“Delusional Supporters”: Mitt Romney Has Almost Certainly Not “Already Paid Taxes On His Ordinary Income”
You can’t write about tax rates these days without getting shelled by those who feel their favorite Presidential candidate is being attacked by whatever you say.
That’s too bad, because it hinders the ability to have a reasoned discussion about taxes, which is a discussion this country desperately needs to have.
(Almost no non-partisan economist thinks our budget deficit can be solved by cutting spending alone. Taxes will almost certainly eventually have to go up. The question is by how much and on who and when. And that’s a debate we need to have in as cool-headed a way as possible.)
Anyway, anytime one points out that Mitt Romney pays a very low tax rate for a citizen who makes as much money has he does, one quickly hears from Romney supporters who say, effectively, the following:
You idiot. Don’t you understand the difference between taxes on “ordinary income” and taxes on “capital gains”? Mitt Romney already paid taxes on his ordinary income–at normal ordinary income rates! Now you want to tax him twice–by making him pay the same taxes on his capital gains!!!
(Some Mitt Romney supporters are much more polite when making this argument, which is much appreciated.)
To answer the question, yes, I do understand the difference between taxes on ordinary income and taxes on capital gains. And I understand the rationale for having the two tax rates be different (to provide an incentive for investors to risk their capital and thus help build businesses that employ people). And I actually agree with that rationale. I don’t think we can afford to have the difference between the two tax rates be as big as it is, but I agree with the rationale.
But here’s the thing…
Romney’s supporters are almost certainly wrong when they assert that Romney “already paid taxes on his ordinary income” and that now he’s just risking his “capital.”
This is because Mitt Romney has almost certainly taken advantage of one of the most outrageous tax loopholes in our entire tax code: The “carried interest” tax exemption.
This loophole allows money managers to structure the performance fees they are paid as “capital gains” instead of as ordinary income.
The loophole therefore allows money managers to avoid paying ordinary income taxes on their performance fees and then make much bigger bets than they would be able to make if they actually had to pay taxes on their earnings. When the money managers use very sophisticated tax shelters, it also allows them to defer paying taxes for years (if not decades)–and then only pay low long-term capital gains rates instead of ordinary income rates.
Although we don’t know for certain that that’s what Mitt Romney has done (because he won’t release his tax returns), it seems highly likely that this is what he has done. And, in fact, the obvious unfairness of this tax loophole seems like one big reason he won’t release his returns.
To be clear:
Taking advantage of the “carried interest” tax loophole is not illegal or wrong. Romney has done what any smart tax-minimizing person in his position would have done.
But the loophole itself is outrageous.
And the existence of the loophole means that Mitt Romney has almost certainly not “already paid taxes on his ordinary income.”
Rather, Mitt Romney has probably figured out ways to make sure that many of the fees he was paid for managing clients’ money at Bain were directed into future Bain investments before he paid taxes on them. These Bain investment then presumably did extraordinarily well, and Romney’s pre-tax ordinary income compounded tax free. And now, presumably, Romney is paying himself “dividends” or “long-term capital gains distributions” out of these Bain funds, which means that not only his original fee income but his pre-tax investment gains are being taxed at vastly lower long-term capital gains tax rates.
If Mitt Romney had actually paid ordinary income taxes on his fee income and then bet his after-tax income on future Bain investments, those who support today’s low rates on long-term capital gains would be justified in saying this is perfectly defensible, fair, and acceptable.
But Romney almost certainly didn’t.
Rather, Romney almost certainly took advantage of an outrageous tax loophole to take home tens or hundreds of millions more dollars than he would have if he had paid ordinary income tax rates.
So the Mitt Romney supporters who suggest that he paid these rates, unfortunately, appear to be delusional.
By: Henry Blodgett, Business Insider, August 17, 2012
“Re-defining Presidential Politics”: Voting Women Is Key For Complete Gender Equality
The fight for women’s equality will stand still unless women vote. This election year is especially important as Congress will vote on issues key to women’s economic security and health. Today, on Women’s Equality Day, we all can take a step toward complete gender equality by encouraging our young women to vote on Nov. 6.
Since the height of the women’s rights movement, the percentage of eligible women who vote in presidential elections has declined. According to the Center for American Women and Politics, while 72% of eligible women voted in the 1964 presidential election, only 60% voted in 2008. This apparent complacency among young women with a right that our forebears fought so desperately to earn must be addressed.
Universities and colleges across the country are launching voter initiatives that speak to the young community. TurboVote is an online registration tool that sends email and text message reminders to students with the goal of registering record numbers of students in this presidential election year, a time seeing significantly lower youth enthusiasm than four years ago.
