The big political news today is the release of Mitt Romney’s 2010 tax return (although not the 10 years worth that folks are requesting).
What troubles me, and what will probably trouble a lot of Americans is, that on his $21.6 million income, Romney only paid 13.9% in federal income tax. The reason he pays such a low a rate is that US tax policy favors people who don’t work for a living, whose income comes from investment gains1. I don’t think that up until now the sweet deal that the wealthy get has been appreciated by the overburdened middle class, but now they know one reason why their class is shrinking.
That said, this is not the Romney Conspiracy Theories blog, so let’s move on to President Obama whose 2010 tax returns are also public. President Obama worked for a living and his income came largely from his salary as President and royalties from books he wrote. He paid 25% in federal income tax on just under $2 million in income.
I retired in 2011 and now I’ll get those cushy low rates, so I can’t complain about me and Mitt’s sweet deal. You might, though.
I don’t know if folks from Denmark are laughing or crying right now.
1In the US, the top rate on earned income is 35%. Long-term capital gains (from buying and selling stocks held more than a year) are taxed at 15%. Mitt Romney’s investments are in a blind trust, so one cannot say that he earned the money working as an investor.
While the difference between Romney’s effective rate and Obama’s is significant, more disturbing is the difference between Romney’s rate and that paid by regular folks. Take a couple, say a cop and a nurse, or people that run a small business. Let’s say they earn $130,000, all of which is ordinary income. Their deductions and exemptions bring their taxable income down to $ 100,000, meaning that they pay over $ 17,000 in income tax. That’s 13%, the same as Romney. But, they pay FICA on their entire income, at 7.5% (actually 15% since the employer’s portion really comes out of their salaries). So their effective rate is more like 20% or even 27%. Almost all of Romney;s income is exempt from FICA, so his total effective rate is under 14%.
Now, Romney didn’t write the tax laws and I’m not suggesting he pay more than he owes. But, he is running for President which puts some onus on him to fix problems. Unfortunately, the policies he and the other Republicans support would do nothing to reduce the unfairness, rather, they would make it worse.
Agreed. Well said!
I think it will be very interesting if Romney ends up pushing the Republicans to backing some effective Tax Reform that includes making the capital gains rate and income tax rates the same.
I understand the rational for lower tax rates for capital gains….but the ‘flat tax’ side of me says- I am willing to take the risk so that Warren Buffet and Romney pay the same effective tax rate as I do.
Slightly off topic, but Mitt might be the best “poster” for what people have been arguing about with taxing of really upper income people.
Well, I don’t understand the rationale for lower tax rates for capital gains. The closest I come to understanding them is that basis really should be adjusted for inflation. But I suppose tax policy is a bit distant from the topic of this blog.
However, one could argue that the current right-wing meme of charging Obama with instigating class war against the rich is somewhat in the nature of a conspiracy theory. And it’s clear that the class war meme is designed to prevent an increase in the taxes paid by the rich.
This is exactly what I’ve been thinking — Romney’s tax returns are likely to be toxic to this major piece of GOP policy, and I was astonished that his opponents were pressuring him to release his taxes when they should’ve begged him to keep them closed.
Under President Reagan, he would have paid 20- 28%.
Romney paid less than I paid on my UNEMPLOYMENT INSURANCE. That’s right, I’m struggling to get by on UNEMPLOYMENT INSURANCE… and I had to pay more of it in taxes than did Mitt Romney on his millions and millions and millions…
…and the right wonders why we’re SO . FUCKING . PISSED !@!@#
I agree with everything you said!
I concur.
I disagree, better to deal with it now. You know it’s coming up later. The content of the returns wasn’t nearly as damaging as the tapdancing routine. Like a pinned butterfly he was. Who needs a President that can’t function off-script?
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PS: On an income 1/300th the size of Romney’s, I paid 18% in federal income taxes. Another couple of points to the state.
