Jon Huntsman on Tax Reform
Republican UT Governor
HUNTSMAN: We've got to earn our way forward. There's no question about it. Governors learn how to pay the bills. In order to pay the bills, you've got to expand your economic base. And that's a problem we have in the US right now. We read about the jobs that have ticked upward in this country and we're all very happy about that. We're providing people more in the way of real opportunity. But think of where this country would be, if during the first two years of Barack Obama you had had a different president. I would have ripped open the tax code and I would have done what Simpson-Bowles recommended. I would have cleaned out all of the loopholes and the deductions that weigh down this country to the tune of $1.1 trillion. We've got a corrupt tax code. So you've got to say, how are we going to pay for it? We've got to stimulate some confidence in the creative class in this country. Right now they're sitting on their hands.
On the corporate side, I think we recognize the reality that a whole lot of companies can afford to have lobbyists and lawyers on Capitol Hill working their magic. Let's recognize the reality that they're all paying 35%. We need to lower that to 255. So let's phase out the corporate subsidies and clean out the cobwebs and leave it more competitive for the 21st century.
I can tell you, by doing that with our tax code--and I know, because we did it in a state that took us to the number-one job creator in this country--it will leave you and your generation a whole lot better off.
HUNTSMAN: I'd love to get everybody to sign a pledge to take no pledges. I have a pledge to my wife, and I pledge allegiance to my country, but beyond that, no pledges. I think it diminishes the political discussion. I think it jeopardizes your ability to lead once you get there. And I started when I first ran for governor in 2004, as someone who wanted to pin me down on taxes, I said, no thanks, I'm not going to sign it. I didn't raise taxes. We had historic tax cuts in our state. So look at somebody's record. That's always a pretty good indicator and barometer of where they're likely to go.
How accurate is that claim? Huntsman's campaign explained that when Huntsman took office, there were six income tax brackets ranging from 2.3% to 7%. Ultimately, Huntsman and the Legislature approved a single rate of 5%. They created a much flatter tax, stripping away most of the deductions and credits. In general, most taxpayers ended up paying less in taxes.
Did Huntsman "cut income taxes by 30%"? We find that is a significant exaggeration: The statutory top tax bracket before and after the tax system declined fro 7% to 5%, which is a decrease of 28.6%. But that doesn't address the lower tax brackets. Remember, the lowest rate went up from 2.3% to 5%, but they got some tax credits. So Huntsman's 30 percent decrease in the statutory rate didn't apply to them.
Our historically high tax burden is now below the national average. And we have the lowest tax rate since the implementation of the State income tax. Thank you members of the Legislature; you passed tax reform unanimously last session, and this month, it is a reality!
The nation's governors urge you to include state countercyclical funding as part of your legislation to stimulate the economy. This would include $6 billion in Medicaid assistance by freezing scheduled federal FMAP reductions and increasing all states' F Congress approved $20 billion in assistance to states, including $10 billion in Medicaid and $10 billion in block grants. The governors' current stimulus proposal is essentially the same, with the exception that it is a total of $12 billion as opposed to $20 billion. This proposal can be enacted quickly, as there is precedent and it is timely, temporary and targeted.
Additionally, governors appreciate federal efforts to use tax policy to get additional money into the hands of consumers and businesses to stimulate the economy. When considering tax changes to spur economic growth, governors urge Congress and the Administration to follow the maxim of "Do no harm" by avoiding changes at the federal level that would diminish state tax revenues or force state actions that would undermine the effectiveness of federal efforts.
We look forward to working with you to enact the appropriate stimulus program.