Romney's Taxes

 

"You Never Give Me Your Money" - The Beatles

Well Romney has released his taxes for two years and they are even worse than I had imagined.  I can't wait until he gets pressured to release returns from years in which he wasn't already planning on running for the presidency -- I cannot imagine how horribly illustrative they will be in terms of the fundamental unfairness of the American tax system.

Just based on the brief things that I have read and heard this morning, it looks like Romney had income over $20 million for both years and paid an effective tax rate of 13.9% in 2010.  Unbelievable.

I pulled my 2009 taxes out of my filing cabinet this morning -- I think 2010 is still at my office somewhere -- just to see how my wife and I stacked up against Mittens and his wife.  I am an equity partner in my law firm, which means I derive income based on firm profits and that I am treated as self-employed under the law, meaning I pay both the employer and employee sides of the FICA tax.  My income can fluctuate quite a bit from year to year as profits ebb and flow, but I make a pretty nice living by any reasonable standard after 25 years of plying my craft.  My wife is a salaried professional who makes a six figure income in her own right, so in terms of family income we hover right around the top 1-2% depending on the year.  (Typical of most people I know in this demographic, we have virtually no investment income to speak of -- we fully fund our retirement accounts, pay our big mortgage and tuition bills, take a nice vacation or two, and try to save a bit, but we do not have capital gains or interest income worthy of mention.)    

In 2009, which was a very good year for me (although not in quite up to Mitt's speaking fee income), we paid an overall federal tax rate of 30.3%.  (We get hit increasingly by the Alternative Minimum Tax, which wipes out a good bit of our mortgage interest deduction.)  We paid an additional 7% effective tax rate to the District of Columbia.    

I never complain about my taxes.  I feel incredibly fortunate to be where I am in life and would not object to paying a bit more for the greater good.  (And I can assure people that marginal tax rates have no impact at all on our business decisions in terms of trying to make money.)   But when I look at the tax rate paid by this "unemployed" rich kid I see red.  The meager taxes paid on capital gains and the gaping tax loophole that allows ordinary income for these investment management types to be treated as "carried interest" are completely outrageous. 

I have got to believe that these tax returns -- and the carried interest, Swiss bank accounts, money offshored in the Caymans, and the like -- are really going to hurt Romney.  He will be Exhibit A in the case about the unfairness of our tax system and how it is manipulated by the 1% of the 1% so that they pay far less than their fair share.  The notion that this group could not pay a bit more in taxes has got to strike just about everyone in the country as preposterous.  This is not going to be a one day or even a one week story.  It is going to follow Romney throughout the entire election season and should give President Obama a pretty fat target at which to to shoot.   

Oh yeah, and this is how the great "job maker" made his tens of millions a year.  I am sure people will be impressed by his contribution to the economy. 

 

Comments

[low-tech cyclist]

If we raised his tax rate to what the rest of us pay, maybe he'd do us the favor of going Galt on us.

[Sir Charles]

Yes, and what a blow to the economy that would be. Companies would not then take on ruinous debt to pay off Bain investors, thereby avoiding bankruptcy.

Think of the bankruptcy lawyers!

[Paula B]

Work this into the equation. Those of us who are retired or semi-retired gain most of our income from Social Security and/or small pensions. (Do the math: Probably the most a couple could receive in SS is something around $25,000/an.) That's REAL investment income, i.e., OUR own salary invested for our future the future of others. What we're collecting is based on money WE paid into a fund for 40 or more years and finally get to access it, one cup at a time. To think that he would propose cutting us down to 3/4 of a cup to offset his tax own liability on money he never actually earned as salary, is disgusting.

[oddjob]

The meager taxes paid on capital gains

I was in grad school (on an assistantship) when George H. W. Bush was president and I still can recall how struck I was when I heard him speak passionately on the importance of reducing the capital gains tax rate. It was the only topic I can ever recall hearing him speak about with any internal passion at all. Every other time I ever heard him speak passionately about anything it was also innately clear to me that the passion was purely artifice (akin to Romney's but better delivered).

I guess that comes with being to the manor born.

[oddjob]

Oh yeah, and this is how the great "job maker" made his tens of millions a year.

Legal theft would more accurately describe the activity, I think. It's one thing to rework an ailing corporation, but it's an altogether different thing to move in, wildly boost its debt, and then help yourself to a huge chunk of the available cash as "reimbursement", only to then strip the corporation to the point that it goes bust.

