Jeb Bush on Tax Reform
Republican FL Governor; V.P. prospect
BUSH: The thinking is we need to create high, sustained economic growth to lift people out of poverty and to give people a pay raise for the first time in a long while. So reducing the corporate tax rate and fully expensing capital investment will create investment in our own country, on Main Street, in the real economy, and that's what we need to be focused on.
BUSH: Look, the benefit of this goes disproportionately to the middle class. If you look at what the middle class pays today compared to what they would pay in our tax plan because higher income people pay more taxes right now and proportionally, everybody will get a benefit.˙But proportionally, they'll pay more in with my plan than what they pay today.
Q: Well, I mean forgive me, sir, but 2.9% seems like it's less than 11.6%
BUSH: The simple fact is 1% of people pay 40% of all the taxes. And so, of course, tax cuts for everybody is going to generate more for people that are paying a lot more. I mean that's just the way it is.
A: They didn't as greatly as the static thinkers on the left think. They created a dynamic effect of high growth and that's what we need.˙If we think that if people think 2% growth is OK, then we'll have more people living in poverty and disposable income for the middle class will continue to decline. We have to jump-start the economy so that people can have more money to make decisions for themselves
In his positions on fiscal policy, Jeb Bush has given comfort to the suspicious. When asked about the hypothetical trade-off posited during a 2012 GOP debate, where no GOP candidate would accept a dollar of tax increases in exchange for 10 dollars in spending reductions, Jeb Bush took a different view. "If you could bring to me a majority of people to say that we're going to have $10 in spending cuts for $1 of revenue enhancement--put me in, coach," he said at the time. He has also criticized Grover Norquist's no-tax pledge that few GOP lawmakers refuse to sign.
BUSH: What we ought to be focused on in Washington is to build consensus on the things where there's an agreement. Maybe that would be on creating sustained economic growth which creates more revenue than any tax increase. But I don't think that you should automatically say, "No. Heck, no." We have to find in a divided country ways to forge compromise. [Reagan] did exactly that, he forged consensus, he compromised, he didn't violate his principles. So, the idea that you have to have this doctrinaire view [like Grover Norquist's "No taxes" pledge], but you're not necessarily going to be able to solve these pressing problems that we have.
When Governor Bush came into office, Florida was one of only a handful of states that utilized some form of an intangibles tax. This tax was levied on stocks, bonds, mutual funds, money market funds, and other such investments. "By design, the tax is aimed at the state's wealthier residents" and in the absence of an income tax was initiated to derive at least some revenue from the personal income of wealthy citizens and corporations. While it was the most progressive of the taxes employed by the state, it was described by the governor as "evil and insidious," "counterproductive and unfair." Governor Bush worked to reduce it in every legislative session between 1999 and 2006, when it was finally abolished. Its elimination accounted for nearly 30% of the tax cuts he initiated.
Even as he was publicly supporting the services tax, he had privately sent Martinez a letter telling him it was a bad idea. And in 1998, Jeb was able to produce the letter when his Democratic opponent started talking about the services tax and how Jeb had once supported it.
Jeb knew it would be tough to create any public empathy for the actual "victims" of this tax, and so he and his people invented a new description for them: "seniors and savers." They produced statistics to show that a disproportionate number of people who paid this tax were elderly. And indeed, many of them probably were "savers."
In 2004, Jeb explained that the intangibles tax was unfair because it affected only a few hundred thousand people out of a state population of, by then, some 17 million. It never quite got around to explaining that the one common factor these 233,000 people all had was that they were rich.
Jeb reveled in the catchword insidious, which he tried to use whenever he was talking about the tax. "The insidious intangibles tax," he never tired of saying.
Governors are also chafing under a Congressional timetable that calls for the states to lose their tax revenues by 2005 while stretching the repeal of the federal estate tax more gradually over 10 years. Jeb Bush warned about anticipated revenue shortfalls [in Florida], including the expected loss of $210 million from the estate tax in the 2002-03 fiscal year. “While I support the eventual repeal of the estate tax,” Mr. Bush, the president’s brother, wrote, “shifting the burden merely allows Washington to spend more, while requiring us to spend less.”
Senate Bill 1020 also reduces government accountability to taxpayers by easing the requirements or conditions under which taxpayers must be notified of increases in special assessment rates. If this bill becomes law, there could be many instances in which taxpayers would not be informed of special assessment rate increases until the change appears on their annual tax bills.
In his first 100 days, Bush’s legislative agenda met with stunning success. He passed a school voucher plan, got longer prison terms for gun-toting criminals, and instituted a $1 billion tax break.
We are writing to request equal treatment between states and the federal government on estate tax changes. Regardless of one’s view about phasing out the federal estate tax, the Governors are absolutely united in opposing any action that would discriminate against states in the phase-out of the state and federal estate taxes. This issue needs to be addressed before the Senate goes to conference with the House.
Governors believe that the ability of states to independently determine their own tax revenue policy is a basic tenet of federalism. Moreover, no federal tax bill should be enacted without close consultation with the states.
At the very least, there must be equity in the treatment of the state death tax credit in the tax bill the Congress considers with the proposed phase-out of the federal estate tax. Governors oppose provisions that impose disproportionate impacts on state revenue systems. The changes proposed by the Senate would have abrupt, significant adverse impacts on state revenues at a particularly onerous time for many states. The potential impact on states would begin next year and have a potential impact of between $50 and $100 billion over the next ten years.
We urge the leaders to respect those rights and to restore fairness.
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