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Wednesday, January 18, 2012

Keeping his Mitts on his money

Posted By on 01.18.12 at 03:00 PM

"I'm not worried about rich people; they're doing just fine."
—Mitt Romney, Oct. 11, 2011

They sure are doing fine. Yesterday, Romney—whose estimated net worth is $250 million—allowed that he's been paying an effective tax rate of 15 percent over the last decade—a much lower rate than is paid by most Americans who make far less.

Romney's family income in 2010 was between $10 million and $43 million, according to a National Journal analysis of required financial disclosure filings for candidates. His speaking fees alone last year, $374,000—which he characterized yesterday as "not very much"—easily put him in the top bracket (35 percent) for earned income. He also made some money from his book, No Apology. But the vast majority of his income is from investments. Thanks to tax cuts by Bill Clinton and George W. Bush, the rates on capital gains and dividends from investments max out at 15 percent. The tax rate for most married couples on salaries and wages is 25, 28, 33, or 35 percent.

Romney's content with the disparity between capital gains and earned income taxes. The prohibitive favorite for the Republican presidential nomination—his chances are at 91 percent today on the predictions market Intrade—he says he'd leave capital gains at 15 percent for the mega-wealthy, and get rid of the tax completely for families with gross incomes below $200,000.

"Mitt Romney believes in the conservative principle that Americans, to the maximum extent possible, should be able to keep the money they earn," his tax plan says. "We need taxes to pay for the operations of government. But they should be collected by a system that is simple and fair." Raising the rate on capital gains for the really rich would only strangle the economy, according to Romney: the rich would invest far less if they were subject to higher taxes, and that would stifle job creation.

Not true, billionaire businessman Warren Buffet famously declared last August. In his New York Times op-ed, "Stop Coddling the Super-Rich", Buffet wrote that in the 1980s and 1990s, when capital gains were taxed like ordinary income, as high as 28 percent, "According to a theory I sometimes hear, I should have thrown a fit and refused to invest." But he didn't refuse, nor did his peers, Buffet wrote: "I have worked with investors for 60 years, and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation."

The nonpartisan Congressional Research Service came to a similar conclusion last year: lower capital gains taxes "mostly benefit very high income taxpayers" without stimulating economic growth.

Romney is the richest person to run for president since Steve Forbes in 2000, and the third richest ever, after Forbes and Ross Perot. In Monday night's debate in South Carolina, he said President Obama "wants us to become an entitlement society where people in this country feel they're entitled to something from government and where government takes from some to give to others. I'm running to make sure that we don't transform America into something we don't recognize, but instead we restore the principles that made America the hope of the earth."

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