When it comes to tax policy, the Bush family has one thing in common: They like to cut taxes on investors.
Throughout his four years as president, the top tax policy priority for George H.W. Bush was to cut the capital gains tax rate. Even though a majority in Congress agreed with him, he was blocked in the Senate when Majority Leader George Mitchell and the Democrats denied him the 60 votes he needed to overcome a filibuster.
As president, George W. Bush was more successful than his father at cutting taxes. After getting enactment of across-the-board cuts in income tax rates in 2001, he wanted another tax cut to stimulate the economy suffering from the 2002 recession. At the suggestion of brokerage mogul Charles Schwab, he focused his attention on dividend tax relief. This eventually led to Congress approving a 15 percent rate for capital gains and qualifying dividends in 2003.
Florida has no income tax, but before Jeb Bush became governor there was a tax on the value of intangible assets -- mostly stocks, bonds, and accounts receivable. The rate was 0.2 percent. So a Florida resident with a $1 million portfolio could owe $2,000 in intangibles tax. Although taxpayers could easily avoid the tax by creating an irrevocable trust to hold intangible property, the tax raised over $600 million annually for the Florida government.
Jeb Bush called the tax "odious" and "evil." He argued that cutting it would provide relief to senior citizens and small businesses. So he cut the tax in both the 1999 and 2000 legislative sessions. Tight budgets caused by the 2001 terrorist attacks and the 2002 recession put his plan to entirely repeal the tax on hold. But the Florida economy and property values recovered, and he eventually achieved his goal in 2006, his last year in office.
Data compiled by Tax Analysts show that cuts in intangibles taxes were by far the largest component of legislated revenue reductions enacted during Jeb Bush's eight years as governor. Official estimates of revenue legislation in Florida cover the first two years of enactment. Figure 1 divides those two-year estimates of legislation enacted in each year into two categories: reduction in the intangibles tax and all other revenue legislation. Figure 2 sums up over eight years the estimates shown in Figure 1. Cuts in the intangibles taxes were three times larger than cuts in any other category. Cuts in intangibles taxes were larger than the combined cuts in sales taxes, property taxes, and the corporate tax.
Figure 2. Composition of 8-Year Totals of Official Revenue
Estimates of Florida Revenue Legislation, 1999-2006
Democrats repeatedly claimed that the Jeb Bush tax program primarily benefited the privileged few. "No millionaire left behind," they said. "They gave the wealthy and most powerful the vast majority of your tax breaks," complained state Rep. Dan Gelber, "and gave everyone else a few crumbs and told them they've been to the party."
If Jeb Bush remains the top contender for the Republican presidential nomination, we can expect Democrats to make the same arguments again. But it may not just be Democrats who will criticize the Jeb Bush tax cuts. Other Republican candidates who are more conservative than Bush -- like Sens. Ted Cruz of Texas and Rand Paul of Kentucky (who favor a flat tax) -- may also want to highlight his tax relief for rich investors. They will want to portray the current front-runner as a country-club Republican who is only catering to more ideologically pure conservatives until the primaries are over.
A prior post discussed the size of the tax cuts enacted during Bush's eight years as governor of Florida.