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With New Hampshire voters gearing up for a primary election, Republican candidate for Congress Gary Lambert tried to cast himself as the true fiscal conservative in the race when he distributed a campaign mailer this August.
The former state senator from Nashua pledged sound leadership for New Hampshire’s economy if he’s elected to represent the 2nd Congressional District.
Lambert also criticized his major opponent in the GOP primary, state Rep. Marilinda Garcia, asserting that Garcia supports "$150 billion in new taxes."
Lambert said the move would result in massive job losses, and his campaign flyer pictured Garcia’s face on the side of a building, underneath a sign that reads "Going out of business."
With both candidates courting the Republican base, any move to increase taxes could be a turn-off for voters. But is Garcia really pushing for a tax hike, and one that could be measured in billions of dollars? Her campaign quickly denied the charge, and Lambert’s flyer didn’t provide much information to back it up.
To get to the bottom of it, PolitiFact New Hampshire asked Lambert’s campaign for an explanation of where the $150 billion figure came from.
Campaign manager Josh Davidson pointed us to an April 2014 event at which Garcia said she supports closing some types of tax loopholes. Her remarks were filmed and posted to YouTube by the conservative blog Granite Grok.
Garcia said that small businesses are at a disadvantage because, unlike large corporations, they can’t hire lawyers and accountants who are able to "find those loopholes that could reduce your tax rate from 35 (percent) to 20 (percent) like the big companies do."
"So that’s a big problem," she continued. "We need to close those types of loopholes."
Lambert argues that by calling for Congress to close "those types of loopholes," Garcia was calling for the elimination of the entire system of tax credits, exemptions and other mechanisms that allow companies to lower their taxes.
Those mechanisms are collectively known as "tax expenditures," a term the federal government uses to describe revenue lost because of tax deferrals, preferential tax rates, exclusions, exemptions or deductions.
Combined, the federal government will provide corporate tax expenditures worth an estimated $148 billion in fiscal 2014, according to numbers crunched by the White House Office of Management and Budget.
That’s close to the $150 billion figure cited by Lambert’s campaign. However, there are several caveats to consider.
To begin with, it’s hard to know exactly how much new revenue the country would receive if any tax expenditures were eliminated. It wouldn’t necessarily be $148 billion.
As the White House’s Office of Management and Budget notes, eliminating one type of tax break may alter economic behavior, or provide an incentive for companies to chase another type of tax break. Also, the system of tax breaks is interdependent -- eliminating one could lower the amount of taxable revenue in another, or move a company into an entirely different tax bracket.
There’s also the question of whether the reforms would apply solely to corporations, or if tax breaks for both corporations and individuals would be eliminated.
Many are available to both types of taxpayers. In fact, a study by the U.S. Government Accountability Office determined that more than two-thirds of the tax expenditures used by corporations in 2011 were also used by individual taxpayers.
That means tax breaks used exclusively by businesses -- the segment Garcia was referencing in her comments -- account for only a portion of the $148 billion worth of corporate tax expenditures.
It’s also worth noting that eliminating a loophole isn’t the same thing as instituting a new tax, as Lambert suggests. Any new revenue would simply come from existing taxes.
Garcia also disputes the notion that she would support any net increase in taxes. Her communications director, Kenny Cunningham, wrote that Garcia hopes to lower the overall corporate tax rate by eliminating special interest-backed tax loopholes.
"Marilinda has pledged multiple times not to support any new increases in the tax burden and has a long voting record in the NH Legislature to prove her commitment to action on this issue, not just words," Cunningham wrote.
Lambert claimed that Garcia supports $150 billion in new taxes. His statement was based on a remark Garcia made about closing tax loopholes that help big corporations.
The Office of Management and Budget estimates in fiscal year 2014, companies will receive about $148 billion in tax expenditures. That’s close to the figure Lambert offered, but overall, the statement is inaccurate for several reasons.
Even if one accepts the premise that Garcia wants to end all tax breaks for corporations, the expenditures she’s referring to would probably be valued at less than $150 billion, unless Garcia also supported ending tax breaks that are available to both companies and individuals.
According to her campaign manager, Garcia would not support any increase in the tax burden. Instead, she seeks to eliminate loopholes that benefit special interests while working to lower the overall corporate tax rate.
Not only is Lambert’s campaign mailer inaccurate, but it offers such an astronomically high figure that the claim is far-fetched.
For these reasons, Lambert’s claim earns a rating of Pants on Fire.
Gary Lambert for Congress campaign mailer, accessed Aug. 11, 2014.
Granite Grok, "Why Doesn’t Lambert for Congress Mailer Cite GraniteGrok.com?" Aug. 12, 2014.
Granite Grok, "Marilinda Hollis Q+A," May 2014.
Email interview with Josh Davidson, campaign manager for Gary Lambert for Congress, Aug. 11, 2014.
Email interview with Kenny Cunningham, communications director for Marilinda Garcia for Congress, Aug. 12, 2014.
Office of Management and Budget, "Analytical Perspectives, Budget of the United States Government, Fiscal Year 2015," March 10, 2014.
United States Government Accountability Office, "CORPORATE TAX EXPENDITURES: Information on Estimated Revenue Losses and Related Federal Spending Programs," March 2013.
Tax Foundation, "Corporate vs Individual Tax Expenditures," Aprile 23, 2014.
National Priorities Project, "Report: The Big Money in Tax Breaks Continues," April 18, 2014.
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