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Posted at 6:00 AM ET, 01/ 2/2008

Huckabee's record on taxes

By Michael Dobbs


New Year's Eve party, Des Moines, IA.

"Governor Huckabee is a fiscal conservative who cut taxes almost 100 times in the state of Arkansas."

--Mike Huckabee for President website.


When Mike Huckabee shot to the head of the pack in Iowa, his Republican rivals piled on to him for his record as governor of Arkansas. Mitt Romney has been particularly aggressive, accusing Huckabee of being "liberal" on taxes and spending. The conservative Club for Growth has said that it is "hard to take Huckabee seriously" because of his economic record in Arkansas.


So what is the truth? Did Huckabee cut more taxes than he raised during his ten years as governor--or was it the other way round?


The Facts

Huckabee won plaudits from conservatives by pushing a $90 million tax cut package through the Arkansas legislature in 1997, soon after he became governor. Largely on the strength of that tax cut, the Cato Institute awarded Huckabee a B rating in 1998, listing him as one of the country's "top ten tax cutters." But it was largely downhill from there. He was awarded a C in 2000 and 2002, a D in 2004, and an F in 2006. "Mike Huckabee of Arkansas went from being one of the best governors in America to one of the worst," the Institute declared. "The main reason for the drop was his insistence on raising taxes at almost every turn throughout his final term."

According to the Tax Foundation, the state and local tax burden on the average Arkansan increased from 10.1 per cent to 11.3 per cent under Huckabee. When he came into office in 1996, Arkansas ranked 30th in the nation as the state with the highest taxes. When he left at the beginning of this year, it had risen to 13th.

Overall tax revenues in Arkansas rose by some $500 million under Huckabee, according to the Arkansas Democrat-Gazette. In Huckabee's defense, $400 million of this increased revenue went to pay for improvements in the state's educational system mandated in 2002 by the Arkansas Supreme Court, to correct inequalities in education spending. The biggest tax increases came in 2003 and 2004, after the Supreme Court decision.

So what about all those tax cuts that Huckabee boasts about?

The Arkansas Department of Finance and Administration has confirmed that there were 90 tax cuts in the period 1995 to 2005, reducing revenues by $378 million. But many of these tax cuts were very narrowly tailored. A list assembled by the Arkansas Democrat-Gazette included the following:

  • Exempting Arkansas Symphony Orchestra from sales tax. Total revenues foregone: $20,000
  • An income tax deduction for organ donation: $76,000
  • Exempting county fairs from special events tax: $15,000.

  • Offsetting these tax cuts were at least 21 tax increases, including repeated tax hikes on tobacco, alcohol, increases in the sales tax, and a 3 per cent "income tax surcharge." The tax hikes brought in a total of $883 million between 1995 and 2003.

    The Pinocchio Test

    Huckabee often talks about the "nearly 100 tax cuts" that he helped to implement in Arkansas, however trivial. He conveniently forgets about the tax hikes, or uses euphemisms to disguise them. Asked about a tax on nursing home beds by Chris Wallace of Fox News, he said it was not a tax. It was a "quality assurance fee."

    Two Pinocchios for exaggeration.

    (About our rating scale.)


    By Michael Dobbs  | January 2, 2008; 6:00 AM ET
    Categories:  2 Pinocchios, Candidate Record, Candidate Watch, Economy  
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    Comments

    Russert point out that some conservative groups had given Huckabee a D or F when it came to raising taxes. Huckabee said he only raised taxes for things that were crucial, like roads and schools. "That's what being a governor is about in some cases," Huckabee replied, and pointed out that he also lowered some taxes. "We untaxed poor people and gave them a shot of making it up the economic ladder...I'm proud of the fact that we raised teacher pay."

    Is Mike Huckabee in your opinion a Republican or Democrat?

    http://www.youpolls.com/details.asp?pid=1407

    .

    Posted by: PollM | January 2, 2008 9:09 AM | Report abuse

    Very well done. I had not yet found the energy to dive into the Huckabee as tax cutter vs. tax raiser debate; now I think I know the answer.

    Giuliani = the best flawed candidate
    Romney, McCain = adequate flawed candidates
    Huckabee = an almost adequate candidate
    Paul = insane
    Thompson = who knows?

    Posted by: The Angry One | January 2, 2008 9:25 AM | Report abuse

    To me, Huckabee's past stances on taxes are pretty irrellevant given his proposal for a "Fair Tax".

    If Huckabee had been quiet, or not offered any specifics about his policies regarding taxes, then we would be forced to rely more on his record. With Huckabee's "Fair Tax", He would not be making the same sort of decisions he made as governor about raising or cutting taxes.

    Posted by: Paul S | January 2, 2008 10:44 AM | Report abuse

    I know axe to grind pro or con about Huckabee, but I don't think fact-checker can seriously claim to know whether a tax cut resulted in "reduced revenues" as fact-checker claims above. I think we all know it's not as simple as that, because cutting taxes can have the effect of actually increasing overall revenue as people spend more because they have more and as companies can also contribute more by hiring more employees (who then pay taxes) as more money is freed up. It's not an exact science of saying "this tax cut equals reduced revenues for this much" or, which is what fact-checker is perhaps unintentionally implying here.

    Posted by: Mike | January 2, 2008 11:52 AM | Report abuse

    Mike, in Fact Checker's defense, he works in the news portion of WaPo, which embraces static scoring, i.e. the storylines that state "the tax cut of x will add x to the national debt..." without examining the implication that a tax cut could somehow produce zero economic growth. Blue Kool-Aid all, of course, but ECON 101 is beyond the grasp of most MSM news pages.

    Posted by: The Angry One | January 2, 2008 4:24 PM | Report abuse

    Mike, The Angry One:
    It is my belief that the majority of the time, tax cuts cannot increase revenue within a reasonable amount of time. This can be seen with a few back-of the envelope calculations.

    Let us assume a 10% tax cut. That tax cut must then increase revenue by 11% to pay for itself. 11% yearly growth is generally considered dangerous growth (inflation is most likely similarly skyrocketing). Under natural circumstances, how long would it take to reach this level? IIRC, most economists would give this limit at about a 10-year mark. After taking into account the fact that it has to also make up the deficit in the intervening years, 15 years is about the break-even point. That is too long to be considered "increasing revenue" (think within about two-three years).

    Face it: most economists believe that tax cuts do not pay for themselves, and the historical record tends to support this belief. Perhaps in edge cases, but cutting the tax from 2000% to 20% is not what we're talking about here.

    Posted by: Joshua Cranmer | January 2, 2008 5:56 PM | Report abuse

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