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Tax hikes killed Romney’s chances

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January 11, 2008

As political strategists decamped for Michigan and points south, many here wondered how Mitt Romney could lose 2008’s first primary to Sen. John McCain of Arizona, 32 percent 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 Jan. 6 Boston Herald. 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 to State House News Service last year: “We’re down 140,000 jobs since 2001.”

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 No. 36.

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. 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.

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 Giuliani. New York’s former mayor flew to Florida on 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 dramatic, today’s six brackets, reaching 35 percent, would become three: 10 percent, 15 percent 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 option. “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 so-called “death tax.” Corporate taxes, higher only in Japan, would fall from 35 percent to 25 percent. Capital-gains and dividend taxes would tumble from 15 percent 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.

“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 Toomey. “Economic conservatives should be very excited by this bold, new tax-cutting plan.”

“Every Republican that 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.

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.

(New York commentator Deroy Murdock is a columnist and a media fellow with the Hoover Institution on War, Revolution and Peace at Stanford University. E-mail him at deroy.murdock(at)gmail.com.)

2 Responses to Tax hikes killed Romney’s chances

  1. acf

    January 12, 2008 at 2:35 am

    Romney did all that as Governor of MA, all the while swearing up and down that he was not raising taxes. He also presided over increased tuitions and fees at state colleges and universities. In my eyes, it doesn’t matter if you call it a tax or a fee, it’s all money from me for basic state services, and it comes out of the same pocket.

    BTW, Romney never held any offices in New Hampshire. He couldn’t have raised any taxes there as stated in the first paragraph. He does own an estate there.

  2. JerZGirl

    January 12, 2008 at 12:05 pm

    You’re right – Romney COULDN’T raise taxes in New Hampshire – however, as the article pointed out, he did raise taxes on people FROM New Hampshire who work in Massachusetts, thus affecting their taxes paid. To be fair, he also raised taxes on ANYONE not from Massachusetts who works in Massachusetts. But, only New Hampshire had the first primary.

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