Giuliani and Taxes

Posted: Oct 04, 2007 4:43 PM
Giuliani and Taxes

Over the past few months, Mayor Rudy Giuliani has attempted to make the case that he is the strongest economic conservative in the race. However,, which is run by the non-partisan Annenberg School at the University Of Pennsylvania, has pointed out that Mayor Giuliani's record on taxes isn't as conservative as advertised.

Most glaring is Mayor Giuliani's refusal to pledge not to raise taxes by signing Americans for Tax Reform's "Taxpayer Protection Pledge." As former Congressman Vin Weber said, the pledge "has become institutionalized in Republican politics. … It's really become an economic policy." By signing this pledge, Giuliani could make a commitment to no new taxes the cornerstone of his tax agenda. Yet, he refuses to sign the pledge and clearly remains open to raising taxes.

While some may find his record troubling, his recent statements on the campaign trail have proven baffling. Recently, in an interview with the Associated Press, Giuliani refused to rule out a tax increase as a way of solving our Social Security problems. In the interview, he said, "I am opposed to tax increases, but I would look at whatever proposal they came up with and try to figure out how we can come up with a bipartisan way to do it."

In the wake of Giuliani's comments on Social Security, Club for Growth President Pat Toomey felt obliged to write an open letter to Mayor Giuliani. In the letter, Toomey expressed his surprise at Giuliani's comments. Toomey said the comments, "if true, together with your refusal to sign Americans for Tax Reform's anti-tax pledge, casts doubt on your commitment to opposing all tax increases." Giuliani economic advisor Steve Forbes was forced to pen a response to Toomey in an attempt to alleviate the Club for Growth's fears. Ambiguity on taxes is something Republicans cannot afford.

Similarly troubling were statements Giuliani made regarding the Alternative Minimum Tax (AMT) to a group of technology executives at the Northern Virginia Technology Council. Asked about the AMT, Giuliani said he would like to see the tax eliminated in its entirety, saving as much as $1 trillion over the next 10 years. How would Giuliani account for the lost revenue? Would he cut spending? No, he would cut taxes even further to raise the revenue – an answer which, according to reports, "prompted a bewildered response from his audience." To be sure, there are certain taxes – the corporate income tax, the capital gains taxes – that are on the wrong side of the Laffer Curve, and cutting them would produce a revenue feedback. But I doubt even Arthur Laffer himself could come up with a tax cut that would both pay for itself and produce a $1 trillion revenue gain.

That wasn't the first time Mayor Giuliani exhibited behavior that should bewilder fiscal conservatives. In early September, he introduced his tax-cut agenda in New Hampshire. Gathered on stage were men and women there to testify on how they would benefit from Giuliani's tax-cutting agenda. However, what transpired was a testament on how making the Bush tax cuts permanent would help each family. While the Bush tax cuts are an element of Giuliani's agenda, so are they also a part of every major Republican candidate's agenda. In this campaign, Giuliani has yet to offer a forward-looking specific tax proposal. There is nothing new here.

Mayor Giuliani's actions have cast doubt on his commitment to the low-tax, economic conservatism that have been a basic pillar of the Republican Party since Ronald Reagan. He refuses to sign the no-tax pledge – a pledge that has become emblematic of the conservative movement. He raises the prospect of tax increases to address Social Security's fiscal problems. He shows economic naïveté when he offhandedly states that he would offset the costs of one huge tax cut with further tax cuts. Simply put, Mayor Giuliani has failed to produce a forward-looking, pro-growth fiscal agenda.