In the battle for the Wisconsin statehouse, Republicans are working overtime to tar the Democrat who would be governor as "Tom the Taxer." It’s a common tactic on the campaign trail, and may be especially potent this year amid massive job losses and economic uncertainty.
In an ongoing series of TV ads set in a noisy sports bar, the Republican Governors Association blames Milwaukee Mayor Tom Barrett for business closings and hits him for raising taxes as mayor as well as in Congress.
In the first version of the ad, the bartender says:
"An ongoing argument around here is what makes Tom Barrett the all time worst ... more taxes or less jobs? Barrett has raised taxes every year he’s been mayor, and before that he voted for the largest tax increase in history ... raising taxes on gas and Social Security."
Barrett was indeed a member of Congress in 1993, when lawmakers passed and President Bill Clinton signed a giant revenue bill. The measure squeaked by 218-216 in the House. It’s known as the Omnibus Budget Reconciliation Act of 1993.
Barrett voted for the bill, part of a party-line vote in the Wisconsin delegation.
And, yes, the measure increased gas taxes 4.3 cents per gallon, and increased the taxable portion of Social Security benefits.
No dispute about any of that.
But was it really the largest tax increase in history?
We started with the Republican Governors Association, which produced the ad.
RGA spokesman Mike Schrimpf cited a New York Times story from 1996 that touched on tax increases while analyzing debates in the Clinton-Dole election. He told PolitiFact Wisconsin: "According to the New York Times, ‘the 1993 measure was the largest tax increase in American history.’ "
The Times story does say that, but the full sentence contains a key phrase ignored by Schrimpf and the RGA. Here’s the full sentence (italics added): "So in actual dollars, the 1993 measure was the largest tax increase in American history."
And here’s the next sentence: "But adjusted for inflation, it was smaller than the one in 1982" -- a measure signed by President Ronald Reagan.
The Times story took no position on the wisdom of comparing tax laws passed 11 years apart based on raw dollars unadjusted for inflation.
But we do.
As PolitiFact National has noted in previous items on similar statements on the size of tax increases, economists prefer calculating tax increases as share of the nation’s Gross Domestic Product. The GDP is the value of a country’s overall economic output of goods and services at market prices.
It’s common sense, experts say.
U.S. Treasury spokeswoman Sandra Salstrom notes the political discourse over taxes and spending very seldom mentions actual dollar figures.
"Why not? Because, even after accounting for inflation, federal spending has increased in almost every year," Salstrom told PolitiFact Wisconsin. "So almost every year the federal government sets a postwar high in spending."
But each increase does not have the same effect, she noted. A tax change of $10 billion, for example, would affect taxpayers much more in 1970 than in 2009.
The federal government, in the widely cited Treasury Department study on more than six decades of tax increases, says that of several possible approaches, the GDP measure is probably the best is because it eliminates the effects of inflation, real economic growth and the size of total federal receipts.
That study compares major revenue bills from 1940 to 2006, measuring each tax bill’s predicted share of GDP after four years.
The clear winner: the Revenue Act of 1942, one of several major tax bills enacted to pay for World War ll. It’s more than twice the size of the runner-up, a 1941 act.
The 1993 hike that Barrett backed and Clinton signed comes in as the ninth-biggest increase in the period, significantly below the 1982 act signed by Reagan, which ranked fifth.
Partisans have tussled for years over what constitutes the all-time biggest tax-boosting bill. And we expect that barroom arguments will persist.
But the evidence is clear: While Barrett voted for a big tax bill, it’s not the largest in American history, based on its actual share of economic output, which economists and the Treasury Department say is the most valid approach. The increase is evidently the largest in raw dollars, though, so the Republican Governor’s Association has at least one barstool leg to stand on. We rate the RGA’s claim Barely True.
Editor's note: This statement was rated Barely True when it was published. On July 27, 2011, we changed the name for the rating to Mostly False.