Mitt Romney on Tax Reform
Former Republican Governor (MA); presidential nominee-apparent
ROMNEY: First of all, I don't have a $5 trillion tax cut. I don't have a tax cut of a scale that you're talking about. My view is that we ought to provide tax relief to people in the middle class. But I'm not going to reduce the share of taxes paid by high-income people. High-income people are doing just fine in this economy. The people who are having the hard time right now are middle-income Americans. My #1 principle is, there will be no tax cut that adds to the deficit. But I do want to reduce the burden being paid by middle-income Americans. That also means I cannot reduce the burden paid by high-income Americans. So any language to the contrary is simply not accurate.
ROMNEY: What I do is the same way that Tip O'Neill and Ronald Reagan worked together some years ago. Reagan laid out the principles that he was going to foster. My principles: I want to bring down the tax burden on middle-income families. I'm going to work together with Congress to say, OK, what are the various ways we could bring down deductions? One way, for instance, would be to make up a number, $25,000, $50,000. Anybody can have deductions up to that amount. That's one way one could do it. One could follow Bowles-Simpson as a model and take deduction by deduction and make differences that way. There are alternatives to accomplish the objective, which is to bring down rates, broaden the base, simplify the code, and create incentives for growth.
PERRY: Seven percent flat tax. Simple. Keep it simple.
SANTORUM: Well, my plan has two rates, 10 and 28 percent, which is the highest rate under Ronald Reagan when he cut taxes.
ROMNEY: I would like 25 percent, but right now it's at 35, so people better pay what is legally required. But ultimately let's get it down to as low as we possibly can, if it's 20, if it's 25 but paying more than 25 percent, I think, is taking too much out of our pockets.
GINGRICH: I would like to see it be a flat tax at 15 percent and I would like to see us reduce government to meet the revenue, not raise revenue to meet the government.
PAUL: Well, we should have the lowest tax that we've ever had, and up until 1913 it was 0%. What's so bad about that?
His spokesman called the pledge "government by gimmickry." Yet on Jan. 4, 2007, Romney became the first prospective presidential candidate to sign Grover Norquist's pledge to oppose increasing taxes on people or businesses.
ROMNEY: Well, I would like to see our tax rates flatter. I'd like to see our code simpler. I'd like to see the special breaks that we have in the code taken out. That's one of the reasons why I take the corporate rate from 35% down to 25%, is to take out some of the special deals. What I want to do is to take our precious dollars & focus them on the people in this country that have been hurt the most, and that's the middle class. The Obama economy has really crushed middle-income Americans. So what I do is focus a substantial tax break on middle-income Americans. Ultimately, I'd love to see us come up with a plan that simplifies the code and lowers rates for everybody. But right now, let's get the job done first that has to be done immediately. Let's lower the tax rates on middle-income Americans.
Q: Speaker Gingrich just said he is not prepared to raise taxes on the American people in the middle of a slow economy like this. That's what would happen if the payroll tax cut is not extended. Do you agree with him?
ROMNEY: I don't want to raise taxes on people in the middle of a recession. Of course not.
Q: So you're for it?
ROMNEY: And that's one of the reasons why we fought so hard to make sure the Bush tax cuts weren't taken away by President Obama.
Q: But to clarify, you agree with Pres. Obama the payroll tax cut should be expanded?
ROMNEY: I want to keep our taxes down. I don't want to raise any taxes anywhere. Let me tell you, I'm not looking to raise taxes. What I'm looking to do is to cut spending.
ROMNEY: Well, the reason for giving a tax break to middle-income Americans is that middle-income Americans have been the people who have been most hurt by the Obama economy. People are having a hard time making ends meet. And so if I'm going to use precious dollars to reduce taxes, I want to focus it on where the people are hurting the most, and that's the middle class. I'm not worried about rich people; they're doing just fine. The very poor have a safety net; they're taken care of. But the people in the middle, the hard-working Americans, are the people who need a break, and that's why I focus my tax cut right there.
ROMNEY: What you have to do is make America the most attractive place in the world for business, and that means our corporate tax rates have to be competitive #2: government and regulators have to be allies of business, not foes.#3: we've got to become energy secure in this country. #4: we have to have trade policies that work for us, and crack down on cheaters like China. And my list goes on in my 59 points. I know there are some that say, look, we should lower taxes for the very highest-income people. My view is very simple: The people that have been hurt most by the Obama economy, has been the middle class. That's why I cut taxes for the middle class.
ROMNEY: The idea of a national sales tax or a consumption tax has a lot to go for it. One, it would make us more competitive globally, as we send products around the world, because under the provisions of the World Trade Organization, you can reimburse that to an exporter. We can't reimburse our taxes right now. It also would level the playing field in the country, making sure everybody is paying some part of their fair share. But the way the fair tax has been structured it has a real problem and that is it lowers the burden on the very highest income folks and the very lowest and raises it on middle income people. And the people who have been hurt most by the economy are the middle class. And so my plan is for middle income Americans, no tax on interest, dividends or capital gains. Let people save their money as the way they think is best. We're taxing too much, we're spending too much and middle income Americans need a break and I'll give it to them.
Some people advocate the "FairTax" as a means of boosting savings, a system that would entirely replace income taxes with a consumption tax--a kind of sales tax. FairTax proponents estimate that a tax rate of 23% would be sufficient, but detractors claim that it would be closer to 40%. The enormous amount saved by the wealthiest under the FairTax would be made up by a higher tax burden on the middle class. This is not an outcome that will or should gain traction with the American public.
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.
A: Well, immediately I’d go to try and get a reduction on taxes on middle income Americans. Specifically I proposed having people who earn under $200,000 a year be allowed to save their money tax-free. It means no tax on interest, dividends or capital gains. It keeps more money in their pockets. It also means that we have more capital going into the marketplace available for business startups as well as for homes.
