Rudy Giuliani on Tax Reform Former Mayor of New York City; Republican Candidate for 2000 Senate (NY)

Reduce the capital gains tax, permanently

A: I think this package, for what it does, is okay, and I would support it, but it doesn’t go far enough. I think in the face of what’s been going on, which obviously is a matter of serious concern, we should be very aggressive. [I support] legislation introduced that would be the largest tax reduction in American history. It would take the Bush tax cuts, make them permanent, reduce the corporate tax, reduce the capital gains tax, reduce taxes on those things that would allow business to see America as more competitive. And you almost don’t have a distinction any longer between temporary and permanent in the kind of an economy that we live in.

Cut taxes strategically: only those that bring more revenues

A: Well, it would be a criticism of anyone’s tax cut plan. That was the criticism of the Bush tax cut plan or the Reagan or the Kennedy tax cut plan. I would cut taxes strategically. I would cut taxes that would bring us more revenues. And also, during the week we’ll also talk about cutting spending.

Cut taxes $3,000 for family of four earning $80,000

A: Well, we’ve computed it for a family that earns about $80,000 a year. A family of four would save about $3,000 or $4,000. That’s off the single-page form.

Q: How much would a family making $500,000 a year wind up saving potentially?

A: I haven’t calculated it. I haven’t calculated it because I have no idea which ones of the tax cuts are going to happen, which ones aren’t. The one we calculated was for the people who opt for the single form, which I happen to have in my pocket. It’s a single form on which you can fill out your taxes. That would bring you somewhere between 25% to 30% tax reductions, and it would depend to some extent on the number of other deductions that you had.

Simplify taxes: plan to file your taxes on one page

Believe it or not, you can do it on one page. This will result in major tax reduction. A family of four earning $80,000 will save something like $3,000. A family of four earning $120,000 will save something like $7,000--money in their pocket.

One-page fast form: 24% to 36% reduction in income tax paid

A: Well, it helps everyone. And it depends on the rates that you fall in. And in fact, the primary benefit are to people that are middle income. And we’re just talking about the tax savings from the fast form. There are other tax reductions that would help balance that also. That was just to show the effect of the fast form. And the fast form is an option, meaning you can file the other form if you want to. So you have the option of doing it on one page with the key deductions maintained, or you can file the longer form. And it might be that under the longer form you’ll get more benefits if you want to take the time to do it.

Cutting anti-competitive taxes raises more revenue

A: Well, the reality is that some tax cuts do add to revenues. Other tax cuts don’t add to revenues. It depends on the tax cut. And tax cutting has been part of the Bush program, the Reagan program, the Kennedy program, and it always led to significan increase in economic activity. If you cut something like the corporate tax at 35%, you bring it down to 30%, you will get more revenues from that cut, because our corporate tax is the second highest in the world. If you cut some other tax, you might not get those kinds of revenues. So, the question is: What tax are you cutting? Is it anti-competitive? If it is anti-competitive, you’re actually going to get more revenues from that tax cut.

Recommended 64 tax cuts; accomplished 23 of them

A: Not at all. I actually recommended 64 tax cuts and accomplished 23 of them. 18 of them were the ones I originally proposed, and the balance were ones that I accepted and comprised. So that makes up the 23. The overall tax burden on New Yorkers were reduced by 17% by the time I left office. It was the largest tax cut ever done in the history of the city, it was the largest tax cut done in government, anywhere, in the 1990s, including all city, all state, all federal level, because the federal level raised taxes during that period.

I am a supply-sider; and I actually made it work

I am a supply sider. I believe if you need more revenue, one of the first things you go look to is an anti-competitive tax. Right now, if we reduced the corporate tax, which is the second highest in the world, 35%, if we reduced it to 30% or to 25%, we would make more money.

And the Bush tax cuts did the same thing. The Bush tax cuts are now yielding the United States government more money than we were getting when we had the higher tax. So, everyone has their record to look to, we have all different pluses and minuses, but from the point of view of being a tax-cutter, I had the best record of anyone in government in the 1990s in cutting taxes.

FactCheck: Claimed 34% NYC hotel tax cut; actual cut was 14%

There are two hotel occupancy taxes in New York, one local and one state-imposed. The local hotel tax, based on a $200-per-night room, went from 7% to 6%, a cut of 14.3%. This is the one Giuliani would be most responsible for, so his claim of a 34% cut is far too high (The combined state and local tax went from 12% to 6%, a 50% cut.)

Hotel tax revenues didn’t rise as much as he says, either. In 1994 they were $129 million, and in 2001, they were up to $243 million--a respectable increase of 88.6%, but not a jump of $200 million as he claimed.

Overall, a 1997 study found, the city’s 1 percentage point reduction in its hotel occupancy tax rate generated only enough increased activity “to offset as much as half of the direct cost of the tax cut.”

Support a flatter and simpler tax and less corporate tax

FactCheck: Cut NYC taxes by $5.4B, not $9B as claimed

Won’t sign no-tax pledge; pledge only to uphold Constitution

A: It’s a matter of principle. I think if you’re president, you take one pledge: to uphold the Constitution. It is my intention to lower taxes. I have without any doubt of all the people running for president the strongest record of lowering taxes. I did it 23 times in a city that never lowered a tax before. I made supply-side economics work in a city that didn’t understand it. And I ended up having a very positive impact on the economy of the city as the result of that. But I only think a person running for president should take one pledge, and that is to uphold the Constitution of the United States.

