What’s The Deal With Mitt Romney’s Taxes?
So what’s the deal with Romney’s tax returns? Or more specifically, what’s the deal with Mitt Romney letting himself get more and more nippy press by refusing to release his tax returns when virtually every serious presidential candidate of the last 40 years has done it? Allow me to explain.
We already know Mitt Romney is a really, really wealthy guy. But there have been a lot of rich presidential candidates. And, though he was born to wealth, Romney also made a lot of money himself. He’s also said he’ll release information about his wealth, his assets … a lot of stuff. But just not the tax returns.
So what’s the deal? It’s pretty simple. We might say that a specter is haunting Mitt Romney — the specter of the Buffett Rule.
That’s right, we haven’t heard a lot about the so-called Buffett Rule in a while but it’s the concept pushed by kabillionaire Warren Buffett and embraced by Democrats and particularly the White House, which says that the superwealthy should not pay lower tax rates than your average secretary or auto mechanic or office manager or anybody else who gets by on a salary.
It’s a very resonant concept. It makes intuitive sense to people. Overwhelmingly the public supports the idea. And it’s very easy to understand.
This is Romney’s problem. While we don’t know the specifics of Romney’s tax returns, we know enough about his finances and sources of incomes to know that he is likely the poster-boy for the Buffett Rule. As Romney likes to say, he’s unemployed. He doesn’t draw a salary. But he seems to still be making big big money off capital gains which are currently taxed at a very low rate. He doesn’t seem to have drawn a salary at any time recently. So he likely pays no payroll taxes. And that’s before you get into legal but aggressive tax-sheltering. It seems virtually impossible that Mitt Romney doesn’t pay the sort of effective tax rate that would make people’s eyes pop when compared to middle income and even relatively wealthy (by normal standards) people who pay considerably higher rates.
That might cause a little problem in any election year. But issues of income inequality and particularly tax policy are right at the top of the political agenda in 2012. And that dictates keeping those tax returns under wraps as long as possible.
By: Josh Marshall, Talking Points Memo, December 30, 2011
Blame Budget Shortfall On Tax Cuts For The Rich
Let’s leave aside the question of fairness, for now. The paramount question is whether the United States is generating the revenue it needs to fund the public structures that are essential for business and individual prosperity—things like transportation networks, schools, healthcare, college, and many other important functions of government in a capitalistic society. By any indicator the answer is that the United States is falling short in providing both the revenue to fund these services as well as providing for their ongoing maintenance and modernization.
Federal tax revenue is lower than it has been in half a century. The federal government’s revenues from income taxes on households make up 6.4 percent of GDP; which is 1.1 percentage points lower than half a century ago, and 3.8 percentage points lower than the peak in the boom year of 2000. Our current tax revenues are not only low relative to historical levels, but they rank low internationally as well. Our total tax revenues, including federal, state, and local taxes, comprise 27 percent of GDP, a level far lower than most of our peers in the developed world. In fact, among the 33 nations of the Organisation for Economic Co-operation and Development, only three (Korea, Turkey, and Mexico) take in proportionately less tax revenue than we do.
And so we come to the question of whether the richest in America are paying their fair share. The reality is that the steep fall in federal tax revenue was caused largely by cuts in the tax rates for the very wealthiest households. The current marginal tax rate for the highest income bracket—in other words, the tax rate on income above a threshold for the wealthiest taxpayers—of 35 percent is among the lowest since WWII, far lower than the 80 percent rate during the high-growth 1960s and the 39.6 percent rate of much of the 1990s. Of course, most rich households do not pay the published rate—after taking into account deductions and other big tax benefits, the actual percentage of a rich household’s entire income paid in taxes has also fallen precipitously, dropping from 31.3 percent for millionaires in 1993 to 22 percent today.
So, no, the rich are not paying their fair share of taxes—neither as defined by historical American norms or by international standards. And, the result of that shirking of responsibility is sluggish growth, diminished social mobility, declining educational attainment, and lost business efficiencies due to our insufficient and often outdated transportation and information networks.
By: Tamara Draut, U. S. News and World Report, December 16, 2011
Cutting Taxes For The Rich Never Ends Well
You can call it 9-9-9, the Perry two-step, or a national sales tax. But the various flat tax plans being proposed by Republican candidates, right-wing think tanks, and media commentators share some common characteristics that should worry most middle-class Americans.
The basic notion behind a flat tax is to eliminate the current system of six tax brackets—in which people with higher incomes pay higher tax rates—with a single uniform rate. Most flat tax proposals also eliminate most or all of the deductions and credits in the current code—such as the mortgage interest deduction, the deduction for charitable giving, and hundreds of lesser-used preferences.
The flat tax is certainly a good deal for high-income individuals. Although they might not get to deduct mortgage interest payments on their vacation homes, those with high incomes more than make up for it in the lower, “flatter” rate. For example, under a 20 percent flat tax (similar to the one proposed by Rick Perry), the top 1 percent would see an average tax cut of over $200,000.
If the rich are paying less, you can probably guess who would pay more: low- and moderate-income families. For example, under the Cain 9-9-9 plan, 90 percent of filers with incomes between $40,000 and $50,000 would see a tax increase averaging about $4,000. (The Perry plan gives taxpayers an option of staying in the current system—so it’s unlikely anyone would choose the flat tax option if it means higher taxes. Since low- and moderate-income taxpayers would see an increase under the 20 percent plan, the final result of the Perry plan would be the introduction of an exclusive tax code designed for the high-income individuals, while the rest of us get to keep the old clunker. See who would choose which plan.)
Because flat tax proposals lower rates at the top, and because the top is where an increasing share of income is being concentrated, they also tend to bring in significantly less revenue than the current tax code, resulting in higher deficits, fewer public investments, and pressure to cut programs like Social Security and Medicare.
Proponents of the flat tax argue that lower rates on the rich (or the “job-creators” as some are now calling them) and on income derived from stocks and bonds will boost economic growth and job creation. However, this trickle-down theory has been tried and failed: Bush-era policies moved the tax code in this direction, but the “boom” of the 2000s was the worst on record since at least the 1950s.
Tax cuts for the rich and a higher debt for everyone else? We’ve seen that movie before, and it doesn’t end well.
By: John Irons, Research and Policy Director, Economic Policy Institute; Published in U. S. News and World Report, November 1, 2011
Share This Blog
Unknown Feed- An error has occurred; the feed is probably down. Try again later.
mykeystrokes.com 