Giuliani Campaign Press Release - Romney's Taxachusetts Hypocrisy

"Mitt Romney has no choice but to hide behind false attacks – one look at his record as Governor shows he increased government spending, proposed millions of dollars in tax increases, and even raised taxes on New Hampshire commuters repeatedly."

– Katie Levinson, Communications Director

Romney Raised Taxes On Out Of State Commuters – Including Those From New Hampshire – Repeatedly

As Governor, Romney Increased Income Taxes On Individuals Who Did Not Reside In Massachusetts, Including On Their Pensions, Deferred Compensation, And Sick And Vacation Pay. "A nonresident's income relating to employment in Massachusetts or the nonresident's trade or business in Massachusetts, including gain from the sale of an interest in the business, separation pay and deferred compensation and nonqualified pension income not prevented from taxation under federal law and income from a covenant not to compete, is subject to Massachusetts personal income tax regardless of the taxpayer's residence or domicile in the year it is received and regardless of whether the taxpayer has actively engaged in a trade or business or employment in Massachusetts in the year of receipt, effective for tax years beginning on or after January 1, 2003." (Goodwin Proctor Website, "Financial Services Alert — Developments Of Note," www.goodwinprocter.com/getfile.aspx?filepath=/Files/FSAS/FSA_3_11_03.pdf, 3/11/03, Accessed 8/29/07; Massachusetts Department Of Revenue, "Annual Report FY2003," www.mass.gov/Ador/docs/dor/Publ/Annual_Rpt03/AR2003.pdf, 2003, Accessed 8/29/07; "The Governor's Budget Recommendation House 1A Fiscal Year 2004," http://www.mass.gov/bb/fy2004h1/downloads/house1.pdf, 2003, Accessed 9/12/07)

Romney Expanded State Income Tax To Include Income From Business "Whether Or Not The Nonresident Is Actively Engaged In A Trade Or Business Or Employment In The Commonwealth In The Year In Which The Income Is Received." "Taxation of Nonresidents: Massachusetts gross income of a nonresident is determined solely with respect to items of gross income from sources within the Commonwealth. M.G.L. c. 62, § 5A(a). In relevant part, the prior law at 5A(a)(1) defined gross income from sources within the Commonwealth as the income 'derived from or effectively connected with … any trade or business, including any employment carried on by the taxpayer in the Commonwealth.' Effective for tax years beginning on or after January 1, 2003, this act effectively reverses a judicial interpretation of § 5A(a). Newly enacted § 5A(a) defines gross income from sources within the Commonwealth as any income 'derived from or effectively connected with … any trade or business, including any employment carried on by the taxpayer in the commonwealth, whether or not the nonresident is actively engaged in a trade or business or employment in the commonwealth in the year in which the income is received.' Thus, unless otherwise exempt, Massachusetts source income of a nonresident, regardless of the year in which it is actually received, will be taxable in the state." (Massachusetts Department Of Revenue, "Annual Report FY2003," www.mass.gov/Ador/docs/dor/Publ/Annual_Rpt03/AR2003.pdf, 2003, Accessed 8/29/07)

Under Romney's Change, Non-Residents Now Have Their Separation, Sick Or Vacation Pay, Deferred Compensation, Nonqualified Pension Income, And Other Income Taxed. "For purposes of M.G.L. c. 62, § 5A, the act further provides that "gross income derived from or effectively connected with any trade or business, including any employment, carried on by the taxpayer in the commonwealth" shall include, but not be limited to, "gain from the sale of a business or of an interest in a business, distributive share income, separation, sick or vacation pay, deferred compensation and nonqualified pension income not prevented from state taxation by the laws of the United States and income from a covenant not to compete." (Massachusetts Department Of Revenue, "Annual Report FY2003," www.mass.gov/Ador/docs/dor/Publ/Annual_Rpt03/AR2003.pdf, 2003, Accessed 8/29/07)