Letting Bush tax cuts expire means economy would decline

A: The economy begins to go in decline. I think we see an outsourcing of jobs. We see a loss of revenue. I think we see it before then. I think we start seeing it in 2008, 2009. I did a forum on taxes, and a guy who runs a medium-size business was saying he’s already starting to hedge his bets against the idea of a major tax increase in 2010. I mean, how many businesses plan three, four, five years ahead

Reducing taxes is a way to raise MORE money

Eliminate the death tax immediately

Too complex to get to FairTax; focus on reducing taxes

A: I would say the most sensible thing to do is to simplify the tax code, reduce taxes, keep taxes low. I think the flat tax and the FairTax are both very intriguing. And if we were starting off at the very beginning with taxation, the first argument I would make is let’s not have any taxes. The second argument I would make is the FairTax or the flat tax would probably be a better way to go.

Q: But you’re not for the FairTax now, correct?

A: It would be too complex to get there. And somebody would have to show me how we’re going to make that transition. And, also, the thought that there wouldn’t be an IRS with the FairTax--well, who is going to administer the sales tax? And who’s going to administer the people that are exempt from the sales tax? And who is going to administer what items might be exempt from the sales tax?

AdWatch: Cut or eliminated 23 NYC taxes; and created surplus

GIULIANI: Every promise I’ve made, running as mayor of NYC, they said couldn’t be done. They said I couldn’t cut crime, NYC was the crime capital of America. Couldn’t be done. NARRATOR: Under Rudy Giuliani’s leadership, crime in NYC drops 56%.

GIULIANI: NYC was the welfare capital of America, 1.1 million people on welfare. You can’t cut welfare, can’t be done.

Narrator: Welfare rolls went down by a staggering 58%.

GIULIANI: They said we couldn’t reduce taxes. They said you couldn’t get control of spending. That’s impossible.

NARRATOR: Rudy Giuliani turned a $2.3 billion deficit into a multibillion-dollar surplus and cut or eliminated 23 taxes.

GIULIANI: My focus when I ran for mayor was on the future, and it will be in this campaign. Leadership is about what we can do, never taking no for an answer. This is all about how America can grow, how America can get stronger, how America can be the country that realizes all the potential that we know we have.

FactCheck: Cut 14 NYC taxes, not 23 as claimed

In fact, he strongly opposed one of the largest cuts for which he claims credit, reversing himself only after a 5-month standoff with the city council. In addition, the ad’s claim that Giuliani turned the budget deficit he inherited into a surplus, while true enough, ignores the fact that he also left a multibillion-dollar deficit for his successor, not including costs associated with 9/11.

We don’t dispute that all 23 cuts happened while Giuliani was mayor. But by saying “I lowered them,” he takes personal credit for 8 cuts that were initiated not by him but by the state, After our initial article appeared, in an interview posted on YouTube, the mayor said he deserves credit for tax cuts he supported, whether he initiated them or not.

Adjust the alternative minimum tax & get rid of death tax

A: We have to adjust the alternative minimum tax. That has to be reduced. We have to get rid of the death tax. It’s going to go to zero in 2010. And then in 2011, it’s going to go to 55%. And we have to make sure that the tax cuts that went into effect, that that level remains. Otherwise, we’re going to have one of the biggest tax increases in history in 2011.

Claimed 90s NYC tax cuts reduced deficits

Tax cuts should be a goal for New York City, considering its heavy taxation. But Giuliani continued to cut taxes in 2001 as the economy headed into a downturn--even as he hiked spending at more than triple the rate of inflation.

Following in Reagan’s footsteps, he promoted the idea that tax cuts would pay for themselves by heating up the economy. “Even though it seems in the short run that cutting taxes means less money for the government, and makes it harder to reduce our deficits, time and again we’ve proven that just the opposite is true,” Giuliani said in 1997.

1994 hotel tax cut was effective, but didn’t raise revenue

Giuliani argued when he ran for mayor that reducing the hotel tax would increase tourism. In 1994 the state knocked five percentage points off the tax, and the city reduced its tak by one point. “The result has been a boon for our tourism industry, our convention centers, and hotels,” Giuliani said, going on to explain that the city collected more money from the lower tax.

Giuliani cited the example tirelessly, saying it showed that selected cuts would pay for themselves. But a 1997 study found that the tax cut fell short of paying for itself by half. The study didn’t say it was a bad idea to reduce the tax. But it exposed Giuliani’s exaggeration of a solid accomplishment.

Lowering sales taxes creates jobs

First day as mayor: reduced sales tax from 6% to 5%

Economists could have a great deal of fun calculating how much of the rise in visitors was attributable to the tax cut. How much of the increased hotel occupancy came from the drop in crime, how much from the improved quality of life? How much from the positive publicity NY get from those two factors? How much from the dynamics in different economies--factors way beyond the control of any mayor? The exact proportions are impossible to know.

NYC tax reductions of $10.4B through 2003

Supports Task Force to continue reduce taxes

• In 1998 the City’s tax burden has fallen to 7.8% as a share of personal income -- lower than in the years leading up to the fiscal crisis in the early 1990’s.
• The creation of the Tax Reform Task Force will look to further reduce the tax burden on New Yorkers. The Task Force’s goal is to make the tax structure in New York City and State more competitive with other large cities and to study ways of streamlining the number of taxes levied on businesses and individuals.
• To assist the Task Force, the City has reserved another $100 million for tax reductions.
• With tax cuts already enacted and those proposed ($338 million), taxpayer savings will double from $1 billion to $2 billion annually.

Eliminated sales tax on clothes; reduced real estate tax

• The Mayor fought for - and won - a complete elimination of sales tax on all clothing and footwear under $110 beginning December 1, 1999. During the City’s most recent tax-free week, sales were reported to have risen over 70%.
• Effective December 1, 1999 the tax rate will drop from 3.9% to 3.4%, and will drop to 3.0% effective June 1, 2001
• There will be a continuation of real property tax relief for Co-op and condo owners.