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Political Smell Test: Dueling Reichert, DelBene TV spots on taxes

Post by Lewis Kamb / The News Tribune on Oct. 14, 2010 at 12:48 pm | 4 Comments »
October 14, 2010 4:10 pm

Republican incumbent Congressman Dave Reichert and his Democratic challenger Suzan DelBene are currently airing dueling TV spots that generally accuse each other of supporting tax increases.

What the ads say:
Reichert’s ad features a woman telling viewers that DelBene wants “bigger government, higher taxes and thinks the health care takeover didn’t go far enough.” A footnote in the ad cites various news articles to substantiate the claims, specifically referencing a SeattlePI.com story published on May 4, 2010 to support the ad’s “higher taxes” claim.

DelBene’s ad features a man’s voice intoning that “Reichert promised he’d never raise taxes, then turned around and voted for $31 billion in higher taxes on families and small businesses.” A footnote in the ad cites Reichert’s Dec. 9, 2009 House vote on H.R. 4213 (Roll Call No. 943).

What the campaigns say:

(About the Reichert ad):

Reichert campaign: “In the ad we reference her support for `higher taxes’ through the state income tax,” said Darren Littell, Reichert’s campaign spokesman. “… The state income tax was the only one we specifically referenced in the ad, but there are others.”

DelBene campaign: “It’s inaccurate,” said Scott Whiteaker, DelBene’s campaign spokesman. “That blanket statement implies she supports (tax increases) that would apply across the board. That (state income tax initiative) has nothing to do with Congress. That’s a personal position she’s taking on (a state ballot issue).”

(About the DelBene ad):

DelBene campaign
: “Reichert voted against extending $31 billion of existing tax cuts,” DelBene spokesman Whiteaker said. “By opposing an extension of existing tax relief, he was voting to raise taxes by $31 billion… Reichert claims this bill raises taxes, but he’s wrong. Here’s why: The bill cracks down on tax evasion … (and) it closes a tax loophole that allows hedge fund managers to pay 20 percent less taxes than everybody else in their income bracket.”

Reichert campaign: “Reichert never voted to increase taxes as the ad claims,” Reichert spokesman Littell said. “Instead, he opposed the bill because it included a $24 billion tax increase. This tax increase would have impacted real estate investment partnerships and threatened job growth, education endowments, new health care and energy research, and the pensions of Washington State public employee retirees. It is outrageous to suggest a vote to prevent a tax increase can be seen as a “tax increase”.

The Facts
The Reichert ad’s claim that DelBene supports higher taxes is solely based up this paragraph in the May 4, 2010 P-I story:

Asked about perhaps the biggest measure that will be on the fall ballot, DelBene said she was supportive of Bill Gates Sr.’s Initiative 1077 (TNT Ed’s Note: the actual initiatve number is 1098), which would create an income tax for the wealthy to pay for education and health care. “I think he’s trying to do the right thing. I think he’s trying to address our very regressive tax system and create something that’s more fair.”

The P-I story, which is about DelBene’s economic plan, actually notes at least two federal tax credits that she supports. The state initiative referenced (only in the article’s final paragraph) seeks to impose a state income tax on only the wealthiest 1 percent of the state populace (individuals making more than $200,000; couples making more than $400,000). Revenues garnered from the tax would dedicate an estimated $2 billion per year for education and health care. The measure would also cut state property taxes by 20 percent and eliminate the B&O tax for some small businesses. Opponents fear the Legislature would eventually extend the income tax to other tax brackets.

Further, the initiative is a state ballot measure, not a federal issue that DelBene would cast a vote on if elected to Congress.

Getting to the bottom of the DelBene ad’s claim is far more complicated, because it involves an early vote on complex legislation that changed over time. At the time of the vote referenced in the ad, H.R. 4213 sought to extend more than 50 tax relief programs (including unemployment benefits) amounting to $31 billion in breaks to various recipients.

To offset the revenue losses, the bill sought to increase the tax rate on so-called “carried interest” levied on investment partnerships (hedge fund managers and private equities) by treating it as normal income and taxing it at the standard income tax rate (35 percent) rather than the capital gains rate (15 percent). According to the bipartisan Joint Committee on Taxation, revenue garnered from the tax rate change amounted to nearly $25 billion.

Republicans and Democrats (and various interest groups) generally have argued over the implications of the tax rate hike, with Democrats largely contending the measure sought to close an unfair tax loophole for Wall Street hedge fund managers and Republicans claiming it would discourage private investment in real estate development and small businesses, hurting potential job creation. The December 2009 vote referenced in the ad largely broke along party lines, passing 241 to 181 (Though, like Reichert, WA’s 9th District Democrat Adam Smith also opposed it for similar reasons).

Reichert has remained consistent in his statements for opposing the bill, generally following his party’s contentions it would thwart job creation. Past statements and previous legislation he sponsored or otherwise supported also indicate he philosophically favored at least some of the same temporary tax relief extensions in the bill.

Bottom line: Both ads are misleading.

Reichert’s ad mischaracterizes DelBene as generally supporting “higher taxes” based on her stated support of a state ballot initiative that calls to impose a new tax on only a small segment of people, but would cut certain taxes for all.

DelBene’s ad mischaracterizes Reichert as voting “for” tax hikes, when he actually voted against a measure to extend tax breaks due to his opposition of a tax rate increase for hedge fund managers and private equity firms that he and other opponents claimed would hurt economic recovery.

Overall, both candidates have taken positions for and against certain tax breaks and even hold similar views on several tax programs. Branding either candidate as supporting or voting for “higher taxes” in general over-simplifies their positions and provides a false impression.

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