Last week, a year-old video of MIT economist Jonathan Gruber sparked yet another Obamacare controversy. In the video, Gruber said,

“This bill was written in a tortured way to make sure the C.B.O. did not score the mandate as taxes. If C.B.O. scored the mandate as taxes, the bill dies.”

Opponents of Obamacare have predictably jumped on these statements, claiming that the Affordable Care Act was a fraud perpetrated on the American people by a clique of elitist snobs. This line of attack is premised on the idea that the individual mandate really is a tax, and that the Obama administration pretended that it wasn’t a tax in order to put one over on the American people.

The first problem with this argument is that none of this was ever a secret. The Congressional Budget Office itself laid down the rules for what it would score as a tax, and the administration wrote the law to fit around those rules. These types of legislative maneuvers are everyday life on Capitol Hill.

But there’s another, bigger issue here.

The argument that the individual mandate really is a tax (and therefore evil by implication) — assumes that the word “tax” has a concrete meaning. It doesn’t.

The word “tax” can be applied to a wide spectrum of government policies. At one extreme are things that just about anyone would consider a tax, like the individual federal income tax: because I work, I have to pay a certain portion of my income to the federal government; that money goes to pay for lots of different things, some of which I like, some of which I don’t like.

At the other extreme are things that no one would consider taxes. For example, I am an employee of the state of Connecticut. The state withholds 5 percent of my gross salary and credits it to my account in a defined contribution retirement plan. That’s money I cannot avoid paying to the government, yet no one would consider it a tax — probably because it goes into an account that I control. But I could instead have elected the state’s defined benefit plan, in which case 2 percent of my salary would have gone into a state pension fund that I do not control. Still, I doubt anyone would call that a tax.

Then what about Social Security? Social Security is funded by 6.2 percent of your gross salary, plus another 6.2 percent paid by your employer. But conceptually it’s no different from any other defined benefit plan: you are forced to pay money now in exchange for future benefits that will be determined by a formula and that you may never see (if you die too early). In the case of Social Security, you also get disability insurance. So why do most people call that 12.4 percent a “payroll tax”? There’s no good reason. Is it because you can’t avoid it? That can’t be right. First, you can avoid Social Security by taking certain state or local government jobs. More generally, there are plenty of avoidable government fees that we call taxes. For example, in Massachusetts, items of clothing that cost less than $175 are exempt from sales tax, meaning that you can completely avoid paying taxes on clothing. Yet if you buy a $200 jacket and pay 6.25 percent of the excess $25 to the state, everyone would call that a tax. Any “luxury tax” (see the Monopoly board) is by definition avoidable, yet we still call it a tax.

I could multiply the examples. Every bank pays a deposit insurance premium to the FDIC; without the insurance, it would have no chance of attracting deposits and being, well, a bank. That insurance premium gets passed on to all of us in the form of lower interest rates or higher fees. Why don’t we call that a tax?

The same incoherence applies to programs that cause cash to flow out of the federal government. The mortgage interest tax deduction is implemented as a deduction from your taxable that lowers your taxes. Economically, however, it is identical to a spending program that subsidizes homeowners (specifically, those homeowners who are rich enough to itemize their deductions). Yet we account for it as a tax decrease rather than as a spending increase.

These “tax expenditures”—spending programs run through the tax code—constitute over $1 trillion of hidden federal government spending every year, yet they are celebrated as tax breaks.

The bottom line is that many programs that cause cash to flow to or from the government can be characterized as taxes or as insurance premiums, user fees, interest on loans, or something else. Whether we call them taxes or not makes not the slightest economic difference. (The choice of label has no impact on the budget deficit, which does matter; if we stop reclassify Social Security contributions as insurance premiums, what used to count as tax revenue will now count as negative spending, just like Medicare Part B premiums.)

So why does anyone care?

Because Americans have been conditioned to think that taxes are bad and not-taxes are good, even though it’s not clear where to draw the line between them.

Taxes and spending, however measured, are not even a very good proxy for the impact of government on society (the “size of government”). A carbon tax and a cap-and-trade system, for example, could be designed to have economically similar effects, but one would almost certainly count as a tax and the other would almost certainly not count as a tax.

Yet generations of politicians—largely Republicans, although Democrats have generally gone along for the ride—have campaigned on the premise that taxes are bad and must be reduced at all costs. As a result, it’s not just the budgetary impact of a bill that matters—the Affordable Care Act, by the way, is deficit-reducing over the long term, no matter what you call the individual mandate—but whether certain cash flows are counted as taxes or not.

Gruber continued by saying,

“Lack of transparency is a huge political advantage. And basically, call it the ‘stupidity of the American voter’ or whatever, but basically that was really, really critical to getting the thing to pass.”

A lot of politicians pounced on him for calling voters stupid. But what’s really at fault here is the willful stupidity of American politicians who use the word “tax” as a magical talisman without even understanding what it means—or doesn’t mean.