College campuses are a bright spot in the work toward women’s equality. Today, women have surpassed men in pursuit of higher education, graduating in greater numbers and with more degrees than their male counterparts. Another great higher education initiative is Vision 2020, a national campaign launched at Drexel University with the goal of achieving gender equality by 2020, the 100th anniversary of the 19th Amendment, which gave women the right to vote.
When I was a young college instructor, such a goal would have been unimaginable. My department chair told me I would never be granted tenure. Apparently, I had embarrassed my male colleagues by publishing more papers than they had written collectively.
As a president of a Big Ten university and a former U.S. secretary of health and human services, I cannot help but feel proud looking back at overcoming such blatant discrimination. But I also cannot help feeling concerned about the many places in the country still dominated by males – whether it be corporate boardrooms, chambers of commerce or even our nation’s capital. I am proud of the strides we have made as a country, but we have a ways to go.
Women’s equality is a problem not just for women but for all Americans. The best policies are made when there is genuine diversity of thought involved in the process, which includes the distinct voice of women.
Today, as our country celebrates the legacy of those who fought hard for justice, opportunity and prosperity, let us recommit ourselves to the goal of gender equality in our country. And by voting this November, the nation will have no choice but to hear us. Ninety-two years after the passage of the 19th Amendment, we may finally see women redefine presidential politics.
By: Donna Shalala, President, University of Miami, JSOnline, August 24, 2012
“A Debris Strewn Mess”: A Storm The GOP Didn’t Expect
The uninvited participation of a hurricane at next week’s Republican convention would be superfluous. Buffeted by powerful internal winds, the party may be flooded with cash, but it’s already kind of a debris-strewn mess.
Who would have imagined that Topic A, in the days before GOP delegates gather in Tampa, would be abortion? Certainly the thought never crossed the minds of the convention planners who intended this four-day infomercial to be a nonstop indictment of President Obama’s performance on the economy. But the old line about the relationship between the political parties and their candidates — “Democrats fall in love, Republicans fall in line” — is so last century.
Party leaders will blame Rep. Todd Akin (R-Mo.) for airing his appalling views about “legitimate rape.” But if you discount Akin’s bizarre notions about female reproduction, he was only stating official Republican policy on abortion as laid out in the platform that delegates will be asked to approve Monday: “The unborn child has a fundamental individual right to life which cannot be infringed.”
Presumptive presidential nominee Mitt Romney, who once was pro-choice, now says he is against abortion except in cases of rape or incest or when the mother’s life is endangered. But his party claims to believe, as Akin does, that there should be no exceptions. Romney’s running mate, Rep. Paul Ryan (R-Wis.), agrees with Akin but has switched into “whatever Mitt says” mode.
There is no way to tidy up these contradictions. For decades, since the Ronald Reagan era, the Republican playbook has been to patronize social conservatives in the primaries and the party platform on issues such as abortion — and then, upon taking office, do little or nothing for the cause. But social conservatives turned their frustration into activism and eventually gained a measure of power within the party that the GOP establishment finds highly inconvenient.
Anti-abortion crusaders expect the party to practice what it preaches, even though abortion rights are guaranteed under Roe v. Wade and public opinion is strongly opposed to an absolute ban.
Similarly, evangelicals expect GOP action on their belief that the wall between church and state should be demolished. All right, that’s my phrasing, not theirs. But I don’t know how else to interpret the aim of officeholders such as Akin, who has spent his 12 years in Congress fighting to increase the role of religion in government. “At the heart of liberalism,” he once said, “really is a hatred for God.”
The Republican Party also welcomed the energy, enthusiasm and votes of the tea party movement. Was the GOP establishment ever really serious about staging a “second American revolution” or slashing the federal government back to what it was in 1789? Not on your life. The recent pattern is that government grows much faster under Republican presidents than under Democrats. You can look it up.
Patronizing the tea party and enlisting many of its adherents as candidates helped the GOP win an impressive string of victories in 2010 and take control of the House of Representatives. But Speaker John A. Boehner (R-Ohio) has been struggling ever since to control unruly freshmen to whom the unthinkable — triggering a catastrophic default on U.S. government debt, for example — sounds like a plan.
Tension between idealists and pragmatists is inevitable in politics, but the struggle taking place within today’s Republican Party is extreme. The GOP believes in limited government that stays out of our business and lets us live our lives — but also wants to police every pregnancy in the land. The party says it wants to cut wasteful federal spending — but also insists on showering the Pentagon with billions for weapons systems the generals don’t even want. The party says it wants to balance the budget — but endorses a plan, authored by Ryan, that cuts taxes for the wealthy without specifying the offsetting budget cuts that would be required to keep deficits from ballooning out of control.
