Thursday, January 26, 2012

What We All Learned from Mitt Romney’s Tax Returns

Like How Much Money He Makes and How Little His Effective Tax Rate Is –

In another of a series of flip-flops Mitt Romney has released his 2010 tax return and an estimate of his 2011 tax return after saying for months that he would not do so.  To his credit Mr. Romney admitted it was a mistake not to do so; to his detriment this just looks like one more time where he flip flopped on an issue.

So what do the tax returns tells us, well not a whole lot, but there are some interesting points and some conclusions that can be drawn.

  1. The tax returns put a human face on the fact that very wealthy people have had their taxes reduced over the last several decades, and particularly in the last decade.  This heavily skewed reduction in favor of the wealthy was not a secret, but it is much more meaningful when we can see it in action.

  1. Mr. Romney is in favor of having the top tax rate be 25% instead of the current 35%.  At 25% Mr. Romney’s tax bill would go up about 40%.  One suspects he did not include his own taxes in the pronouncement.

  1. If Mr. Gingrich’s tax proposal is enacted Mr. Romney will pay zero in federal income taxes.  To his credit Mr. Romney has pointed this out, but the real news here is just how much in favor of the wealthy people like Mr. Gingrich want to reduce taxes.  Everyone can have their own opinion on what the taxation level should be, but really does anyone propose that people with income in excess of $20 million should pay no tax?  Ok, anyone except radical Conservatives who want to shift the burden onto the middle and lower income groups.

  1. Mr. Romney appears to have followed both the letter and the spirit of the law (the spirit being that the tax laws have been radically skewed in favor of the investor class) but why not.  If you can have this low a tax rate by legitimate means, what possible reason is there to try and cheat?

  1. Mr. Romney did not earn any wages or salary from a job.  He may truly know how to create jobs, but just not know how to create one for himself.  Actually he is self-employed, and earned over $600,000 from self employment income.  Or as he would put it, “not very much”.

  1. A Director’s fee of about $113,000 was paid to Mr. Romney by the Marriot Corporation.  Assuming Mr. Romney spent 100 hours in this job, which is probably too high an estimate this comes out to more than $1,000 an hour.  Nice work if you can get it.

Well, you get the picture, as Mitt says, he pays a lot of taxes, and he does.  But the reason he does is that he has a lot, a whole lot of income.

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