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PPS: If you’ve ever wondered what Republican “close loopholes to lower rates” tax reform would look like, consider what’s been proposed in my state, Okieland. “We can cut all rates by .5% (corp rate by 1%!) by eliminating these 47 ‘loopholes’ ….” The top 5 ‘loopholes’, which cover nearly all the lost revenue:
Personal Exemption $132,699,190
Sales Tax Relief $43,212,000
Investment in Rural Business Ventures $37,406,000
Oklahoma Earned Income Tax Credit $31,887,000
Child Care $31,887,000
Hmmm. Pretty much a wash for me, but the typical citizen here is in for a bath. Meanwhile, a great deal for the plutocrats!
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PPS: I agree with having a lowered rate on investment income, it rewards savers, but believe it should be even more aggressively progressive than the income tax. Say 0% to $50,000, to a high of 50% far below Romney’s Plateau.
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PPPS: For a (nearly) complete archive of Presidential tax returns, click here.
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PPPPS: His tax return was 500 pages?!?!?
Paul, glad to hear you’re pissed! And pissed at the right people! Too many who come up short have been hooked on the conservative Bitterberry koolaid. Trading their economic interests for “family values”. Well, I admire their principles (*cough*). Those family values are way out of my price range. 😉
That’s exactly what I think and why I wrote the article. Romney makes the issue concrete.
I don’t think the revelation will hurt Romney’s chances for getting the nomination. I think most Americans believe that they should pay the least taxes possible while remaining within the law. No one is suggesting Romney broke any laws.
However, now there is a face attached to a very rich man who pays a lower tax rate than they do.
President Obama used the Warren Buffet and his secretary story in the State of the Union speech tonight. Then he described himself as a beneficiary of tax cuts for the rich. I wish he could have worked Mitt Romney in.
I think that kind of rationale is how the legislation got sold. I would have no problem letting investors adjust the basis of an investment for inflation, but now I can buy a stock and hold it for a year in a time of 1-2% inflation and less than half as much tax.
One basis for allowing a lower rate on capital gains is that it takes the potential taxes out of the equation as to whether you should hold or sell. To some extent, a reduction in capital gains rates should increase total revenue.
Polling of Republicans (i.e., people like me) show an inordinate interest in keeping rates low on millionaires so if we win the lottery, taxes will be low for us. At Republican gatherings, there is a fear that the government will take everything you have when you die, even though the estate tax affects very few. The concern about some remote possibility drives policy. Polling in South Carolina showed a healthy demand for smaller government across the whole Republican electorate, in a state which has a net inflow of Federal dollars. It never ceases to amaze me to see a farmer (like my Grandfather, soybeans, corn) who gets some federal farm subsidies, and is on social security and medicare, and whose grandson was on the federal payroll for 18 years, after a free four year engineering education, rail against that massive federal bureaucracy.
Now I’m from the school that says that if we raise taxes, the Democrats, and to some extent the Republicans, will just spend more, and we will never get the deficit under control. We saw what happened when we had a surplus. President Bush (yes, I know he’s a Republican, but if you listen to the debates, the last Republican President was Reagan) just gave it away rather than pay down the debt. Now that I’m no longer career military, my family benefits mightily from these lower tax rates.
I think there is a broader point here – along the lines of what Doc alluded, Romney now also gives a “face” to an issue of the real nature of tax inequity that most people didn’t really pay any attention to or think of – they just bought into the simple meme that richer people pay a higher rate of taxes.
Having Romney’s taxes out there brings the issue of the 15% rate to light…and now you hear a whole conversation happening that rarely took place before – whether investment income deserves to be taxed at a lesser rate than work…and whether that is fair or not. It is a real issue that never broke through…until now, where you have a prominent personal example drawing attention to it.
I also agree that when you combine this along with all of his other recent statements and actions, it just reinforces the theme of Gordon Gecko / Montgomery Burns / Monopology Monacle Guy … he truly is the face of everything that is wrong on Wall Street and Big Money. He represents the arrogant elitist and out of touch portion of the One Percent that not only is the GOP so blatently slavish to, but also to which the finger rightly points for many of our dysfunctional problems in governance as well as the systemic damage our economy suffered. He has turned himself into the poster boy Marie Antoinette for our time.
