The Magazine

Republicans Who Love Taxes

Coming soon to a state house near you.

Feb 17, 2003, Vol. 8, No. 22 • By STEPHEN MOORE
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NOT SINCE RECONSTRUCTION had a Republican won a governor's race in Georgia--until last November, when Sonny Perdue pulled off a stunning come-from-behind victory over incumbent Democrat Roy Barnes. But after 120 years of Republican exile from the governor's mansion, it took Gov. Perdue only about 120 minutes to endorse Georgia's largest tax increase in memory: $600 million. Tax collections in Atlanta have nearly doubled in the last 12 years, making preposterous Perdue's claim that either "taxes must be raised or vital services cut." Perdue has now retreated from the tax-hike blunder, but only after anti-tax Republicans in the state legislature persuaded him that the votes couldn't be found for his tax grab.

Perdue isn't the only GOP governor flirting with higher taxes. An analysis by the American Legislative Exchange Council (ALEC) notes that with nearly $100 billion in state deficit spending gaps to close this year (New York and California make up about half that shortfall), governors may end up raising taxes by half that amount, making 2003 the biggest tax-hike year ever for the states. And yes, many of the calls for the biggest tax increases are coming from Republicans. In Idaho, Gov. Dirk Kempthorne is seeking a 1.5 cent per dollar hike in the sales tax. In Arkansas, Mike Huckabee is lobbying for a sales tax hike and assorted other fee increases, as are Kenny Guinn of Nevada and Bob Taft of Ohio.

One of the most cockeyed tax schemes has been advanced by John Rowland of Connecticut, who has called for a Clintonesque "millionaire income tax surcharge." Eight years ago, Rowland first ran for governor as a Reaganite, vowing to eliminate his predecessor Lowell Weicker's first-ever state income tax. Rowland not only swerved clear of that promise; now he wants to move from a flat 4.5 percent tax rate to a steeper, graduated rate structure. This is precisely what anti-income-tax groups in Connecticut feared all along: Once Weicker's income tax was cemented in place, politicians would jack up rates during the first signs of financial trouble. So now, a state that flourished for 200 years without an income tax has a Republican governor who can't conceive of any way to balance the budget without raising it.

But here's the really strange twist of fate in state-level politics: Suddenly many Democratic governors are shunning new taxes and trimming agency fat after a decade-long state spending feast. Admittedly it's early, but so far there are signs that the 2002 elections ushered in a new breed of ambitious, politically non-suicidal Democratic governors, including Jennifer Granholm of Michigan, Ed Rendell of Pennsylvania, and Bill Richardson of New Mexico. They all seem keenly aware that the political graveyard is filled with the tombstones of Mario Cuomo, Michael Dukakis, and Jim Florio--class-warfare Democrats who raised taxes, wrecked their states' economies, and were subsequently chased from office by unforgiving voters.

For now at least, these new-new Democrats are begging off broad-based tax hikes to plug budget holes and are actually cutting spending. Tennessee's new governor, Phil Bredesen, has dismissed Republican predecessor Don Sundquist's wildly unpopular call for a state income tax, and instead is seeking a 5 percent across-the-board spending cut to balance the budget. In Georgia, Democratic lieutenant governor Mark Taylor is pledging to fight any attempt by Sonny Perdue to raise taxes. "I am totally stunned that [Perdue] would take the easy way out and ask for tax increases," he says. "We are not like Washington, D.C., Democrats. We will oppose the tax increases."

Contrast that common-sense approach with the strange goings-on in Idaho. Kempthorne stunned even his most enthusiastic supporters in January by endorsing what would be the biggest tax increase in Idaho history. "I will not preside over the dismantling of state government or jeopardize our bond rating," Kempthorne announced sanctimoniously. Actually, states that raise taxes are more likely to have a subsequent bond rating deterioration than states that cut their budgets and cut tax rates.