[oddjob]

On the other hand (fwiw) this smidgen of alternative perspective was published in the Boston Globe about two weeks ago, back when Gingrich & Perry were just beginning to blast away at Romney's record with Bain Capital:

Romney foes put Bain on defensive

[Prup (aka Jim Benton)]

It would be deadly in the general -- and is stomach-turning in general -- but it's gonna bote him in the primaries as well. Many Republicans respect/worship businessmen -- but for their success, not 'mere money' if you see how they respect other forms of success. They don't mind wealth being flaunted.

But
I think the sheer magnitude -- against the jokes about being 'unemployed' and 'liking to fire people -- will shock some; the tax rate -- against their own -- will bother others.

The real 'killer' is the phrase "Cayman Islands." You guys don't watch crime shows the way I do, and the way many Republican (and Democratic) voters, and that phrase has become code for 'something crooked.' I literally can never recall a person having an 'innocent explanation' for a Cayman account -- it usually translates as 'drug money' or 'money laundering.'

And one thing that makes Republicans Republicans is their tendency to respond to 'code words.'

Oops!

[oddjob]

"Cayman Islands." ... that phrase has become code for 'something crooked.'

The phrase "Swiss bank accounts" also often has that aura about it.

[Sir Charles]

I actually vacationed in the Cayman Islands a couple of years ago. It was quite nice.

Strangely enough I had to bring along investment documents for a hedge fund to review -- huge, deeply boring documents at that -- that one of my clients was investing in. That and sun and surf are the local industries.

The fact that a fund is domiciled there does not make it crooked, but it is to take advantage of local tax and registration laws.

However, the average person is not going to like the sound of it.

[kathy a.]

in 2010, we paid 34% federal and more in state taxes, maybe around 8%.

(we also have a very high sales tax, close to 10% in my area -- which is a tax that hits poor people pretty hard.)

i agree that the combination of a LOT of unearned income and the rather shockingly low taxes on it are off-putting. most people have to work to have money coming in -- even the business people he is counting on. hardly anyone has *that* kind of money coming in, no matter how hard they work. mitt's tax rate is obscenely low. he's not exactly endowed with a good grip on the realities of finances for most people. (but brooks says he is tenacious, right down to his DNA!)

[MR Bill]

When Mitt frames criticism of the structure of his taxes as "an attack on the Free Enterprise system" and anti Capitalist, he makes a big big opening for Obama.

[low-tech cyclist]

Taking (Federal income and payroll taxes and state income taxes)/total income, we paid a tad over 27% in taxes on our income.

There were, of course, property and sales taxes and gas taxes and stuff like that on top, but let's stick with just taxes on income to have an apples-to-apples comparison with the Mitt.

That means we paid just shy of double the tax rate that Mitt did, even though we made roughly 1/100 as much as he did. And unlike Mitt, for whom that money rolled in whether he hit the campaign trail or sat on a beach, my wife and I had to show up at work every day to keep those paychecks coming.

And we're comparatively lucky - most working people would quite legitimately envy our jobs, whose most physically taxing component is the walk between the parking garage and our desks, and equally legitimately envy our paychecks, which put us in the top 5% of households with respect to income.

So if we've got a legitimate grudge against Mitt Romney, it's nothing compared to the one that most Americans have.

[lingin]

I honestly don't think this is going to hurt Romney as much as most of you think. I think most people are going to look at the amount he paid ($5 - $6 million) and think he paid a lot of money. In fact, I wouldn't be surprised if most people think he paid too much. They're going to look at only that dollar figure not the percentage of his "investments."

[Sir Charles]

lingin,

It's possible, but I tend to think not.

Especially if the point about the inequities of the tax percentages gets highlighted again and again, which it will.

[oddjob]

"...Romney is half right when he says his critics are putting capitalism on trial. This election is putting his brand of capitalism on trial...."

Gingrich is still going all populist on Romney. In fact, he's expanding his populist attack.

[Sir Charles]

This is going to be fun.

[oddjob]

Excellent read on the next set of likely Romney revelations that will give him heartburn:

`The problem with being the Swiss bank account guy’

[oddjob]

Sen. Carl Levin (D-MI) says Mitt Romney will have to make his pre-2010 tax returns available. That may sound like a predictable demand from a partisan Democratic. But it’s more than that....

(AKA: Top Dem Offshoring Expert Smells Something Fishy In Romney’s Tax Code)

[Paula B]

How long would it take Mitt to earn what you make in a year? There's an app for that: http://slate.me/wZwkZk

[Prup (aka Jim Benton)]

It sounds trivial -- and may be -- but 'code' changes as rapidly as slang, and nothing sounds as weak as testerday's slang -- think about how we laugh at their use of 'hippie.' And "Really, now, I mean, 'Swiss bank account?' Really? That is so last century!"