Also, his tax records seem to be shedding light on the issue of how the ultra rich just tax-shelter their money in off-shore havens… something the President was able to rail against quite effectively in his SOTU speech tonight.
I think the damage from his original tap dance has already been done. Would additional delay have just made it much worse… you are absolutely correct on that. But he’s taken a hit, nonetheless… and while the release dispells the pressure, I don’t think it undoes the self-inflicted damage already done.
I’m totally with you on both of your excellent PPS points, BTW. I agree with you about neeeding some sort of progressive investment tax structure for the very reasons you stated…and that it needs to be extremely low (or nonexistant) at the bottom end and deserves to be 50% at the higher end.
Oh – re: your PPPPS… I’m with you on that – 500 pages… WTF???
Aw, dang, I lost count of my ‘P’s! LOL!
I think we have yet to hear the end of the carried interest rule. That not only taxes some of Gov. Romney’s income which we might ordinarily think of as wages or commissions at the capital gains rate, but the carried interest may be deferred, and, as we learned from the great tax lawyer Mitch McDeere, deferring taxes is a good thing. While I would vote for Gov. Romney over President Obama, if he releases ten years worth of records there will be more plums to pick.
It would never occur to me to deposit money in the Cayman Islands. I’m nervous enough giving my money to be protected by Charles Schwab, who I think is in Nancy Pelosi’s district. And if I were going to run for, say, Governor of Massachusetts, all of my overseas accounts would have been closed and I’d be driving a Chevy, or a pickup truck like Scott Brown. OK, he’s a millionaire. Drive a Cadillac. What was he thinking?
http://johntreed.com/headtax.html
This guy has a way to make sure Romney pays the same amount of taxes as anyone else. Every pays the same amount, not the same percentage of their income, the same amount of money in taxes every year.
I understand the logic that a loaf of bread costs the same for me as it does for Mitt, but whatever he’s paying in taxes is not a hardship for him. Even if he paid 30 percent of his income in taxes, it would not be hardship. Paying $9,999 or so of my income in taxes would be for me.
And please, spare me the “rich are a minority that has rights” crap.
LOL! Good points and you have a beautiful way with words in your fun writing style!
I very much enjoyed it, thanks!
Well said!
The real reason why this is bad is not for the injustice of it but for what it did and does to your country.
The lesson the United States desperately needs to learn is that your trillion-dollar-a-year military budget is nothing more than a gigantic public money sponge.
The American Society of Civil Engineers estimates that it would take nearly $930 billion to fix your country’s failing bridges and roads over the next five years. With estimated spending of $380.5 billion, they predict a shortfall of $549.5 billion.
Add to that the very real costs imposed by peak oil and global warming and tour tax structure is a roadmap to a social catastrophe the scale of which can’t even be imagined.
Besides the argument that a lower capital gains tax rate encourages saving*, one of the other arguments in support of the capital gains tax was the benefit it would have on companies ability to grow an create more jobs (i.e. increase capital). Ideally, that would sound like a logical reason, but, as we have seen, it would also encourage behaviors that negatively hurt companies and the markets (i.e. speculation, shorts, etc.). I am not sure if we would be able to find a way to encourage the healthy investment without being forced to accept those practices that separate investing from any actual investment (i.e. betting on a loss or similar practices).
*I have to wonder how much people our encouraged to save with a lower capital gains tax rate seeing that, with the earlier cut, instead of savings, people took larger and larger loans and mortgages (not to mention leveraging investments and investing in extremely high risk products).
Disclaimer – these are idle thoughts. When it comes to tax rates and economics, the only constant is how many times I find I am constantly wrong.
Are the percentage of people who don’t pay any federal taxes (except FICA) going to be outraged, except in theory? The number is quite large. Our family is one of that number. Our income and deductions for children mean that we get a refund every year of taxes paid. So what segment of the population is outraged (not just theoretically) so much that they would never vote for Romney? You have to take into account die hard Democrats/Republicans who will never vote any other direction. You also have to take into account the likely voters.
