Politics & Policy

Red Flag

Romney vs. Rudy on taxes.

Nashua, New Hampshire — As political strategists decamped for Michigan and points south, many here wondered how Mitt Romney could lose 2008’s first primary to Senator John McCain (R., Ariz.) 32 to 37 percent, respectively, despite Romney’s four years as governor of contiguous Massachusetts and some $15.5 million in reported campaign expenditures. Granite State Republicans, previously keen on Romney, likely soured on his legacy as a tax hiker who increased levies in Massachusetts and New Hampshire.

Boston newspapers informed their New Hampshire readers of Romney’s rising-tax tide.

“Tax rates on many corporations almost doubled because of legislation supported by Romney,” Boston Science Corporation chairman Peter Nicholas wrote in the January 6 Boston Herald. “His portrayal of himself as a reliable tax cutter…is undercut by the facts.” Romney boosted taxes on subchapter S corporations owned by business trusts from 5.3 percent to 9.8 percent, a four-fifths increase. Nicholas called this “an important disincentive to investment, growth and job creation.”

“Corporate taxes went up $210 million under Romney,” the Herald editorialized. “And we wonder why companies look north, south, east and west, anywhere but Massachusetts, to expand?”

“Imposing business tax increases is wrong for the people of Massachusetts,” Greater Boston Chamber of Commerce CEO Paul Guzzi complained last year: “We’re down 140,000 jobs since 2001. We need to create a climate in which employers can create jobs here in Massachusetts — not inflict further damage to our economy.”

While Romney sped a $275 million capital-gains tax rebate, scored property-tax relief for seniors, and secured a two-day, tax-free shopping holiday, he imposed $283 million in business “loophole closures” and $501.5 million in increased fees on marriage licenses, gun registrations, gasoline deliveries, real-estate transfers, and more. Under Romney, the Tax Foundation calculated, Massachusetts fell from America’s 29th most business-friendly state to 36th.

Romney’s sledding became even tougher when Republicans here learned that his 2003 and 2004 tax legislation covered those who work, conduct business, and/or invest in Massachusetts, but live elsewhere — including New Hampshire. According to figures the Massachusetts Department of Revenue provided me, between 2003 and 2006, such New Hampshirites shipped Massachusetts $95 million above what they paid when Romney arrived. The average check from such a Granite State commuter grew 19.2 percent under Romney.

“Mitt’s loss in New Hampshire can be attributed directly to the excellent communications skills of those Massachusetts workers, living and voting in New Hampshire, to other Granite State voters,” says Bob Bevill of Merrimack, chairman of New Hampshire’s Eagle Forum.

Affectionately known as ‘Fifi,’ for his proposed astronomic increase in user fees and business taxes for small businesses, Mitt Romney’s administration requested of the Massachusetts legislature more than 80 new, different, or existing fees in his first budget of 2003. In addition, taking a page from King George III’s ‘taxation without representation,’ Romney increased income taxes on non-residents, who have no voice in the Massachusetts legislature. Finally, because the state failed to pay for its share of mandated services, Massachusetts’ local property taxes skyrocketed, while the state income tax for residents remained the same at 5.3 percent.

All this bad tax news helped push Romney into McCain’s shadow. Romney’s worrisome tax record now faces a fresh challenge from his rival, Rudolph W. Giuliani. New York’s former mayor flew to Florida Wednesday to unveil what Club for Growth (CFG) president Pat Toomey calls “a supply-sider’s dream.”

Giuliani proposes that Americans could file an optional, 11-line, one-page Fair and Simple Tax (FAST) form. They would enjoy mortgage-interest, charity, and state/local tax deductions, a $3,500 personal exemption, a $1,000-per-child credit, and a new health-insurance exclusion of $15,000 for families and $7,500 for individuals.

More dramatically, today’s six brackets, reaching 35 percent, would become three: 10, 15, and 30 percent. A family of four earning $80,000 would save $2,207 or 24 percent in taxes. At $120,000, they would save $7,014, or 36 percent.

Americans who cherish today’s 67,204-page tax code could keep it. Others could volunteer for the FAST tax. “Your Money. Your Choice,” as Giuliani’s slogan goes.

Giuliani would index the Alternative Minimum Tax to inflation, and eventually scrap it. He would bury the Death Tax. Corporate taxes, higher only in Japan, would fall from 35 to 25 percent. Capital-gains and dividend taxes would tumble from 15 to 10 percent. President Bush’s tax reductions would become permanent.

“This tax cut — the largest in history — would represent a monumental leap forward for the American taxpayer and the U.S. economy,” says Americans for Tax Reform president Grover Norquist. “This is Reaganism. This is an economic plan worth fighting for.”

“Giuliani understands that the way to create more economic growth is to lower the burden and inefficiency inherent in the current system, much as he did in New York,” says CFG’s Toomey. “Economic conservatives should be very excited by this bold, new tax-cutting plan.”

“Every Republican I can see in this race is promising to lower taxes,” Giuliani told journalists here on Primary Eve. “But here is the difference: I am the only one who actually has done it — big time.” Giuliani reduced Gotham’s tax burden 19 percent, totaling $9.8 billion. As he presented his initiative, Giuliani said, “Fiscal Conservative Republicans remember what Ronald Reagan taught us: when you cut taxes you liberate the potential of the American people…and you unlock the genius of our free- market economy.”

For his part, Romney wants taxes “simpler, and flatter and lower,” but offers few specifics.

With plenty on their minds already, Republicans now can weigh Romney’s sad, statist record on taxes against Giuliani’s audacious, hopeful tax agenda.

© 2008, Scripps Howard News Service

New York commentator Deroy Murdock is a columnist with the Scripps Howard News Service and a media fellow with the Hoover Institution on War, Revolution and Peace at Stanford University.

Deroy Murdock is a Manhattan-based Fox News contributor and a contributing editor of National Review Online, and a senior fellow with the London Center for Policy Research.

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