Thursday, November 27th, 2014

Taking stock of 'tax-hike Mike'

SUMMARY: Fred Thompson says Mike Huckabee raised lots of taxes in Arkansas. Huckabee responds that he cut taxes "almost 100 times." We find Thompson on solid ground but Huckabee stretching the truth.

The critics call him "tax-hike Mike."

Ever since he set up his committee to explore a run for the presidency, Mike Huckabee has been drawing fire from the fiscally conservative and very vocal Club for Growth.

The nonprofit group and its political action committee often target political candidates who don't live up to the group's standards of low taxes and low spending. In the presidential race, the club is giving special attention to Huckabee, going so far as to set up a Web site (www.taxhikemike.org) to post attacks on the former Arkansas governor's fiscal record.

As Huckabee has moved up in the polls, his Republican rivals have made similar attacks.

In an appearance on the Fox News Channel on Nov. 5, Fred Thompson said Huckabee was "one of the highest taxing governors that we had in this country and rivaling Bill Clinton in terms of the Cato ratings, and getting a D when Clinton got a D and getting an F for part of his administration."

Thompson is correct that Huckabee is not exactly a darling of fiscal conservatives. When he became governor in 1996, Huckabee touted his aversion to taxes. But over the next 10 years, he became increasingly willing to compromise with the state's Democratic-led Legislature on fiscal issues.

Thompson cites information from the Cato Institute, a conservative think tank that issues biannual "Report Cards" for governors based on their tax and spending records. In 1998, two years into his governorship, Huckabee received a B from Cato, which praised him for instituting a large, broad-based tax cut package in the previous year.

However, Huckabee's Cato grade steadily dropped from there: The group gave him C's in 2000 and 2002, a D in 2004 and finally, as Thompson states, an F in 2006. In its report last year, the organization declared that Huckabee "went from being one of the best governors in America to one of the worst. ... The main reason for the drop was his insistence on raising taxes at almost every turn throughout his final term." Because of this drop, Cato gave him a D for his 10-year career as governor.

As governor, he supported quite a number of tax increases, including hikes in the state sales tax, a cigarette and tobacco tax and a nursing home bed tax, to name just a few. The per capita tax burden in state and local taxes rose in Arkansas by 47 percent between 1997 and 2005.

Huckabee's careerlong grade does, as Thompson states, match the D Bill Clinton earned in 1992, his last year as Arkansas' governor, and the D grade the group awarded the Clinton-Gore administration in 2000.

It's worth noting that the fiscal reports done by Cato factor in spending policy as well as tax history, according to Stephen Slivinski, who produces the fiscal report cards. In 2006, Slivinski's team gave Huckabee the lowest grade of any governor when it came to tax policy.

Thompson called Huckabee "one of the highest taxing governors," and it's hard to dispute that. Again, though, as a point of clarification, that doesn't mean Arkansas has the nation's highest tax burden. According to the Tax Foundation, a nonprofit research organization, Arkansas residents have the 13th-highest state and local tax burden in the nation. That is, however, a significant jump from the No. 30 spot the state held when Huckabee became governor.

We find Thompson's claim to be Mostly True.

Huckabee has a retort when he's accused of raising taxes. In the summer of 2007, the club ran a TV ad in Iowa comparing Huckabee to his Democratic predecessor Bill Clinton and calling him a "tax-and-spend liberal." Huckabee fired back with a news release:

"As governor of Arkansas, I cut taxes and fees almost 100 times, saving the taxpayers almost $380-million. I left a surplus of nearly $850-million, which I urged should go back to the people. ... I pushed through the Arkansas Legislature the first major, broad-based tax cuts in state history — a $90-million tax relief package for Arkansas families."

But Huckabee's response has glossed over some facts.

The Arkansas Democrat-Gazette , a Little Rock newspaper, obtained a list of the nearly 100 tax cuts passed during the governor's tenure and found they included such small-change items as a sales-tax break for manufacturing machinery amounting to $500 a year and a tax exemption for county fairs that cost the state $15,000 a year.

Whitney McLaughlin of the Arkansas Department of Finance and Administration confirmed the Democrat-Gazette's budget numbers for PolitiFact. During Huckabee's tenure, taxes or fees were cut 90 times, which did reduce tax revenue by about $380-million. The paper concluded that Huckabee doesn't deserve credit for all of those cuts, noting that all but one required a vote from the Legislature, and most were the product of larger negotiations between the branches of government.

The one tax cut Huckabee undoubtedly had his hands on was a $90.6-million income tax reduction enacted in his second year as governor. His administration did, as he says, leave the state with an $844.5-million budget surplus (as of March 2007) that the current government is now figuring out how to dispose of. And Huckabee did advocate for sending rebates to taxpayers in 2006, when the year's surplus was expected to be $332-million.

All of those Huckabee figures are correct.

But, where did the money in that surplus come from? Mike Stormes, the state budget administrator, said the surplus was the result of "a conservative budget combined with a booming economy." The Arkansas Department of Finance and Administration estimated that tax revenues grew by $505-million between 1997 and 2005; the per capital tax burden, state and local taxes only, rose 47 percent in that same period.

Huckabee correctly toots his own horn about a major tax cut in his second year as governor and he did leave a big surplus when he left office. But we give him a Half True for mischaracterizing his fiscal policies in between.