Whitman and Fiorina: California Dreamin' on Taxes
In Washington, the partisan war is flaring up again, this time of over taxes. President Obama wants to keep the "Making Work Pay" middle class tax credit while rolling back the expiring Bush tax cuts for households earning over $250,000. Republicans hope to stop him, keeping the Treasury-draining Bush windfall for the wealthy despite the stunning deficits - and record income inequality - they produced. And to sell their budget busting giveaway, the leading lights of the GOP pretend that tax cuts magically increase government revenue.
Nowhere is the Republican myth-making on behalf of the richest Americans more on display than in California. There, former CEOs Carly Fiorina and Meg Whitman are pushing policies to transfer tax dollars into the vaults of the wealthy, including their own.
As you'll recall, in 2008, former HP chief executive Fiorina had a troubled tenure as a campaign surrogate for John McCain. But while she misrepresented McCain's views on abortion, on taxes she's hasn't deviated from the script.
And that script says, as McCain claimed in 2007:
"Tax cuts, starting with Kennedy, as we all know, increase revenues."
As it turns out, not so much. The national debt tripled under Ronald Reagan and doubled again under George W. Bush. Analyses from the Center on Budget and Policy Priorities showed that the Bush tax cuts accounted for almost half of the deficits during his presidency and, if made permanent, would contribute more to the U.S. budget deficit than the Obama stimulus, the TARP program, the wars in Afghanistan and Iraq, and revenue lost to the recession - combined.
Nevertheless, two weeks ago Carly Fiorina joined John Boehner, Jon Kyl, Marco Rubio, Tom Coburn, Judd Gregg, Mitch McConnell and the rest of the new Republican alchemists in her battle against Democratic Senator Barbara Boxer:
"Let me propose something that may seem crazy to you: you don't need to pay for tax cuts. They pay for themselves, if they are targeted, because they create jobs."
And in almost perfect segue for her Golden State Republican colleague Meg Whitman, Fiorina added, "Why are we making it harder for people to invest capital? We should be making it easier!"
The former eBay CEO Whitman couldn't agree more. At a time when California is billions of dollars in the red, the billionaire has proposed killing the state's capital gains tax altogether. As her campaign brochure declares:
Eliminate the state tax on capital gains.
California is one of the few states in the country that taxes capital gains at a higher rate than traditional income. This is double taxation at its worst.
Not only is Whitman's claim false, as the Los Angeles Times duly reported. But as the Times' Michael Hiltzik also noted, ending the capital gains tax would cost California up to $10 billion in revenue annually even as it would put tens of millions of dollars directly into Meg Whitman's pocketbook.
Meg Whitman, the billionaire former chief executive of EBay, proposes to eliminate the state tax on capital gains. That tax, like the state tax on all other income, tops out at 10.3% for income exceeding $1 million.
The Whitman campaign refused to tell me this week what percentage of Whitman's income derives from capital gains (which can be defined as profits on stock, bond, real estate and other such investments). Whitman has thus far refused to make public her tax returns, which might hold a clue...Capital gains might even represent the majority of her income in some years.
As Chris Kelly of the Huffington Post aptly put it, "Meg Whitman's Tax Plan: She Stops Paying Hers."
Of course, John McCain's one-time stand-ins learned well at the feet of the master. As the Center for American Progress noted, McCain's 2008 tax plan wouldn't merely have added $2 trillion more to the national debt while delivering 58% of its benefits to the richest 1% of American taxpayers. That scheme to cut taxes for the wealthy, including halving the capital gains rate, would have delivered hundreds of thousands of dollars annually directly to John and Cindy McCain.
As for Carly Fiorina and Meg Whitman, their tax policies are a fiscal suicide pact for California and the nation, all based on an economic delusion. But for them, it would be a California dream come true.