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SHAYS AGAINST TAX INCREASES; CHALLENGER VAGUE ON SPECIFICS
Norwalk, CT – October 6, 2008 – In an article in Sunday’s Connecticut Post, Congressman Christopher Shays’ challenger, who has criticized Shays recently on his economic policies, declined on four occasions to provide specifics about his position on taxes. On income taxes, capital gains taxes, estate taxes, and corporate taxes, Shays’ challenger did not provide specific percentages or rates when asked by reporter Neil Vigdor.
Shays, Himes divided on taxes
By Neil Vigdor
Staff Writer
In a race framed by pocketbook issues, U.S. Rep. Christopher Shays, R-4, and Democratic challenger Jim Himes are separated by a wide chasm when it comes to their positions on how much constituents and local corporations should pay in taxes on income, capital gains and inheritances.
Shays supported the 2001 and 2003 tax cuts proffered by President Bush, votes that Himes has blasted in his challenge of the 21-year incumbent, New England's lone Republican House member.
The so-called tax relief passed by Congress, Himes said, had limited benefits for the middle class and was fiscally irresponsible because the federal government has run up a $10 trillion debt.
"The differences between our two points of view is very stark," said Himes, who has made the economy a central plank of his campaign.
"I want to take pressure off middle-class households, and he believes we should be putting more money in the hands of very wealthy Americans."
Shays characterized Himes, a Greenwich resident, as a tax-and-spend Democrat who he said would roll back the Bush tax cuts, raise the levy on dividends and restore the marriage penalty.
Connecticut, Shays said, gets back 69 cents in appropriations for every $1 in taxes residents pay to the federal government -- the biggest disproportion in the nation.
"He's basically saying that the people in the Fourth Congressional District aren't paying enough, and I don't accept that one bit," said Shays, who represents most of Fairfield County and a sliver of New Haven County.
Here's where the two candidates stand on the major federal taxes.
Income taxes. In line with GOP presidential candidate John McCain, Shays said he wants to keep the current income tax rates of 10 percent to 35 percent and opposes Democrat Barack Obama's proposal to raise the top rate to 39.6 percent on joint annual income exceeding $250,000.
Himes said he is open to raising the rate on the most affluent taxpayers but declined to put forward a specific percentage.
"My general feeling on the income tax is that it hits working families particularly hard in combination with payroll taxes," Himes said. "If the top marginal rates need to be increased to pay for what our government spends, that's something we might need to contemplate."
Capital gains-dividends. Himes, a former Goldman Sachs investment banker turned nonprofit housing executive, said he is open to increasing the top tax rate on investment earnings from the current 15 percent.
"I'm comfortable with a capital gains tax rate that is lower than the income tax rate because we don't save enough as a country and we don't index capital gains, but I'm not prepared to say exactly what the rate should be," Himes said. It would be premature, Himes said, to back a specific capital gains tax rate until the next White House administration is in place.
Shays said he wants to keep the current rate for capital gains and said raising it could shrink revenue.
"I can't for the life of me think of why we want to increase the capital gains tax," he said.
In 1993, Shays said he supported increasing the luxury tax on boats, cars and jewelry, a vote he now regrets because it cut into revenue due to fewer sales. "People respond to taxes," he said.
Estate taxes. Under Shays' tax plan, estates of up to $5 million would be exempt from the inheritance tax, which currently has a $2 million exclusion and a top rate of 45 percent. Estates from $5 million to $25 million would be taxed at the same 15 percent maximum as the capital gains rate, with the levy increasing to 30 percent for estates of more than $25 million. The estate tax would be indexed under the Shays' proposal.
"What you're really trying to do is protect the farmer and small business from having to sell their businesses to pay the tax," Shays said.
Himes said he does support exempting some estates from inheritance tax but was not prepared to specify a dollar amount or a rate.
"Of all forms of taxes that we have, an estate tax is least economically damaging," Himes said.
Social Security. Under the current tax code, earnings above $97,500 are not taxed for Social Security. In a break from Obama's tax plan, Himes said he opposes imposing an added tax for Social Security on annual earnings exceeding $250,000. Himes also said he is against a "clawback" provision in Obama's tax plan whereby those earning more than $250,000 would be taxed on income from $97,500 to $250,000.
Shays said he would support increasing the current $97,500 cap, but only as part of comprehensive Social Security reform package.
"I won't support it if it's just piecemeal," Shays said.
Corporate taxes. Shays said efforts to raise the corporate tax, which is 35 percent at its current top rate, would hurt businesses and the economy.
"I'm not in support of raising the corporate tax. Corporations hire people and put them to work," Shays said.
Though both candidates said they favored closing corporate loopholes, Shays said he would oppose eliminating tax-saving incentives for businesses that build more housing or use renewable energy.
Himes said he hasn't developed a specific corporate tax proposal.
Tax credits. To help repair the economy, Himes wants to offer tax credits to middle-class households, for first-time home buyers, those sending a child to college and those that put money into savings accounts.
Himes' plan would give credits equal to 50 percent of the first $10,000 in college costs per student for four years to households earning less than $250,000 annually. It also would a give a one-time $1,500 credit to first time home buyers in that income bracket to help with closing costs, as well as 50 percent credit on the first $2,000 in voluntary contributions the household makes to a savings account per year.
Shays unsuccessfully proposed a $500 tax credit for households that spend $1,500 annually on home heating. He said he favors tax credits for those who use renewable energy and said he would pay with them from the royalties paid by oil companies to drill off the nation's Atlantic and Pacific coasts.
Carried interest earned by hedge fund managers Both candidates were in agreement on hedge fund profits.
The tax code allows hedge fund executives to pay capital gains taxes at 15 percent on a portion of the profits they earn known as "carried interest" instead of paying the personal income tax rate, which can go as high as 35 percent.
Himes and Shays said the profits should be taxed as personal income, except those profits that come from their own investments in the hedge fund.
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