Being a “big tent” party is never easy. The GOP, for all of its divisions, is full of energy and passion. What unites the various factions is the task of defeating Obama, and on this point there will be no dissent in Tampa.
But why does the Republican Party seek power? What does it really stand for? What does it hope to accomplish? What kind of America does it envision?
Keep an eye on that storm track as Isaac plows toward Florida. Maybe the elusive answers to those questions are blowin’ in the wind.
By: Eugene Robinson, Opinion Writer, The Washington Post, August 23, 2012
“Letting Romney Off Easy”: Proud Enablers, Media Trades Ethics For Access
In the wake of last month’s New York Times dispatch about reporters letting powerful politicians edit quotes before publication, various establishment media outlets angrily denounced the practice. Seeking to distance themselves from the ugly image of journalists serving as de facto spokespeople for the politicians they are supposed to be scrutinizing, these outlets made such a public spectacle in order to reassure their audiences that they would never trade ethics for access.
But, of course, anyone working in journalism in recent years knows such trades have long been standard practice. Today’s reporters are expected to acquiesce to demands by politicians, and most often, they do just that. And while their feigned public umbrage at the Times’ quote approval story shows that news outlets are at least smart enough to be embarrassed by their unscrupulous behavior, it doesn’t mean the behavior has stopped. On the contrary, as last week’s headline-grabbing interchange between a local Colorado reporter and the Romney campaign shows, that behavior persists, with the establishment media serving as a proud enabler.
Here’s what happened: According to CBS 4′s Shaun Boyd, she was asked by Mitt Romney’s campaign to do a satellite interview with the Republican presidential nominee, who wanted to get a carefully scripted message out to this swing state’s voters. Boyd agreed to do the interview — not surprising, because it could be (and was) billed as a major scoop for her local news station. This was no ordinary Q&A, though. Fearing a repeat of Boyd’s laudably hard-hitting interview of Romney back in May, Romney’s campaign demanded that Boyd not ask the candidate about abortion or the Todd “Legitimate Rape” Akin controversy. Incredibly, Boyd agreed.
When the interview occurred, Boyd (unfortunately) held up her end of the sordid deal, not asking Romney about what has become one of the defining issues of the entire election. However, she did tell viewers about the no-abortion-question condition, which consequently became a story unto itself.
Democrats and news organizations pounced on Romney’s interview conditions, correctly citing them as proof that he doesn’t want to answer tough questions. Meanwhile, Boyd basked in the reflected glow, garnering national and local media attention that portrayed her as a supposed star fighting the good fight on behalf of journalistic integrity. For instance, the Washington Post featured her in a “wide-ranging interview” and touted her for giving “serious consideration to the handling of the staffer’s extreme conditions” (and yet then submitting to them). Likewise, in the local media market, Denver Post editorial page editor Curtis Hubbard gushed on Twitter about Boyd, while the Post’s Alicia Caldwell took to the paper’s website to congratulate Boyd for “push(ing) back against the Romney camp’s conditions.”
Amid the celebration, though, these same voices of supposed journalistic integrity forgot to mention that Boyd didn’t simply reject Romney’s interview request and then do a story about the demands — a move that would have been genuinely praiseworthy. Instead, she publicly complained about the conditions, but nonetheless acquiesced to them. Sure, she was absolutely correct to acknowledge the conditions on the air before airing the Romney-censored interview — and, certainly, she should be given some modicum of credit for disclosure. But that disclosure shouldn’t be portrayed as some hugely courageous act. On the contrary, being honest with viewers and disclosing such conditions is the absolute least any reporter should do when acceding to such preposterous demands. Indeed, the fact that Boyd’s disclosure was so venerated implies that it is now all but unheard of in newsrooms to even respect that minimum standard of transparency.
What’s so especially damning about this episode is that Boyd likely had leverage in this situation. After all, as she said, Romney’s campaign came to her asking for an interview, not the other way around. Put another way, Romney’s campaign wanted something from CBS 4, giving CBS 4 more power to dictate the terms. Boyd or her bosses could have made the “beggars can’t be choosers” argument, telling Romney he could have the valuable airtime he desired, but not with such preposterous conditions — and if he didn’t like it, they could have told him no deal. Instead, for the sake of access, Boyd folded, conducting the interview on Romney’s terms and promoting it on CBS 4′s website. Just as troubling, she was subsequently portrayed as a great hero by the same establishment media that publicly pretends to be offended by trading ethics for access.