My husband works for a private company. I believe the owner is probably a millionaire, but not many times over. I don’t know enough about him personally (he seems pretty generous to the employees) but if he gets hit with a big increase in taxes, will my husband have a job?
There is something that I find disturbing. Every year around my birthday, I get a breakdown of the years I worked with income listed and my benefits upon death or retirement. The past few years there was a disclaimer that there is a projected shortfall. This year, I didn’t even get the notice. Why?
Your husband’s employer doesn’t get taxed on money he pays to employ your husband. That’s a write off. If his taxes were raised, the employer would have an incentive to reduce his own income (to save on taxes), and one way he could do that would be by hiring more employee or raising salaries & benefits for his employees. The higher the marginal rate, the greater the incentive to reinvest rather than take profits.
One difference is that your tax status does not result from a series of complex strategies engineered by an army of lawyers and accountants (at least that is my guess). Your husband takes his earnings in the form of salary, subject to regular income tax and FICA. He is unable to claim them as capital gains, with favorable rates and not subject to FICA. You likely didn’t have children primarily as a tax strategy. I’m guessing you don’t bank in the Caymans or Switzerland (or do you?). I’m guessing your return is not flagged, as Romney’s was by his own accountant, with several potentially abusive transactions.
By the way,though I am nowhere near Romney’s class, I benefit from the low tax rates on capital gains and dividends. But I recognize the rationality of treating all income equally and would be willing to pay more as part of a broad tax reform. And it would not change my investing decisions. In fact it would make investing more efficient if all profits were taxed equally, since then one would look to maximize profits, rather than avoiding taxes.
One of the arguments I hear is that if you raised Capital Gains taxes, it would discourage wealthy people investing. Oh, sure… I guess they’ll all just get day jobs at Wal-Mart instead.
I wanted to answer a few of your comments.
1. You didn’t get a statement from SSA. They have stopped issuing the statements due to budget cuts. See this.
2. I doubt many people will change their opinion of Romney due to his tax rate. I don’t think many people are even suggesting that.
3. The income tax rate on business owners cannot have an effect on their decision to operate a business. This is a common misconception. Tax is only assessed on net income, so it has no effect on the viability of the company. For instance, your husbands salary and benefits are paid out of what is, for the company, pre-tax income.
Holy crap, someone saw the regressives pushing flat taxes and raised them a full crazy! A literal flat tax. Now is laissez faire at its finest! Hey, let’s go ahead and toss in an option to surrender your citizenship in exchange for an exception from his “head tax”. Turn citizenship itself into a vanity object, a club for the wealthy. Hey, maybe we could tie various rights to various levels of tax paid, like a PBS fund drive, or a crowdsourced funding model. Vanna, can I buy an amendment, please? I feel like making some free speech today. Just literally make the gov’t for sale. $9,999 gets you the right to vote in federal elections, and a spread of basic civil rights … perhaps offer them a la carte! … states can set their own limits. For $24,999 you can run for the House, $49,999 the Senate, and for $100,000, the Presidency. Perhaps members of the military can get an exemption for Federal Service? Robert Heinlein, here we come!
Naturally, Mr Head Tax is from the shrink government to the size of a dot through revenue starvation. He wants to slash the gov’t 70% while drastically raising everyone’s taxes! What a deal!
Dumbass.
Never understood that either, since only the net gains are taxed. Unless the rate was =>100%, a person is in no way penalized for investing. A higher rate makes it less attractive, but even if my marginal rate on cap. gains was 90%, I still have 10% I otherwise wouldn’t have. God forbid i should have to work for it or something.
I’m not sure I agree. According to the ABC News/WaPo poll, Romney’s favorability among Independents dropped 20 points in the last week and he is now at 23% favorable, 51% unfavorable. I don’t think it’s just the tax rate. There is the way his tax returns were handled-first he wouldn’t release them, then he’ll release them in April, then he releases 2 years worth. There’s the offshore accounts. But he is perceived as a very rich guy out of touch with ordinary people and paying a rate lower than many working people doesn’t help him.
