Mitt Romney's taxes

[KingOrfeo]

Ben Adler writes in The Nation:

The Problem With Mitt Romney's Tax Rate

Ben Adler on January 24, 2012 - 1:27pm ET

After weeks of hemming and hawing, Mitt Romney has finally released some of his tax returns. In 2008 Joe Biden released ten years’ worth of tax returns. When running for president in 1968 Romney’s father George Romney released returns for twelve years. Romney released just the returns for one, 2010.

In 2010 Romney paid only 13.9 percent in federal taxes on his income of $21.7 million. Does that sound low to you? It should. The highest marginal income tax rate is 35 percent. But Romney has the good fortune to live off unearned income. “It’s slightly lower than the total payroll, excise and lowest marginal income tax rates combined paid by Americans earning between $40,000 and $50,000 per year,” noted Ed Kleinbard, a law professor at the University of Southern California on a call organized by the Democratic National Committee.

The reason is that our tax code gives preferential treatment to unearned income, such as dividend payments and capital gains. Capital gains, which are overwhelmingly earned by the wealthiest Americans, are taxed at only 15 percent. That’s why, as Brad Plumer shows at the Washington Post, our wealthiest presidential candidates have often paid the lowest rates. This is obviously unjust. The argument in favor of this policy is that it encourages investment and by extension economic growth. Unfortunately, it’s not true: the economy has grown the most during periods when the capital gains tax rate was closest to the income tax rate. That’s why, as I’ve argued before, liberals should make taxing capital gains as regular income a top priority and a major deficit reduction proposal.

Conservatives, naturally, have found an intellectually dishonest justification for Romney. They argue that since Romney’s dividend income was first taxed as corporate income, “a competent campaign, and candidate, would explain that Romney’s real federal tax rate on his investment income was more than 40 percent (being conservative, after deductions and such), since the revenue stream was subject to both a personal tax rate and the corporate tax rate,” writes John Hood of National Review. “A competent campaign would then point out that state taxes would bring the effective income tax rate on Romney’s investment income to 50 percent or higher.”

The Wall Street Journal editorial page made the same argument. But, as Timonthy Noah points out in The New Republic, this is just hypocrisy. Corporations are separate legal entities from their owners. When corporations lose money, their owners are not personally liable. Conservatives have taken this idea to its logical extreme, as in the recent Citizens United Supreme Court decision, holding that corporations have the same First Amendment rights as individuals and so their spending on political messaging cannot be limited.

But if corporations are legally separate entities, then they obviously should pay taxes separately too. It’s also worth noting that if you are a housekeeper paid out of your employer’s after-tax income, conservatives never argue that your effective income tax rate is doubled and you should receive a special exemption. Everyone’s income taxes come from somewhere that may have been previously taxed – businesses are paid by customers using their after tax income—but conservatives object only when it’s a rich person, in the form of corporate profits or capital gains, who is subject to “double taxation.”

Romney will be hit for other aspects of his tax returns. Some of these are valid grounds for questioning Romney’s patriotism, such as his offshore accounts in Switzerland and the Cayman Islands. Others are just examples of Romney playing by the current, immoral rules of the game, such as his availing himself of the “carried interest” loophole that allows him, like hedge fund managers, to be paid deferred salary from Bain Capital in the form of capital gains.

The real problem is not that Romney takes advantage of the current system, it’s that as president he would make it worse. Romney proposes lowering taxes for the wealthy to pay for his proposed cuts in social spending. “Romney pays a lower tax rate than most police and firefighters and he doesn’t want that to change,” notes DNC executive director Patrick Gaspard.

But it’s also important to keep Romney’s taxes in perspective: as Romney noted at Monday’s GOP debate, his main opponent, Newt Gingrich, proposes a wildly regressive tax scheme that is infinitely more beneficial to Romney. Gingrich would eliminate capital gains taxes altogether. As Romney pointed out, he would pay zero percent in taxes under that program.

 

[islandman]

I do not understand why he's being made to feel ashamed of his wealth.

Don't we all aspire to be wealthy or is the American dream really dead?

 

[KingOrfeo]

I do not understand why he's being made to feel ashamed of his wealth.

Don't we all aspire to be wealthy or is the American dream really dead?

The American Dream is middle-class affluence, not megawealth. And it is a fact that most Americans will die in their parents' income bracket.

But, read for comprehension. The message here is not that Romney should be ashamed of his wealth, the message is that he should be ashamed of the way our tax code favors the wealthy like him. Again:

The real problem is not that Romney takes advantage of the current system, it’s that as president he would make it worse. Romney proposes lowering taxes for the wealthy to pay for his proposed cuts in social spending. “Romney pays a lower tax rate than most police and firefighters and he doesn’t want that to change,” notes DNC executive director Patrick Gaspard.

But it’s also important to keep Romney’s taxes in perspective: as Romney noted at Monday’s GOP debate, his main opponent, Newt Gingrich, proposes a wildly regressive tax scheme that is infinitely more beneficial to Romney. Gingrich would eliminate capital gains taxes altogether. As Romney pointed out, he would pay zero percent in taxes under that program.

