Friday, November 2, 2007

McCain Related Article 11/2/07

Associated Press: McCain On A Mission Of Redemption, Flying Closer To Alone
By Calvin Woodward


Time’s Real Clear Politics Blog: Head To Head In Florida
By Tom Bevan


Associated Press: Did Romney Up Taxes Or Close Loopholes?
By Steve LeBlanc

BOSTON -- Mitt Romney's Harvard MBA and gold-plated resume convinced many business leaders he would follow in the tradition of corporate-friendly Republicans when he was elected governor of Massachusetts in 2002.

Within three years, some had a vastly different opinion, after Romney's efforts raised the tax bill on businesses by $300 million as part of a multifaceted plan to eliminate a state budget deficit estimated from $2.5 billion to $3 billion.

Romney, who is now running for president declaring he never raised taxes as governor, says he merely closed "loopholes" in the tax code. Business leaders see things differently.

"These certainly were tax increases and a new source of revenue for the commonwealth," said Brian Gilmore, executive vice president of Associated Industries of Massachusetts, the state's largest business lobbying group.

"His indicating that he balanced a budget without raising taxes is misleading at best," Gilmore added. "We respectfully disagree."

Romney spokesman Eric Fehrnstrom said the loophole closings were more about tax enforcement than tax increases.

"In cases where companies were using aggressive accounting to escape their tax liability in a way that was never intended by the law, we closed those loopholes," he said.

Nonetheless, Romney's tax loophole fervor was so infectious, it caught the attention of the Legislature's most liberal lawmakers, who ended up offering to help him hunt down more gaps in the tax laws.

They pushed Romney to roll back tax breaks approved in the 1990s to benefit defense and mutual fund companies like Raytheon and Fidelity _ a suggestion he rejected.

"There's going to be a lot of debate over the definition of what is a loophole and what is a break and what is a tax," Romney said during his first year in office.

On the stump, Romney boasts that he is the first Republican presidential candidate to sign a no-new tax pledge offered by the conservative Americans for Tax Reform. He did so in January, a day after he concluded his term as governor.

While Romney refused to sign a similar pledge in 2002 _ Fehrnstrom labeled it "political gimmickry" at the time _ today he criticizes GOP rivals like Rudy Giuliani, John McCain and Fred Thompson for not following suit.

He has also tried to winnow the GOP primary fight to a contest between him and Giuliani, in part by noting the former New York mayor sued to kill the presidential line-item veto in 1997 and the Supreme Court eventually found it unconstitutional.

Romney also lambastes Giuliani for threatening to sue former New York Gov. George Pataki, a fellow Republican, when he challenged a $400 million tax on commuters coming to New York City. The state Legislature repealed it in 1999.

Romney, however, speaks much less about his work raising tax revenues from businesses while courting fiscal conservatives and other Republican primary voters.

One of the biggest tax "loopholes" identified by Romney were real estate investment trust subsidiaries created by banks to hold mortgages. Parent banks received dividend income from the trusts and took advantage of deductions to lower their state taxes.

"The biggest loophole closing involved banks that were calling themselves real estate companies in order to avoid bank taxes," Fehrnstrom said. "Those were the types of abuses we stopped. That's called tax enforcement."

Revenue officials said there were between 50 and 60 real estate investment trust subsidiaries in Massachusetts when Romney signed the law in 2003 barring them and retroactively collecting the taxes back to 1999.

The banks sued and eventually reached a settlement with the state to pay about half of the retroactive taxes.

Businesses were also angry at Romney's incremental approach to tighten those laws.

Romney proposed such "loophole" closures over three successive years, but he hit a wall in 2005. Pressure from business leaders forced him to cut in half a proposal for $170 million in tax loophole closures. He also had to abandon a plan to give the state's top revenue officials authority to pursue corporations that lowered their tax bills by transferring profits outside Massachusetts.

"The thing that was irritating about it is that he kept coming back the following year. At that point, I was thinking, 'You already had your shot at the apple,'" said Bill Vernon, state director for the National Federation of Independent Business. "When you continue to do that, it has a negative impact on business."

Estimates of the total revenue increase generated by the business tax loophole closings range from about $300 million, as calculated by the national anti-tax Club For Growth, to $400 million, as calculated by the Associated Industries of Massachusetts.

The efforts to tighten tax laws are part of a larger, more complex history of Romney's tax record.

While governor, he succeeded in pushing a one-year rebate of $275 million in retroactive capital gains taxes, as well as tax credits for investment, manufacturing and research and sales tax holidays.

Romney and lawmakers also approved hundreds of millions in higher fees and fines during his four years in office.


Anonymous said...

