Business and Political Experiences Pull Romney 2 Ways on Economy
Ms. Anderson, executive director of Citizens for Limited Taxation, an influential group in the small world of Massachusetts conservatives, met with Mr. Romney in a hotel conference room north of Boston with a copy of the pledge printed on parchment-style paper “that looked a little businesslike,” she said.
“What I remember is that he never stopped smiling,” Ms. Anderson said in an interview. “He listened and gave us all the time we needed to make our case, and then he said what he was going to say: ‘I’m just not going to sign it. It’s not necessary. I’m not going to raise taxes.’ ”
But Mr. Romney would soon anger conservatives with a tax proposal that was not intended to raise any new money. In October 2002, he called for Massachusetts to shift from a flat-rate annual tax on automobiles to a tax based on emissions. Mr. Romney was careful to describe the plan as “revenue neutral.” It was meant to change behavior. Owners of low-emission vehicles would pay less; owners of high-emission vehicles would pay more.
Ms. Anderson told The Boston Globe that it was an example of “big mama government telling us how to lead our lives.”
The idea found little support in the legislature, but it was representative of Mr. Romney’s broader view that government could improve the economy not just through tax cuts but also through penalties — as in his landmark plan to penalize people who do not carry health insurance.
“Experience proves again and again that incentives are more effective than controls,” he wrote in his book.
As Mr. Romney sought to close the state’s budget deficit, he also sought to raise revenues by invoking what he described as the conservative principle of personal responsibility, cutting corporate tax deductions and raising fees for things like ice rink rentals and business licenses.
He invoked the same idea in a deal with the legislature to replenish the state’s unemployment fund through a combination of benefit cuts and higher fees on businesses, with most of the burden falling on companies that had most frequently dropped workers onto the dole. All states use a version of this “experience rating” to set unemployment taxes; Massachusetts under Mr. Romney moved from a modest adjustment to one of the steepest slopes.
“It was kind of hard to argue against those changes,” said Bill Vernon, Massachusetts state director for the National Federation of Independent Business, a small-business trade group.
Mr. Romney has indicated, however, that he would not replicate the Massachusetts approach nationally. He has said that the federal government’s revenues are sufficient, and that he would focus on spending cuts.
He has also backed away from the use of tax penalties. In early 2006, he proposed what he later described as a “similar but more palatable” plan to offer a tax break for buyers of fuel-efficient vehicles, with no attempt to recover the lost revenues from owners of other vehicles.
And in December 2006, while preparing for his first presidential bid, Mr. Romney signed his name to a national version of the pledge for no new taxes.