 

[islandman]

The American Dream is middle-class affluence, not megawealth. And it is a fact that most Americans will die in their parents' income bracket.

But, the message here is not that Romney should be ashamed of his wealth, the message is that he should be ashamed of our tax code.

I disagree.

The tax code is the tax code. He's talking about lowering the income tax rate and overhauling the tax code, both things he should be proud of.

 

[KingOrfeo]

I disagree.

The tax code is the tax code. He's talking about lowering the income tax rate and overhauling the tax code, both things he should be proud of.

Not if he's really such a deficit-hawk, he shouldn't.

 

[JAMESBJOHNSON]

KingOreo dont like tax free municipal bonds either.

My late aunt used to piss & moan about inheritance until my grandmother died, at which time she was first in line for her share of it.

 

[islandman]

Not if he's really such a deficit-hawk, he shouldn't.

As I understand it, he's taking a page out of the Chris Christie handbook.

I'm all for that route.

 

[KingOrfeo]

As I understand it, he's taking a page out of the Chris Christie handbook.

I'm all for that route.

The one in NJ? That embarrassing fuck Chris Christie?

 

[unregistered]

 

[KingOrfeo]

His tax rate is lower because the law is written to encourage investment, fool.

Read for comprehension:

The argument in favor of this policy is that it encourages investment and by extension economic growth. Unfortunately, it’s not true: the economy has grown the most during periods when the capital gains tax rate was closest to the income tax rate.

 

[Wrong Element]

What's the old saying? "The scandal isn't what's illegal--the scandal is what's legal."

 

[Liar]

Not if he's really such a deficit-hawk, he shouldn't.

Speaking of which... I haven't watched any of the debates or reead more than the odd news report and clip from their campaign trails, but doesn't ity seem sort of quiet on the debt and deficit alarm crying front from the candidates? That's not in vouge anymore?

 

[Sean Renaud]

I have been watching most of them, and now that you mention it they haven't talked a lot about the debt or the deficiet. It's not entirely ignored but they certainly haven't made it a cornerstone very often.

 

[KingOrfeo]

I remember Ross Perot ran in 1992 and 1996 on the message that the deficit is The Problem and, if you accept that, proposed what seemed at the time, from a certain angle, like a very common-sense approach: To balance the budget, we must cut spending and raise taxes at the same time.

Didn't fly with the voters.

And then just a few years later, the government actually ran a surplus. (That went away when W decided to cut taxes at the start of a war. Has any other national leader in modern history ever done that?!)

 

[Liar]

Benign theory: What they'd do with the deficit is not a differenting factor between them, except maybe Paul.

Cynical theory: They are keeping the deficit issue on the low-down, because they know that if they ever get in the driver's seat, they'll be forced to do realpolitik, which means more of the same.

 

[KingOrfeo]

Benign theory: What they'd do with the deficit is not a differenting factor between them, except maybe Paul.

Cynical theory: They are keeping the deficit issue on the low-down, because they know that if they ever get in the driver's seat, they'll be forced to do realpolitik, which means more of the same.

Well, it won't be such an easy issue for the Pub nominee to avoid in the general election, not if he wants to fire-up his base and exploit the "Owebama" meme.

 

[TexasWife25]

I think anyone with a brain would say the tax code is old, outdated, confusing and easy to get the rate you want if you have enough accountants working for you.

Romney didn't do anything illegal, but its hard for the average American to say I pay 25% or 30%
and the man who wants me to vote for him, pays half that and makes more in a year then I'll see in a lifetime.

 

[coastal-boy]

His tax rate is lower because the law is written to encourage investment, fool.

It is income. Period. It is written into the code BECAUSE THEY MAKE THE LAW you stupid old man.

 

[JAMESBJOHNSON]

When I was a young man a friend and I wagered over which of us would make a million first. My friend made his money first and died soon afterwards.

So which of us did fortune favor? Is God fair?

 

[richard_daily]

I disagree.

The tax code is the tax code. He's talking about lowering the income tax rate and overhauling the tax code, both things he should be proud of.

And this is a good idea in a troubled economy why?

 

[Ham Murabi]

I think the problem with Romney's tax rate is that it is too high.
I can't think of a good reason why anyone should pay more than 10 percent of their income to the federal government.

 

[richard_daily]

I think the problem with Romney's tax rate is that it is too high.
I can't think of a good reason why anyone should pay more than 10 percent of their income to the federal government.

Hmmm, to maintain the US's first world status perhaps?

 

[TexasWife25]

I think the problem with Romney's tax rate is that it is too high.
I can't think of a good reason why anyone should pay more than 10 percent of their income to the federal government.

To pay for things like public schools, police, working roads and the generally running of our government?

 

[coastal-boy]

I think the problem with Romney's tax rate is that it is too high.
I can't think of a good reason why anyone should pay more than 10 percent of their income to the federal government.

To provide the ability to fight a war to protect ourselves when attacked?

 

[KRCummings]

To pay for things like public schools, police, working roads and the generally running of our government?

The state pays for most of that.