Mike Huckabee is an adroit public speaker. He communicates his message in life-like, cogent terms, with compelling examples like the story he told (at the Ames Straw Poll) of what his then-11-yo daughter entered into the "Comments" section of a Visitors Book after visiting the Yad Vashem holocaust museum: “Why didn't somebody do something?” Very effective.

Huckabee is all about calling his listeners to "do something," to awaken them to their own empowerment, and summon them to action in order that "Main Street," and not "Wall Street," will prevail in guarding the values and beliefs upon which the Republic was founded.

Huckabee puts his listeners at ease, and reassures them, articulating clear concepts in a natural, easy style (no doubt something well-cultivated as a pastor). He’s not angry or demanding, like a Ron Paul, nor is he as “rigidly-scripted” as Romney, and his large brown eyes peer through a humble demeanor, drawing a striking contrast to a somewhat mechanical-squinty Brownback. One can easily imagine sitting comfortably with this man over a cup of coffee at the Main Street Cafe.

Most importantly, perhaps, Huckabee convinces many that he is ONE with the FairTax grassroots movement. While many - like Romney, and others, who are invested in the current income tax system - seek to demagog the well-researched FairTax plan, its acceptance in the professional / academic community continues to grow. Renown economist Laurence Kotlikoff believes that failure to enact the FairTax - choosing instead to try to "flatten" what he deems to be a non-flattenable income tax system - will eventuate into an irrevocable economic meltdown because of the hidden aspects of the current system that make political accountability impossible.

Romney's recent WEAK response to FairTax questioning on “This Week with Geo. Stephanopoulos” drew a sharper contrast between Huckabee and all other presidential front-runners who will not embrace it. Huckabee understands that what's wrong with the income tax can't be fixed with "a tap of the hammer, nor a twist of the screwdriver." That his opponents cling to the destructive Tax Code, the IRS, preserving political power of granting tax favors at continued cost to - and misery of - American families, invigorates his campaign's raison d'etre.

Of the FairTax, Huckabee asserts that it's...

• SIMPLE, easy to understand
• EFFICIENT, inexpensive to comply with and doesn't cause less-than-optimal business decisions for tax minimization purposes
• FAIR, FLAT, and FAMILY FRIENDLY, loophole-free, and everyone pays their share
• LOW TAX RATE is achieved by broad base with no exclusions
• PREDICTABLE, doesn't change, so financial planning is possible
• UNINTRUSIVE, doesn't intrude into our personal affairs or limit our liberty
• VISIBLE, not hidden from the public in tax-inflated prices or otherwise
• PRODUCTIVE, rewards - rather than penalizes - work and productivity

A detailed benefits analysis of the plan (from The FairTax Book) explains Huckabee's ardent advocacy:

For individuals:
• No more tax on income - make as much as you wish
• You receive your full paycheck - no more deductions
• You pay the tax when you buy "at retail" - not "used"
• No more double taxation (e.g. like on current Capital Gains)
• Reduction of "pre-FairTaxed" retail prices by 20%-30%
• Adding back 29.9% FairTax maintains current price levels
• FairTax would constitute 23% portion of new prices
• Every household receives a monthly check, or "pre-bate"
• "Prebate" is "advance tax payback" for monthly consumption to poverty level
• FairTax's "prebate" ensures progressivity, poverty protection
Finally, citizens are knowledgeable of what their tax IS
• Elimination of "parasitic" Income Tax industry
• Those possessing illicit forms of income will ALSO pay the FairTax
• Households have more disposable income to purchase goods
• Savings is bolstered with reduction of interest rates

For businesses:
• Corporate income and payroll taxes revoked under FairTax
• Business compensated for collecting tax at "cash register"
• No more tax-related lawyers, lobbyists on company payrolls
No more embedded (hidden) income/payroll taxes in prices
• Reduced costs. Competition - not tax policy - drives prices
• Off-shore "tax haven" headquarters can now return to U.S
No more "favors" from politicians at expense of taxpayers
• Resources go to R&D and study of competition - not taxes
• Marketplace distortions eliminated for fair competition
• US exports increase their share of foreign markets

For the country:
• 7% - 13% economic growth projected in the first year of the FairTax
Jobs return to the U.S.
• Foreign corporations "set up shop" in the U.S.
• Tax system trends are corrected to "enlarge the pie"
• Larger economic "pie," means thinner tax rate "slices"
• Initial 23% portion of price is pressured downward as "pie" increases
No more "closed door" tax deals by politicians and business
• FairTax sets new global standard. Other countries will follow

Passionately supporting FairTax, Huckabee understands that, if elected President, Congress will have to present the bill for his signature. His call to action goes beyond his candidacy: Main Street will have to demand that their legislators deliver the bill.

(Permission is granted to reproduce, in whole or part. - Ian)

Brad Marston said...

BTW Katherine...

Azamatterofact should be listed as a Massachusetts blog for McCain

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As far as the business aspect of her company goes.

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