Part VI: Govenor Mitt Romney's Record On Taxes And Fees

Yesterday, we looked at Mitt Romney's impressive record of getting Massachusetts out of a $3 billion debt to a $2 billion surplus. Today, I plan on analyzing Mitt Romney's record on taxes and fees. This is an area that he often receives criticism but as usual, if you look at the facts, his record on this issue is just as amazing as other aspects of his economic record. 

Mitt Romney's Record On Taxes

Many people in Massachusetts are pleased with the way Mitt Romney handled taxes in the Bay State:

Massachusetts Citizens For Limited Taxation Executive Director Barbara Anderson praised Romney, saying "There was no one else out on the horizon and with the legislature almost entirely Democratic, we felt it was necessary to have a grown-up in the corner office. … And we were right to back him. He's been a really good friend to the taxpayers."  

Wait a minute...how can Mitt Romney be a good friend to the taxpayers!? Here's how:

2004 SALES TAX HOLIDAY:  Governor Romney Enacted The State’s First-Ever Sales Tax Holiday In 2004.  (Office Of Governor Mitt Romney, “Romney Promotes Tax-Free Shopping Day On Saturday,” Press Release, 8/14/04)

· 2005 SALES TAX HOLIDAY:  Governor Romney Enacted A Second Sales Tax Holiday.  (Office Of Governor Mitt Romney, “Romney, Dimasi, Hart Promote Tax-Free Shopping Weekend,” Press Release, 8/14/0)

· INVESTMENT TAX CREDIT:  Governor Romney Signed An Economic Stimulus Package Making The Investment Tax Credit (ITC) Permanent. (Office Of Governor Mitt Romney, “Romney Signs Economic Stimulus, Supplemental Budget Bills,” Press Release, 11/26/03)

· BIOTECH MANUFACTURING JOBS TAX REBATE:  Governor Romney Proposed And Enacted A Tax Rebate For Manufacturing Jobs Created In The Biotechnology, Life Sciences And Medical Device Fields. (Office Of Governor Mitt Romney, “Romney Signs Economic Stimulus, Supplemental Budget Bills,” Press Release, 11/26/03)

· RESEARCH AND DEVELOPMENT TAX CREDIT:  Governor Romney Proposed And Enacted An Expansion Of The Research And Development Tax Credit. (Jay Fitzgerald, “Gov Nearly Halves Package; Rebellious Legislators Vow To Override Stimulus Vetoes,” The Boston Herald, 11/27/03)

· COMMUTER TAX RELIEF:  Governor Romney Signed Legislation Allowing Commuters To Deduct Transportation Costs From Their Income Taxes.  (Office Of Governor Mitt Romney, “Governor Romney Signs $25.2 Billion FY 2007 State Budget,” Press Release, 7/8/06)

· BUSINESS DEVELOPMENT:  Governor Romney Proposed And Enacted A Refundable Tax Credit To Promote Development At The Former Fort Devens U.S. Army Base.  (Stephen Heuser, “$660M Drug Plant, 550 Jobs For Mass.,” The Boston Globe, 6/2/06)

Here are some other reasons why Mitt Romney would be a friend to the tax payers of Massachusetts:

Romney served as governor of Massachusetts (2003-2007), with a generally conservative record that included economic expansion.

He balanced the budget every year of his administration with out increasing taxes or increasing state dept. Romney turned a $3 billion budget deficit into a $500 million surplus by reducing government spending and added 80,000 new jobs by the end of his term.

In 2004, 2005, and 2006 Governor Romney proposed cutting the state income tax from 5.3% to 5.0% [4]. Although the Democratic super majority in the state legislator refused to budge. Romney vetoed 844 pieces of legislation, with over 700 overridden. He vetoed an increase in the minimum wage, saying "there's no question raising the minimum wage excessively causes a loss of jobs."

Under Governor Romney the state abolished a retroactive capital gains tax that would have forced nearly 50,000 taxpayers to pay additional taxes and fees.  

Mitt Romney's Record On Fees

One of the most common criticisms that Mitt Romney gets is that although he did not raise taxes as Governor of Massachusetts, he substantially raised fees to raise revenue.

This claim is true. However, what people don't understand is that when the government operates a program, they are are not paying the real market cost for that good or service. In other words, the cost involved doesn't actually reflect the real market price. 

Here's Mitt Romney himself explaining this simple but essential concept at during the Republican debates in 2008 election:

Q: As governor of Massachusetts, you raised hundreds of millions of dollars in additional revenue through so-called fees and loophole closings. You passed a health care bill forcing individuals to buy insurance on the threat of a fine. How do you reconcile that policy with your claim to be the authentic conservative?

A: I mentioned fees, and it’s appropriate if the state is providing a service to someone that’s not a requirement to have a car or a driver’s license, but instead, let’s say, we’re going to be taking out an oil tank from your back yard because it’s leaking into the ground and the state’s going to provide that service. But to charge a fee sufficient to do so makes a lot of sense. So the fees ought to be adjusted from time to time to compose the amount of what the cost is of providing that service. If there hasn’t been a fee raised in a couple of decades, you probably have some inflation in there you ought to adjust for.

McCAIN: Gov. Romney raised taxes by $730 million. He called them “fees.” I’m sure the people that had to pay it, whether they called them bananas, they still had to pay $730 million extra.

ROMNEY: We raised fees $240 million. Not $730 million. Facts are stubborn things. We audited our fee increase, because, of course, we cared. Now, why did we raise fees $240 million? We had a $3 billion budget shortfall, we decided we were not going to raise taxes, and we found that some fees hadn’t been raised in as many as 20 years. These were not broad-based fees for things like getting your driver’s license or your license plate for your car, but instead something like the cost of a sign on the interstate and how much it was going to cost to publish a McDonald’s or a Burger King sign on the interstate. We went from, like, $200 a sign to $2,000 a sign to raise money for our state in a way that was consistent with the what the market had done over the ensuing years.

Mitt Romney's reason for raising fees is a simple straightforward conservative and smart business approach to managing a organization's finance because in the long run, it actually saves money:for the taxpayers:

They claim Romney's increases in fees are identical to taxes. On the contrary, Romney saved millions of tax dollars by ending the taxpayer subsidizing of fees. A fee covers the cost for a special good or service provided to an individual by the government; when a fee is not high enough to cover the cost of the service provided, taxpayers end up subsidizing. Romney shifted the burden from the community onto the individual who benefits from the service provided.

Mitt Romney's act of raising fees was the correct and conservative response to managing the government.We know that when a government subsidizes an program, it actually cost MORE to operate which creates more waste and inefficiency. By shifting the cost of the service away from the government to the individual, the government becomes more efficient and cost effective since its providing the service at the price the market will determine the service should cost. 

Conclusion

The American people expect our leaders at any level of government to run the government in the most efficient and cost effective manner. That means that they have to be able to provide programs without going into debt and raise the necessary revenue (taxes and fees) to cover the cost of those programs without be a burden on citizens and businesses. Moreover, these programs and services should be offered to the community at their true cost rather than the artificial cost. 

Mitt Romney's record on taxes and fees demonstrates that he can operate the government in such a manner that businesses and jobs grow, saves the taxpayers money and keeps the government out of debt while providing these programs in an affordable and efficient manner to the general public. 

Tomorrow, I will discuss RomneyCare because it will provide us with an opportunity to look at his leadership skills under the microscope and really analyze Mitt Romney's leadership skills in managing the government.