Politics & Policy

Rudy’s Taxing Problem

If you tax like a Dem . . .

Republican presidential hopeful Rudy Giuliani was recently in New Hampshire touting the 23 tax cuts he supposedly pushed through as mayor of New York City. He also announced his support for extending the Bush tax cuts and promoted other tax-relief measures he would advocate as president.

#ad#Upon closer inspection, however, Giuliani’s record on taxes isn’t as conservative as advertised. In fact, a nonpartisan independent organization found that Mayor Giuliani actually opposed significant tax cuts, and would have denied hundreds of millions of dollars in tax relief for New Yorkers had he gotten his way.

FactCheck.org, which is run by the non-partisan Annenberg School at the University Of Pennsylvania, has pointed out that Mayor Giuliani fought Republican efforts to kill the city’s commuter tax, and actually went to court to keep it alive. In 1999, New York state senate Republicans called for an end to the tax, which amounted to .45 percent of earned income for most non-residents working in New York City. Giuliani not only opposed this tax cut, but said the commuter tax should be higher. The Giuliani administration went so far as to file suit to retain the tax, but ultimately and fortunately lost, which saved taxpayers in New York state, New Jersey, and Connecticut $360 million annually.

In another instance, FactCheck.org reported that Giuliani strenuously opposed a personal-income-tax-rate cut amounting to $469 million — but now claims credit for it as one of the 23 taxes he cut. In 1998, a 12.5 percent personal-income-tax surcharge was set to expire, but Giuliani fought to keep it in place, arguing that the city needed the tax revenue. A true supply-sider would have argued the opposite: Lower tax rates lead to higher tax revenue. The tax surcharge was allowed to expire only after Giuliani caved in to demands by the Democrats on the city council who supported killing the tax.

Rudy Giuliani’s recent attempt to portray himself as Reaganite tax-cutter just doesn’t square with the hard facts about his record opposing broad-based tax relief. The mayor honestly admits that he is more liberal than many Republicans on social issues, but has yet to admit that his economic record is similarly out of sync. Moreover, his refusal to sign Americans for Tax Reform’s “Taxpayer Protection Pledge” raises serious doubts among economic conservatives about his commitment to keeping income-tax rates low.

Meanwhile, Giuliani’s backers have launched a misinformation campaign about Mitt Romney’s successful fiscal record in Massachusetts. They have suggested that Mr. Romney raised taxes by allowing fees that were already in place to remain once he became governor.

Here are the facts: When Mitt Romney took office, he inherited a $3 billion budget deficit, which he eliminated primarily through spending cuts and without tax increases. In fact, the Romney consistently proposed reducing the state income-tax rate — from 5.3 percent to 5 percent, but was rebuffed by the Democratic-controlled legislature (Romney did convince the legislature to cut several other taxes, including the capital-gains tax). The fee increases accounted for only ten percent of the deficit reduction.

Governor Romney received high marks for his low-tax, budget-balancing fiscal record from Massachusetts Citizens for Limited Taxation. On the issue of the fees, the anti-tax group’s executive director, Barbara Anderson, told the Associated Press: “To us a fee is what a fee is and a tax is what a tax is. [Romney’s] support for the income tax rollback never wavered.” Further, the Club for Growth recently found that Governor Romney “imposed much-needed fiscal discipline on a very liberal Massachusetts legislature.”

As a long-time member of the supply-side cabal, I’m convinced that Governor Romney is the best candidate to extend the Art Laffer–Jack Kemp–Ronald Reagan supply-side revolution into the 21st century. Unlike the other GOP presidential candidates, Mitt Romney learned about free-market capitalism not from textbooks or Washington policy debates, but by practicing it for 25 years as an entrepreneur in the private sector.

Moreover, Governor Romney was the first 2008 presidential candidate to sign the no-tax-rate-increase pledge. In major speeches earlier this year before the Detroit Economic Club and the Club for Growth, Romney came out for extending the Bush tax cuts, permanently killing the death tax, providing relief from the Alternative Minimum Tax, lowering the corporate tax, and reducing marginal tax rates for all Americans.

And the governor has put a bold new pro-growth tax reform on the table: abolishing taxes on capital gains, dividends, and interest for moderate-income taxpayers earning $200,000 or less annually. This innovative approach would not only boost savings, investment, and economic growth, it would further expand the ownership society to America’s broad middle class.

More important, Governor Romney’s rhetoric about pro-growth tax relief actually matches his record.

Cesar Conda, formerly assistant for domestic policy under Vice President Cheney (2001-2003), is an advisory board member of The International Economy magazine. He also is a member of the Romney campaign’s economic-policy advisory team.

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