This is the kind of thing that is no doubt happening every day on the campaign trail — and it has profound long-term effects. As KDVR Fox 31′s chief political correspondent Eli Stokols told me on Friday, whether it is a reporter like Boyd accepting such conditions or other media outlets condoning such compromises, campaign reporting is now actively — and knowingly — contributing to the degradation of both journalism and America’s democratic process. He said:
“We in the media all see how campaigns try hard to limit information, restrict access and force their limited engagements with the press to take place on their own terms. It’s depressing that elections, at least from the campaign side, are no longer about getting information to voters so they can make informed decisions, only about getting voters to make the decision the campaigns want them to make. But when we accept a campaign’s terms of certain questions being off limits or allowing staffers approval on quotes, we are both accepting and enabling the smallness of our politics; and we’re diminishing ourselves and our profession in the process.
“It’s a sad state of affairs when journalists are so desperate for anything resembling a scoop that they willingly acquiesce to ridiculous stipulations and conditions because scrubbed quotes and contrived interviews still make us feel good as long as we can call it ‘an exclusive’.”
While voters may not know exactly how the reporter-politician relationship works, their vague sense of what Stokols describes is almost certainly one of the reasons they have lost faith in the press corps. Until more rank-and-file reporters, editors and news producers renegotiate the terms of those relationships on more ethical grounds, that faith will continue to diminish — as it should.
By: David Sirota, Salon, August 24, 2012
“Pure And Delightsome”: Choose Right Gov. Romney, Not Racism
Dear Gov. (Bishop) Romney:
I’m assuming you’ll understand why, as someone who teaches the history of the Church of Jesus Christ of Latter-day Saints in a classroom, your comment yesterday at a rally in Michigan irked me tremendously. In case you’re trying to forget what you said, let me repeat it for you. “No one’s ever asked to see my birth certificate. They know that this [Michigan] is the place that we were born and raised.”
I have tried my best to give you the benefit of the doubt. It seems however, that you are the same bully who cut your classmate’s hair back in high school. The reality is, you are the product of white privilege; some from your money, but also from the racist history of the LDS beginning with Brigham Young. You might think that it’s unfair to bring up the LDS’ troubled past, but I think it is, in part, a big issue for you in this campaign. Let me explain.
Most reporters focus on the 1978 revelation that black men could be part of the Mormon priesthood as the end of Mormon theology regarding race, though a recent op-ed in the New York Times by John G. Turner suggests that “race is still a problem for the Mormon Church because they have never repudiated nor apologized for it.” I agree with Turner. It is a problem for the LDS.
It is a greater problem for you, however, because you are running against the first African-American President of the United States. You are also from a persecuted minority, though you have chosen to take the trappings of whiteness, prosperity and privilege and make them your own. That is within your right. It is not a good look for you however, nor is it for The Church of Jesus Christ of Latter-day Saints, that you represent, whether you want to or not.
When you talk about “welfare” or the birth certificate “joke,” I think they are much more than a “dog whistle” to your base. I wonder if it also comes from Mormon theology which taught that black people are black because they are cursed as “fence sitters in heaven” and had the mark of Cain. If that’s not enough, the Book of Mormon, specifically 2 Nephi 30:6, said the Laminites would become “Whitesome and Delightsome” if they accepted the book of Mormon. Perhaps you have not noticed the text was changed to “Pure and Delightsome” in 1981. So, for you to continue to pick up race-bating is not only a tea party tell, it is a reflection, whether you like it or not, on the LDS past—no matter how many “I am a Mormon” commercials feature people of color.
What’s more, your own family history points to a painful past. Your grandfather escaped to Mexico to be able to practice his belief in polygamy (you and President Obama both have polygamy in your family history). Mormons have been persecuted for a long time, though your money and your father’s position protected you from associating with that persecuted past. It is part of you, no matter how much you cling to your privilege. Would it be too difficult for you to exercise some discretion, noting your own past, and realize that many African Americans are sick and damn tired of white people questioning the President of the United States about his birth certificate?
I hope you realize that because President Obama won in 2008, he had made it easier for you to run for President in 2012. Both the Republican Party and the religious right shunned you in 2008. Many Christian power brokers are holding their noses to vote for you because they hate President Obama more. Many wonder if you even are a Christian. So please, before you use racism and dog whistles against the president, consider your church’s past of persecution, and bigotry. Choose the right, if you can.
By: Anthea Butler, Religion Dispatches, August 25, 2012
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