Well, ultimately with a progressive tax, there has to be some sort of Capital Gains.
Let’s say that this happens: A man and his wife move into a retirement community and sell their house. They bought their house 30 years ago for $50,000. Now, it’s worth $550,000, which is what they sell it for. They make $50,000 of taxable income.
Without treating it as Capital Gains, their income for the year that they sold their house would be $550,000, instead of $50,000, which boosts them up into a significantly higher tax bracket. If they had taken that $500,000 of gross profit on their house and laid it off over the 30 years that they had their house, added with the $50,000 of taxable income, they’d have paid significantly less taxes than what taking it all in one year. Yet, the way that income tax works would force you to take it all in one year.
Your primary residence is exempt from capital gains.
Your comment seems to be based on the idea that someone is suggesting that the concept of capital gains be eliminated. Nobody has suggested that. What’s being discussed is that capital gains are taxed at a different rate than other income.
Charo, unless I am completely misunderstanding you, you do realize you are paying federal taxes, right?
Just like you, I get a refund every year- but that is simply a matter of overpaying Federal withholding. Other than if you are poor enough that you really don’t pay any taxes, and can claim the earned income credit, can I imagine a scenario where you really don’t pay any federal taxes. Look at your tax returns last year- not at the refund, but at the taxes due, vs the taxes withheld.
And that doesn’t even touch of course your social security payments- which are really taxes too.
I don’t know why anyone would be outraged at Romney for legally paying as small amount of taxes as he is allowed by law. But yes, I think there is something wrong with the law that Romney and Buffet are paying- percentage wise- about half of what I pay in taxes.
I also think there is something wrong with the law that it takes 500 pages for Romney to file a claim because of all the complex investments, designed in large part to avoid paying taxes. Our tax system is flawed, and complex in a way that benefits the wealthy.
Oh, but we used to have that in Belgium and Germany before World War One. In Belgium, every man had a vote, but an additional one if he paid a certain minimum in personal tax, an additional one if he paid a certain minimum in real estate tax, and and an addiitional one if he had a university diploma, with a maximum of three votes. To be eligible for the Chamber, he had to earn 10 times that minimum amount in either category. To be eligible for the Senate, it was 100 times that amount, or a doctorate. Funnily the text on the Senate said person instead of man, and so some women, while not having a vote themselves, could be and were elected in the Senate, by men.
The German system was different, but ensured that the socialist party even when getting a clear overall majority of normal votes (happened a few times) only got a third of the seats.
The first world war did away with extra votes for the rich. Fear of the bolsheviks, I tell you.
By the way, us West Europeans may have a higher percentage of total GDP going to taxes, but many countries do not have any capital gains tax. That part of Romney’s revenue would not even have shown up in Belgium …
Paul, I… did not know that. Not really surprised. Feudalism is a long time dying. Thanks for the note! Something to look into.
And you are pissed at Romney for this? Shouldn’t you be pissed at those in Congress who write and pass such legislation? Like, say…Charlie Rangel – who happens to be a Democrat. Who apparently thinks he is not subject to the same tax law as the rest of us….as apparently does most of the current Administration who failed to pay their taxes.
I’ve wondered several times, how much the deficit could be reduced if we could just get EVERY congressional member, aides, and staff to pay their back taxes!
I simply do not get why Democrats want people who make more money to pay more taxes, yet they themselves don’t pay more – if they even pay their taxes at all! I mean, there is no law in place that says you can ONLY pay what you are taxed – they CAN pay more if they wish, but they don’t, and never do. WHY?
I’ll tell you why – because every single American knows very well that any ‘extra’ money they pony up would be squandered right along with the rest of the required taxes they already pay. Congress nor the President are serious about reducing spending or the deficit and until they are, paying more makes no sense at all.
I hardly blame Romney for the tax rate he pays – we all work to pay as little as possible, the least we can get away with by law. If we think the current rates are wrong – WE, as in We The People, not Republicans or Democrats need to lobby Congress for change. We The People allowed the current rates to be passed…it’s not Romney’s fault, as much as Obama would like you believe that – it’s simply not true.