Q: So for families earning under $200,000 a year, you’d recommend some sort of immediate tax cut, is that right?
A: That’s exactly right. This is middle-income Americans. These are where 95% of Americans live, and get their tax rates down, allow them to save for the future, to make investments in their homes, & be able to save for college. The best thing we can do is keep money in the homes of the American people.
ROMNEY: Lowering taxes grows the economy. Lowering taxes helps build jobs & helps working families, and so I strongly have been of the view that one of the great lessons for Ronald Reagan was that lowering taxes helped built our economy. Sen. McCain was one of two Republicans who voted against the Bush tax cuts. I believe the Bush tax cuts helped our economy grow and are one of the reasons that we’re not in a recession today Senator McCain continues to believe that that was the right vote to take, and I respect that that’s his view. I just happen to disagree with it. As governor, I fought tirelessly to reduce taxes. We cut taxes some 19 times in our state, and we held down s
HUCKABEE: Did you support or oppose the 2002 Bush tax cuts?
ROMNEY: I have never opposed the Bush 2002 tax cuts. I supported them. The first comment I made about the Bush tax cuts was that I supported the Bush tax cuts.
Huckabee is referring to the 2003 cuts, which occurred right at the beginning of Romney’s term as governor. Romney is correct to say that he neve publicly opposed Bush’s tax cuts. But while he may have supported them, we find no record of his doing so in public. Indeed, Romney rather pointedly refused to endorse the Bush tax cuts in 2003. The Boston Globe cited Romney telling the state’s congressional delegation that he “won’t be a cheerleader” for tax cuts that he doesn’t agree with. According to this account, Romney added that he wouldn’t oppose Bush’s cuts either, because he “has to keep a solid relationship with the White House.”
A: The total fees raised were $260 million, which is a big number. We had a $3 billion budget gap. The Democrats wanted to raise taxes. I said, “No way.” And in fact we did not raise taxes on our citizens, and we lowered them across that state time and again. I’m proud of what we were able to do to lower taxes. I’m also going to lower taxes for the American people, and that’s the key thing. Right now, you can listen to the Democrats. Their pledge is clear. They’re going to raise taxes. I want to lower them.
A: It’s good, but it’s not that good. There are a lot of features that are very attractive about a FairTax. Getting rid of the IRS is something we’d all love. But the truth is, we’re going to have to pay taxes. Completely throwing out our tax system and coming up with an entirely new one is something we have to do very, very carefully. The president’s commission on tax reform looked at this and said: Not a good idea. Some of the reasons are the FairTax, for instance, charges a 23% tax, plus state sales tax, on a new home, when you purchase a new home. But if you buy an old home, there’s no tax. Think what that might do to the construction industry. We need to thoroughly take it apart before we make a change of that nature. That’s why my view is, get rid of the tax on savings and let middle-income people save their money tax-free
A: I want to make it very clear that I’m not going to raise taxes. As governor of Massachusetts, I made it very clear there, and I did not raise taxes. We faced a huge budget gap, but I recognize that raising taxes could lead to a slowdown in our economy, so we didn’t do it. We balanced our budget, and that’s exactly what I’ll do with the federal government.
A: I like middle-income Americans to be able to save their money and not have to pay any tax at all on interests, dividends or capital gains. A zero rate on capital gains for middle-income Americans. And by the way, we’re all talking about how anxious we are to veto overspending. I was a governor. I’ve done it hundreds of times. I can’t wait to get my hands on Washington’s budget.
Calling it “my pledge,” Romney vowed not to support a freeze or reversal of the plan to roll income taxes back to 5 percent by next year even in the face of a budget hole nearing $3 billion. Romney chided Democrats for taking the “easy way” to fix problems by passing the tax hat.
“The easy way to fix any problem is to go to the people and say you have to pay more money, but that’s not what the job of management is,” Romney said. “That’s my pledge, we are not going to raise taxes, we are not going to walk away from what the voters are in favor of doing, which is bringing the tax rates down.”
A: No. I don't believe in raising taxes. And as governor I cut taxes 19 times and didn't raise taxes. Let's step back and talk about the first part what you said. I was fortunate enough to be a governor that got an increase in the credit rating in my state. Republicans and Democrats worked together in Massachusetts to cut spending. I came in, we had a huge deficit. We cut spending. Every single year I was governor we balanced the budget. That kind of leadership is what allowed us to get a credit upgrade from Standard & Poor's. And that's the leadership we finally need in the White House.
During his single term as governor, Mitt Romney raised taxes 5 percent in Massachusetts, the state already known as "Taxachusetts." His cuts to local governments forced them to increase property taxes to the highest level in a generation. He his them by calling them "fees" and boasted that he never raised taxes, and the amazing thing was that most of the national press fell for it, especially those who wrote for many of the conservative news outlets. The Romney spin machine was effective (albeit expensive) in convincing many people that he had a conservative record as a governor, when in fact he raised "fees" by about $700 million.
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.
ROMNEY: First of all, we raised fees by $240 million in our state because we had a whole series of fees that hadn’t been raised, in some cases, in decades, so we brought them up to the cost of providing services. These were not broad-based fees that were required for all people to pay, rather for specialized services.
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George W. Bush (R,2001-2009)
Bill Clinton (D,1993-2001)
George Bush Sr. (R,1989-1993)
Ronald Reagan (R,1981-1989)
Jimmy Carter (D,1977-1981)
Gerald Ford (R,1974-1977)
Richard Nixon (R,1969-1974)
Lyndon Johnson (D,1963-1969)
John F. Kennedy (D,1961-1963)