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Tax-cutting Democrats

If this becomes a trend, I'm switching parties. You read it here first. Emphasis mine. And pay particular attention to Bill Richardson's quote at the end of the excerpt.

Only last week, the very blue state of Rhode Island adopted one of the most sweeping pro-growth tax reforms in any state in recent years. Democrats, who control 70% of the state legislature, teamed up with Republican Governor Donald L. Carcieri to enact a plan that allows residents the choice of a flat tax that cuts the top tax rate on high income earners to 5.5% from 9.9% if they voluntarily give up deductions. In an instant, Rhode Island has gone from the state with the third highest income tax rate in the nation to the 27th, according to the Tax Foundation.

For good measure, the state also cut property taxes, passed a tax credit of up to $1 million for businesses to help fund private school tuition, and reformed the health insurance market by allowing small businesses to buy "stripped down" health insurance free of many costly mandates. The latter could save employers 25% while expanding the number of insured workers.

Just as impressive is the economic logic that Rhode Island Democrats used to justify the tax cuts. "Our high tax rates make us uncompetitive," says Democratic House Speaker William Murphy. "Business leaders with incomes of more than $250,000 look at Massachusetts and see a 5.3% income tax, Connecticut with a 5% tax, and Rhode Island with a 9.9% tax. They make a choice on where to move and create jobs, and that difference in tax rates is a big factor in where they go." Art Laffer couldn't have said it better.

A handful of Democratic Governors have also signed tax cut bills in recent weeks. Arizona's Janet Napolitano agreed to a 10% across-the-board cut in income tax rates, and Oklahoma's Brad Henry signed into law a budget that will cut rates by nearly 20%, from 6.25% to 5.25% and abolish the state estate tax.

Governors Henry and Napolitano resisted the tax cuts for much of this year, but now they are taking political credit for signing them. Maybe they learned from Bill Clinton, who signed a reduction in the capital gains tax in 1997 after campaigning against "tax cuts for the rich" and basked in the stock market rise and strong economy for much of the rest of his second term.

Another Democratic Governor who's embraced tax cutting and benefited politically is New Mexico's Bill Richardson. Since winning the state house in 2002, he has cut the state's top income tax rate to 4.9% from 8.2% and cut the capital gains tax in half. "This was our way of declaring to the world that New Mexico is open for business," Mr. Richardson tells us. "After all, businesses move to states where taxes are falling, not rising." But don't tax cuts produce budget deficits? Not in New Mexico, which now has a half-billion-dollar surplus and has seen tax revenues soar by 27% this year, faster than in any other state over the past year, according to the Rockefeller Institute state revenue report.

We asked Mr. Richardson how he thought his party could regain its competitiveness with the GOP on the national level. His answer is good advice for Democrats everywhere: "We have to be the party of growth and the American dream, not the party of redistribution."

Seriously, if this catches on with Democrats at the national level, that's all I need to switch affiliations.


I don't trust this. Look for big tax increases after the next election. At least they are singing the right song. in Michigan we have a Dem. Gov. who is calling for more of the same old crap that brought us down.

How about just be independent and vote for whichever candidate has a better record on fiscal issues?

Some Democrats do get it. Richardson is one of them.

Adam, my party affiliation doesn't dictate which candidate I vote for. It does, however, determine which primary I vote in, and therefore which party I have a chance to influence.

If such moderation came back to the Dems (and dumping the BDS crowd) they can win hands down in 2008.

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