It would appear that Obama accomplished his goal of class warfare if he was able to rile anyone up over this tax issue. I don’t wonder why you are pissed – Obama is leading the charge and he wants you to be pissed at those that make more money than you. You are doing exactly as Obama wishes you to do; however, Obama is not honest about his comparisons and he, like the Republicans are playing political games with your support.
To compare Buffets “investment” income tax rate to his secretary’s “earned” income tax rate is totally disingenuous and really is an out and out lie. He made it sound like Buttet paid less taxes than she paid – which is total bull. At least I hope you did see through his ploy, even though it appeared to work on you. That’s class warfare – alive and well and working to Obama’s advantage.
I don’t like my tax rate, but I don’t begrudge Romney for being wealthy and being able to live on his investment income. I wish we could all do that, but it simply will never happen – Utopia just doesn’t exist in the real world. There will always be the haves and the have nots. I’m a have not, but I’m okay with that. I just want Congress and the President to get spending under control. We don’t need anyone – any class – any sector of the population to pay more tax. The government needs to spend our money more wisely and spend within a budget (of which the President has YET to get passed). He’s doing a magician act. Look over here (inequality of income/taxes/ class warfare) while the real issue (over spending) is over there. And it appears he is doing quite well with his act.
You consider SS taxes??? Money that your employer matches and that you ‘supposedly’ will get back when you retire? That’s not taxes, that’s a forced retirement account – providing SS is still solvent when you retire, of course.
And you do realize that the investment money was taxed at a higher rate when it was earned, and the tax he is paying on the money he earns from it being invested is quite different than earned income, right?
I mean, basically he more than likely DID pay the higher rate on the money he ‘earned’ that is now being invested.
As an example.
He earned by actually working $10,000
He payed regular income taxes (25% or so) at the time it was earned.
He invested the balance $7,500
He pays 15% on the Interest that $7,500 earns.
And the kicker – when he dies and leaves that money to his heirs – The Dems want his heirs to have to pay death/estate taxes of around 20% on both the $7,500 AND the interest. Essentially, they want to DOUBLE TAX the money. They want Romney to pay taxes when earns it, taxes on the interest and then his heirs to pay taxes on all of it AGAIN!
So, Romney likely DID pay what you and I pay on the funds when they were actually EARNED, but on the money he receives as INTEREST is taxed at a lower rate. Obama wants to talk about Common Sense – well, that makes perfect sense to me. To tax him at 25% on interest that he earned on money that he already paid 25% on makes no sense at all.
Not necessarily, There are many dodges in his line of work. Payment into tax deferred accounts. Carried interest-people in hedge funds and private equity like Romney are able to treat the fees they are paid to manage money as capital gains, even though they have no money of their own at risk. We simply don’t know. It would take a team of accountants examining his tax returns dating back many, many years and even then it might be hard to say for sure.
I agree with you Scientist – it is not just one thing or the other… it is the full pattern of how Romney acts and how he handles these things that reinforces this view of him being an out of touch, extravegently wealthy elitist who doesn’t care about the “rabble” below him.
The actual numbers and results in his tax records only serve to reinforce that already existing meme.
Most of your comment is completely OT — but yes, SS is a tax and it’s not a retirement account, and your description of inheritence tax is a fantasy — but as far as I can tell, the rest of your argument is that it is somehow obvious to you that income that comes from interest should be taxed at a lower rate than salary and wages. You are welcome to your opinion. You might be interested to know that current tax law does not grant a lower tax rate to interest, as you seem to suppose. The lower tax rate is for capital gains. I’m guessing you have a concern that investment money is somehow double taxed, but in fact capital gains are only taxed on the increase — that is, what you sold the asset for minus what you paid for it. So there is no double taxation on capital gains.