Seriously, the phrase no longer has the emotional connotations it once did. The key words that will resonate today are 'Cayman Islands Account.' That has the same emotional echoes as "Swiss bank account" used to -- only worse.

'Swiss' could imply 'hiding assets from a spouse' or 'tax evasion' -- neither are major sins to many Republicans -- as well as 'criminality.' "Cayman" has such a strong echo of criminality that the immediate echo is 'drug money' or 'money laundering.' (And it's played that way on tv. If a cop hears "Cayman Islands Account" he doesn't wonder about whether the guy is invoved in criminal matters, he just starts investigating -- sure he'll find something. The other echo is the sound of a mechanically-disguised voice instructing the relative of a kidnap victim -- or someone being forced into criminality through threat -- to 'transfer the money to this account in the Caymans.' -- So much so that when I saw a movie that used "Antigua" as the account holder I was disconcerted until i realized how old it was.)

It may not matter, but I'd switch the phrasing.

[oddjob]

I realize that, Prup, and I don't doubt that Senator Levin does as well, but as he has pointed out, Romney's spokesperson said it was "an ordinary Swiss bank account" and there is no such thing if you're not a Swiss resident.

[oddjob]

Swiss bank accounts are used by (non-Swiss resident) people when they want to hide something.

[kathy a.]

oddjob -- love the link to the smelliness of offshore accounts. linked in that link is a TPM piece about how those of romney's ilk get such great tax breaks.

paula -- great calculator! i especially like the part about how long it would take me+spouse to earn what mitt earned in 2010. suffice it to say that it would take many, many generations, whereas mitt achieved our earnings for that entire year in an extremely short time.

[oddjob]

Whether hiding money from the IRS is not repulsive to Republicans kinda isn't really the point. It's whether other voters will be repulsed or not this autumn that matters most.

[Prup (aka Jim Benton)]

oddjob: They will, of course. But we can help, as well. AzBlueMeanie has an interesting idea:

I am curious what one of those 4 nights and three days in the Cayman Islands packages costs. I was thinking a "Visit Mitt's Money in the Caymans" raffle might make a good fundraiser for Democratic organizations. You need to bring back photos of his P.O. Boxes in the Caymans.

That's the sort of thinking I like seeing from bloggers, ways we can make our voices heard as a unique sound in the Democratic Donket Pack. (Next new open thread I might repost the three I suggested a week or so ago.)

And I'm sorry, but we need to start doing something. We are the ones who can begin to 'change the discourse' -- the Party has shown an unwillingness to do so since 1974 -- so we can begin to respect -- and win respect for -- our own ideas, ideas that are a lot more popular than we let ourselves think.

[Prup (aka Jim Benton)]

And remember, any time I suggest 'stunts' like this, even if they are aimed at a particular district, they are meant to bring attention to policies of the whole Republican Party -- or to force people to support or denounce other Republicans.

And they are designed to 'get people talking' but, ideally not about the stunt itself, but about the idea behind it and the policies it highlights. And while, yes, we have to count on the 'blimp-riders' to pick it up, we are not aiming them at their 'refined minds' but at the actual voters. (Thus "Cayman Islands" not "Swiss bank" and, more directly to the point, no more "Boehner golfing" ads that are ohsoclever but never even mention that there is a candidate to vote for, Justin Coussole -- nae that the ad viewers and heaven help us the ad makers probably never heard.)

[oddjob]

:)

[Prup (aka Jim Benton)]

I will translate that smile, oddjob, as 'Oddjob, reporting for duty, sir!' and prepare your orders.

Seriously, I have been hoping right along you'd be interested and would help out in small or large ways, from asking around the gay-owned or oriented businesses you patronize if they'd be willing to allow a stack of political pamphlets to be left for their customers to take to finding someone to run the whole show. (I'll gladly take credit for the original idea and give whst help necessary, clerical, editorial, or design, but I have absolutely no administrative ability, financial ability, or contacts.)

[Orlando Family law Attorney]

RE: "You Never give Me Your Money" by The Beatles. I can't decide if this song best resembles Mitt Romney's Tax paying practices of under 14% or my last marriage.
While many pay taxes over double the amount that Romney paid out in 2010; despite banking multi-millions from Bain Capital.

IMO, Romney has corporate puppet written all over him and I am disguised that the State of Florida voted him the winner of the Florida primary. This country is undoubtedly headed for self destruction.