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Former Massachusetts Gov. Mitt Romney is trying to gain support for his presidential bid in Georgia, and one of his chief supporters here recently offered a case for Romney’s candidacy we found quite interesting.
"Georgians are suffering under the leadership of President [Barack] Obama. Mitt Romney is the candidate with the vision and experience to turn around the failing economy," Edward Lindsey, a Republican state representative from Atlanta, said in a news release pumped out Aug. 22 by the Romney campaign.
Lindsey, the House majority whip, one of the most influential positions in the Georgia Legislature, added: "As governor, [Romney] balanced the budget without raising taxes and created jobs. He has the experience in both the private and public sectors to get Americans back to work."
Romney, widely considered one of the Republican front-runners, is trying to make the argument that he can do a better job than Obama in managing the American economy. The candidate that makes the best argument will likely win the presidency in 2012. With that in mind, we wondered whether Lindsey is right about Romney’s record in Massachusetts. Did he balance the budget without raising taxes and create jobs?
We talked briefly to Lindsey, who referred our questions about his claim to the Romney campaign.
So first, let’s deal with the budget question. Romney took office as Massachusetts’ governor in January 2003. The Massachusetts economy, like much of the country, was struggling before he took office. In 2002, Massachusetts leaders passed tax increases that raised revenue by about $1 billion, said Mike Widmer, president of the Massachusetts Tax Foundation.
In 2003, the money problems continued, and it was now Romney’s job to find solutions. That year, the Massachusetts Legislature balanced the budget through spending cuts and raised revenue through some revisions of the corporate tax code. Romney signed off on several other corporate tax revisions in 2004 and 2005. Those changes resulted in an additional $350 million in revenue, Widmer said. When Romney left office, Massachusetts collected about $18 billion in revenue.
Were those code changes a tax increase?
Romney officials call them "loopholes." Widmer refers to them as "corporate tax increases."
"I don’t fault Romney," Widmer said. "I commend him and the Legislature for the balanced approach that they took."
Noah Berger, president of the Massachusetts Budget & Policy Center, does not believe they are tax increases.
"I think it’s fair to say that’s different than raising taxes," Berger said of the changes.
The issue has been debated for years.
"[Romney’s] indicating that he balanced a budget without raising taxes is misleading at best," Brian Gilmore, executive vice president of Associated Industries of Massachusetts, the state's largest business lobbying group, told MSNBC in 2007. "We respectfully disagree."
Romney officials countered that he was trying to stop some companies from using "aggressive accounting" to reduce their tax liability. The changes, according to MSNBC, included real estate investment trust subsidiaries created by banks to hold mortgages. The parent banks received dividend income from the trusts and took advantage of deductions to lower their state taxes.
Romney campaign spokesman Ryan Williams told us the candidate was under pressure from the Legislature, which he described as 87 percent Democrat and among the most "liberal" in the country, to raise taxes. Romney, he said several times, resisted and did not raise "broad-based taxes." We asked whether we should then consider the corporate tax code changes a tax increase.
"[Romney] did not increase taxes to solve a difficult situation," Williams said.
As for job creation, federal data show the number of employed Massachusetts residents grew by about 1.3 percent during Romney’s four years as governor. The job growth was greater than population growth. Critics argue Romney cannot make much of a case that he was a great job creator as governor. Massachusetts was ahead of only Louisiana, Michigan and Ohio in the percentage of job growth during Romney’s four years in office. Louisiana leaders then had an excuse for slow job growth, contending with the aftermath of a hurricane called Katrina.
Some economics experts argue governors should get little credit, or blame, for job growth. Williams, the Romney spokesman, correctly noted that unemployment fell from 5.6 percent the month Romney took office in 2003 to 4.6 percent four years later. He also correctly pointed out that Massachusetts had lost jobs in each of the two years before Romney took office. Massachusetts also had about 30,000 fewer employed residents in the two years after he was no longer governor.
Technically, Lindsey has a point on both parts of that specific quote. Romney did preside over an increase in job growth as governor. As past research has shown, it was smaller than nearly every other state. There was improvement, however, on the employment front when he was governor.
As for taxes, Massachusetts didn’t raise the property tax rate or other traditional types of taxes during Romney’s time as governor. But he did close several corporate loopholes, which resulted in companies paying more taxes. Because the changes to the corporate tax code resulted in some businesses paying more in taxes, we believe Lindsey’s statement needed some clarification and rate it Mostly True.
Massachusetts population data, 2000-2007
MSNBC, "Did Romney up taxes or close loopholes?" Nov. 2, 2007
PolitiFact, "Dems say under Gov. Mitt Romney, Massachusetts ranked 47th out of 50 states in job creation," June 19, 2011
U.S. Bureau of Labor Statistics, Massachusetts employment and unemployment data, 2001-2011
Telephone interview with Noah Berger, president, Massachusetts Budget & Policy Center, Aug. 23, 2011
Telephone interview with Mike Widmer, president, Massachusetts Taxpayers Foundation, Aug. 23, 2011
Telephone interview with Romney campaign spokesman Ryan Williams, Aug. 25, 2011
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