Dear, dear Sally
Sally, you seem to be arguing both ways- that SS is not a tax and that it is a tax. I would be in agreement that SS shouldn’t be a tax, that it should be going directly into individual investment accounts….of course then it wouldn’t really cover those who might truly need it- the children of parents who die young, but I still like the idea in general. But as it is now, SS deductions are really taxes. Reminds me of when Bush Sr. said “no new taxes” but raised government ‘fees’, which went directly into the general fund.
Well thats not quite right, but yes, I am aware of the argument that this is income based upon money that he already paid income tax on. Thats also not necessarily true, but lets assume it is.
So what? Why do we treat some income different than other income? The word is ‘income’ tax, not “income tax only on salaries and interest, but not investments.”
You do realize that anyone can view any taxes as unfair? Why are taxes on income fair, but taxes on total wealth unfair? Another viewpoint would be to treat individuals like business’s- take total income and deduct all expenses, and tax only the net gain. Would that be fair? It really all depends on your point of view.
I lean towards a ‘flat tax’ world, but I also understand how really difficult that is(another discussion) – but as far as I am concerned income should be income and taxed the same.
Now that brings up a favorite of mine. “Death Taxes”- really known as “Estate Taxes”.
I am always amused at how defensive those who will never pay it are about “Estate Taxes”. Just off the top of my head, I believe the estate tax kicks in for estates of 1.5 million or more, or 3 million or a married couple.
Why do you think it is wrong that his heirs- who never paid any taxes on it, and never did a thing to earn it- shouldn’t pay any taxes? One of my favorite authors, Robert Heinlein even suggested a world where government was entirely funded by estate taxes- essentially the government didn’t tax anyone on their income or wealth, but taxed the entire estates of those who died- with the rational that the heirs did nothing to earn it. I am not quite that extreme, but I have no problem at all with the concept of someone who is inheriting 250 million dollars(Romney’s estimated worth), paying 50 million dollars in taxes and being left with only 200 million dollars they never spent a breath earning.
While I pay 35% taxes on the money I work hard for all year long.
No one likes paying taxes. Anyone can argue for their own self interest in what is a fair tax. But why the poor and middle class fall for arguments that estate taxes for millionaires are unfair, I don’t understand at all. But millionaires around the country thank you for your support.
It’s not that Romney paid a much lower tax rate than I did (although I do believe our tax code needs a major overhaul). It’s his entire inability grasp how most other people live. His ‘not very much’ speaking fees from 2010 that totaled over half a million dollars, or his impromptu $10,000 bet. He has no idea how most of the country lives or the struggles they have to live, and that makes it very hard to believe he could represent all of us.
Agreed.
I find it interesting that people who are educated in matters of literature represnet themselves as the fairness police when it comes to the success and failure of others. The representation for social justice is directly proportionate to thier party affiliation.
In this article, the writer decrys the “unfairness” of Mitt Romney’s low tax rate compared to the middle class as he paid only 13.9%. Conveinently leaving out the fact that this is a 2nd tax on the same dollars. In other words, Mitt would have paid 35% income tax on his money when he earned it and another 15% capital gain when he invested that money.
Obama paid 25 % tax on about $8 million dollars. Lets examine that. How is it the top published income tax rate in the USA is 35% and Obama paid 25%. Where’s the justice.
Furthermore, In John kerry’s case, he not only gave no money to charity the year preceeding his presidential run, He subsequently bought a yacht and registered it in another state to avoid sales tax! Wait, I thought liberals loved paying taxes??!!
Why would anyone be in favor of raising taxes, when we have a bloated gov’t that cant get out of it’s own way?? And to all the liberals,progressives, marxists, commies or what ever else you call yourselves these days, please check the box on the federal tax return stating you are enclosing “x” amount of extra tax money to help fund the government. If you believe you are under taxed, you can do somthing about it right now.
I see you don’t understand the concept of capital gains. If you invest $1000 of the money you earned (and have already paid taxes on) in something, then sell it for $1500, you are NOT taxed on the $1500. You are only taxed on the gain — $500, none of which you have already paid taxes on.
Private equity firms also get to take advantage of some loopholes that mean the partners’ distributions are NOT taxed as ordinary income but are taxed as capital gains. Bills have been introduced to fix that, but it’s a very complicated area.
