Money doesn't grow on trees. If Jindal is gaining something from this shell game then there's a surplus that he pockets. This is what I'm hung up on, the origin of that surplus.
Jindal doesn't get any money out of it, he gets a shot at the presidency.
He can't run for the presidency if his state is insolvent, and he can't run for the president if he breaks the pledge by raising taxes.
But his state was 1.6 billion dollars under water without much else he could cut politically. He had to raise more revenue.
Thus, the ploy above. The math looks something like this:
Tax Increase - Tax Credit + New Fee = New Revenue (and a balanced budget)
or
$350 million - $350 million + $350 million = $350 million in new revenue (and a balanced budget)
If that looks like a tax increase of $350 million to you, you'd be be right wrong because the + $350 million in new fees don't count as tax increases under the new pledge. That's a fee and not a tax increase. Why this doesn't count as a tax increase according to the pledge remains unstated, but it's likely for the same reason that the group responsible for the pledge is OK with the push to transfer current income tax revenue to consumption taxes.
Regardless, Jindal has been allowed to have his cake and eat it too. He has raised "taxes" in reality without raising "taxes" according to lobbyists. Now he can claim that he has a perfect record on tax increases because he never raised them, he never broke the pledge, and he won't get hammered by the lobbyists during his presidential run.
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