Former Virginia Gov. Jim Gilmore became the seventeenth and likely final major candidate to announce his candidacy for the Republican nomination for president.
While running for governor in 1997, Gilmore made the implausible promise that he would repeal Virginia’s car tax, but once elected he was unable to deliver when the real cost of repeal became apparent.
As a national figure and presidential candidate, Gilmore has pushed an extremely regressive tax reform agenda, dubbed “The Growth Code,” that would provide massive tax cuts for the rich and likely blow a major hole in the federal budget.
Record as Governor
Gilmore ran and won the governorship of Virginia on the promise of repealing the state’s personal property tax on cars. Car taxes are sometimes perceived as progressive, but they are in fact regressive, capturing a greater share income from poorer Virginians compared to higher-income individuals.
In his first year in office, Gilmore secured legislation phasing out the car tax over five years by first reimbursing individuals and then local governments for an increasing percentage of the tax each year until it was 100 percent offset with the reimbursement. This legislation failed to provide a fiscally prudent way of making up for the substantial loss in revenue from the phase-out.
During his campaign, Gilmore estimated that a complete phase-out of the tax would cost $620 million annually, a claim that a Republican lawmaker who felt mislead by the estimate referred to as “utterly erroneous.” A more realistic estimate pegged the cost at $1.4 billion, more than twice the size of Gilmore’s estimate. To make up for the lost revenue, Gilmore pushed a whole slew of budget shenanigans, such as borrowing against a one-time legal settlement and requiring retailers to prepay sales tax. Despite his objections, more fiscally prudent lawmakers ultimately voted to freeze the reimbursement rate for the tax at 70 percent in 2002 and later to cap the reimbursement expenditure at $950 million each year from 2006 to the present.
Altogether, the phase-out of the car tax during his governorship blew a $2 billion hole in the state’s budget and continues to sap the state of $950 million in much-needed revenue each year. While Gilmore has touted his fiscal responsibility by claiming he left the state with a balanced budget, the reality is the budget was only “balanced” due to fiscal chicanery, and he left an estimated $4 billion structural deficit to his predecessor.
Record as a National Figure and Presidential Candidate
In 2008, Gilmore attempted to recreate the political success of his anti-tax campaign for governor in a run to represent Virgina in the U.S. Senate. Gilmore’s anti-tax Senate campaign floundered however, proving that voters will not automatically vote for any politician who rails against taxes.
Following his failed run for Senate, Gilmore became the President and CEO of the Free Congress Foundation. Gilmore developed a regressive tax reform package called the “The Growth Code.” The regressive provisions of the proposal include eliminating of taxes on capital gains and dividends, immediate expensing of capital equipment, lowering the top marginal tax rate to 25 percent and the implementation of a territorial tax system.
Although a report detailing the reform package claims it would be revenue-neutral, the outline of the proposal does not include a single reference to how it would make up for the trillions in lost revenue that the cuts it proposes would generate. Even assuming a Herculean amount of base broadening (which again the document does not mention), it is likely that the proposal would still create a massive hole in the federal budget. As the Director of Citizens for Tax Justice Bob McIntyre put it, Gilmore’s plan “clearly would be an enormous tax cut for the rich, a big tax increase for the poor, a bankruptcy plan for the federal government, and a disaster for the economy.”