As the days tick down to Hawaii’s May 22 special congressional election, Republican Charles Djou is airing an ad falsely accusing former Democratic Rep. Ed Case of voting to raise "taxes that kill 3,000 local jobs a year.”
The ad, which first ran May 14, makes this claim: “Case said he’s against higher taxes, but in Congress he voted to raise taxes. Taxes that kill 3,000 local jobs a year.” It cites a Jan. 5, 2006, "web memo" from the Heritage Foundation, a conservative Washington think tank, to back up its figure of 3,000 jobs per year. That memo argued that Congress should make permanent the tax cuts signed by President George W. Bush: the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003. Most of the cuts were due to expire by Dec. 31, 2010, but the Bush administration began campaigning early to make them permanent – starting with the reduced tax rate on investment income that was due to sunset on Dec. 31, 2008. In its web memo, Heritage estimated the average yearly employment growth in each state from fiscal years 2008 through 2014 if all the cuts were left in place. The estimate for Hawaii: 3,426 per year.
We needn’t delve into Heritage’s analysis (with which other prominent economists disagree) to find the main flaw in Djou’s claim: Case, who served in Congress from January 2003 to January 2007, voted on May 10, 2006, for a two-year extension of the tax break on capital gains and dividends. He was one of only 15 Democrats to vote that way – an act for which fellow Democrat Colleen Hanabusa has attacked him in one of her recent TV ads. (Hawaii’s special election in the 1st congressional district is a multi-candidate, winner-take-all election.) The Senate followed suit, and Bush signed the bill into law.
Case also was one of 76 Democrats to vote on July 28, 2006, for the Pension Protection Act of 2006, which made permanent many of the retirement provisions contained in Bush’s 2001 tax law – including higher contribution limits to 401(k) and IRA plans. A majority of House Democrats voted against that bill, which became law.
We asked the Djou campaign if it had any other evidence that Case’s votes on taxes cost Hawaii 3,000 jobs each year. Dylan Nonaka, a spokesman for Djou, said Case had voted for many tax increases. He also said the fact that Case voted to extend the Bush tax cuts in 2006 after voting against them in 2003 only underscores the ad’s larger point that Case can’t be trusted. It is true that Case voted against the Bush tax cuts in 2003, but that’s not the same as raising taxes. And the Heritage memo fails to back up Djou’s claim that Case’s tax votes were draining thousands of jobs from his state.