Romney Imposed State Income And Sales Taxes On Out-Of-State Residents For Their Share of In-State Partnership's Real Estate. "A nonresident of the commonwealth who is a member of a partnership that is engaged in the conduct of a trade or business in the commonwealth or that owns or leases real property in the commonwealth, except a nonresident limited partner of a limited partnership engaged exclusively in buying, selling, dealing in or holding securities on its own behalf and not as a broker, shall be subject to the taxes imposed by this chapter on his distributive share of the income received or earned by the partnership from sources taxable under this chapter." (Massachusetts Department Of Revenue, "Annual Report FY2005, http://www.mass.gov/Ador/docs/dor/Publ/Annual_Rpt04/AR2004.pdf, 2006; "The Governor's Budget Recommendation House 1A Fiscal Year 2006," http://www.mass.gov/bb/fy2006h1/06print/06budrec/pbudrec.htm, 2005, Accessed 9/12/07)

Why Is Romney Misleading On Spending And Taxes?

Perhaps Because…

Between 2002 And 2006, Massachusetts State Tax Burden Rose 10.75% (U.S. Department Of Commerce Bureau Of Economic Analysis, Regional Economic Information Systems, Downloadable Files Available At: http://www.bea.gov/regional/reis/CA1-3fn.cfm, Accessed 8/14/07; U.S. Census Bureau, http://www.census.gov/govs/statetax/02staxrank.html, Accessed 8/15/07; U.S. Census Bureau, http://www.census.gov/govs/statetax/03staxrank.html, Accessed 8/15/07; U.S. Census Bureau, http://www.census.gov/govs/statetax/04staxrank.html, Accessed 8/15/07; U.S. Census Bureau, http://www.census.gov/govs/statetax/05staxrank.html, Accessed 8/15/07; U.S. Census Bureau, http://www.census.gov/govs/statetax/06staxrank.html, Accessed 8/15/07)

During Giuliani's Tenure, New Yorker's Tax Burden Decreased 17% To Lowest Level In Three Decades. (The City Of New York Office Of Management And Budget, City Of New York Executive Budget Fiscal Year 2002 Budget Summary, pp. 8, 11 )

Romney's Recommended Budgets Increased Real Per Capita Government Spending By 7.77%. ("Governor's Annual Budget Recommendations, FY2003-FY2007," http://www.mass.gov/bb/, Accessed 8/20/07; U.S. Census Bureau, "Annual Estimates Of The Population For The United States, Regions, And States And For Puerto Rico: April 1, 2000 To July 1, 2006," http://www.census.gov/popest/states/NST-ann-est.html, Accessed 8/20/07; Bureau of Labor Statistics, "Consumer Price Index – All Urban Consumers: 1997-2007," http://data.bls.gov/PDQ/servlet/SurveyOutputServlet, Accessed 8/20/07)

Total Spending In Recommended Budgets Grew 22.2% Under Romney's Watch, From $29.477 Billion In Fiscal 2003 To $36.021 Billion In Fiscal 2007. ("Governor's Annual Budget Recommendations, FY2003-FY2007," http://www.mass.gov/bb/, Accessed 8/14/07)

Cato Institute Rated Romney "C" In 2006 For His Tax Policy. "As Mitt Romney launches his bid for the Republican presidential nomination, his fiscal record as governor should be scrutinized. Romney likes to advance the image of himself as a governor who has fought a liberal Democratic legislature on various fronts … But Romney will likely also be eager to push the message that he was a governor who stood by a no-new-taxes pledge. That's mostly a myth. His first budget included no general tax increases but did include a $500 million increase in various fees. He later proposed $140 in business tax hikes through the closing of "loopholes" in the tax code. He announced in May 2004 that he wanted to cut the top income tax rate from 5.3 to 5 percent, but that was hardly an audacious stand. Voters had already passed a plan to do just that before Romney even took office. In his budget for 2006, he proposed $170 million more in business tax hikes, almost completely neutralizing the proposed income tax cut. If you consider the massive costs to taxpayers that his universal health care plan will inflict once he's left office, Romney's tenure is clearly not a triumph of small-government activism." (Stephen Slivinski, "Fiscal Policy Report Card On Amercia's Governors: 2006, Cato Institute Policy Analysis, pg. 42, 10/24/06)