The top published tax rate is a marginal tax rate, meaning the last $1 is taxed at 35%. In 2010, the Obamas paid 26% effective tax rate, which is their tax divided by their income. Their marginal rate was 35%.
Justice is served.
Apparently, you were unaware of the huge deficit the federal government is running, a deficit caused by Republicans and Democrats alike. At present the deficit is so large that any reasonable spending cut plan simply won’t balance the budget.
Taxes are at historically low rates right now. When I was born in 1950 the top marginal rate was over 90%! Indeed one of the longest periods of sustained growth and prosperity in the country happened when the tax rates were double what they are now.
I would call Social Security an insurance policy and annuity. SS provides disability insurance and is an annuity for the recipient and their survivors.
However, I think that if you pay the government for a government benefit, it is rightly called a tax. Lots of things are really “user fees” like the public library down the street. But it is convenient to aggregate them all under the heading of “tax”.
Don’t forget to wipe the spittle off your keyboard.
Is it hard to type while you’re wildly shaking a fist in the air?
The double taxation crap is a lie meant to snare simpletons. Congrats, Jeff, you got hooked!
Double taxation is on dividends (not capital gains as Jeff said rather ignorantly) and I would be content to change the law so that corporations could deduct what they paid out in dividends (but not donations to Super PACs).
Those who decry the death tax don’t realize that it really closes a huge loophole.
Let’s say I bought 1000 shares Google when it went public, and today my investment is worth many times over what I paid for it. If I sold it today, I would pay a capital gains tax of 15%. If I die today instead and my heirs sell it, they will pay no tax on the gain because the basis of all assets resets to the fair market value at my death.
Even with the current estate tax, they wouldn’t pay anything unless my estate was over some number of millions of dollars.
Agreed, but it all mushes together in so many minds, and they get all hot and bothered about stuff that “just ain’t fair!” … Jeff is not the first I have seen referring to capital gains taxation as double-taxation. Add death taxes into the same category.
The people have always been anti-tax …. our history is that of people trying to get away from gov’t, first from England to the colonies, then from the early republic to the West. Plenty of tax rebellions along the way. We’ve been closed in for a long time now. Time to get over it.
Speaking of tax rebellions … in 1381, the King introduced a “poll tax” (essentially a “head” or “flat” tax). Commoners stormed the Tower, dragged out the Archbishop of Canterbury, and beheaded him. Very crudely. His mummified head is still keep in the Tower. Flat tax proponents beware 😉
The one argument from the other side that does make sense is that for assessing capital gains, the basis should be adjusted for inflation. If I put $10,000 in GE stock 30 years ago and held it until today, that initial investment would be closer to $20,000 in today’s money. So I should be taxed on the gain from $20,000 to whatever the shares are worth today, rather than the gain from $10,000.
I completely agree with that, Scientist, but the devil is where the rubber meets the road! The inflation standard would need to be objective, based on gov’t statistics, and I assume it would be. If the original purchase can’t be documented (something I’ve not looked into, say, a case of bad recordkeeping or a messy inheritance situation), I assume the taxpayer is on the hook for the full sale amount?
Need to do my taxes tonight. Sorry to say i have no investments in the marketplace at the moment. At least it keeps the taxes simple!
Inflation indexing would follow the CPI. When you sell an asset you have to provide a basis. The burden is on you to keep the records and if you are audited you have to justify the basis. Technically, if you can’t, the IRS can assign a basis of 0, but my understanding is that they will generally accept a reasonable estimate.
I can testify that once you have investments, doing your taxes can be complex. I generally can’t even do mine until I get my statements from Ameritrade and they don’t even send them out until late Feb. And then, sometimes, just when you think you’re done, they revise them.
Sorry, didn’t mean to imply that I’ve never had investments, just no cenventional investments at the moment. And I haven’t had any record-keeping trouble. I have had experience with the state tax commission, in which the assumptions were very clearly guilty until proven innocent! I am surprised to hear the IRS might accept an estimate.