Mitt Romney has released the broad outlines of his tax returns for 2010 and 2011 — $45 million in income over those two years, with $6.2 million in taxes paid. The complete returns for 2010 and more detailed estimates of what he will pay in 2011 will be released later today.
Overall, Romney paid taxes at a 13.9 percent rate. For comparison’s sake, two other wealthy men who are prominent in American politics paid a considerably higher percentage of their income in taxes in 2010: Newt Gingrich paid at a rate of 31.7 percent; Barack Obama paid at a rate of 26.3 percent.
So why that immense difference? Why did Obama and Gingrich pay taxes at almost twice the rate of the considerably wealthier Romney?
Because while Gingrich and Obama made most of their money through work, most of Romney’s income was generated by doing nothing and allowing money to make money. Under the American tax system, that kind of self-perpetuating wealth is taxed at less than half the rate of income generated through labor.
If the gap between the rich and the rest is growing larger — and it is — the tax code is making that gap worse.
And that’s really the major issue here. Based on the two years made available so far, Romney’s tax returns are useful less as a source of insight into the candidate than as a case study of the gross inequities of current tax policy.
Why should wealth be taxed at such a lower rate? And remind us again — why would it be such a terrible idea to end the Bush tax cuts for Romney and others as a way to help address the deficit problem? If we’re going to have to cut Social Security, Medicare, Medicaid and other programs that help average Americans — and at some point we will — why shouldn’t more affluent Americans also sacrifice in some way as well?
As Warren Buffett put it yesterday, Romney is “not going to pay more than the law requires, and I don’t fault him for that in the least. But I do fault a law that allows him and me earning enormous sums to pay overall federal taxes at a rate that’s about half what the average person in my office pays.”
It’s hard to argue that someone with a net after-tax income of $38.8 million — a tidy sum during a two-year period in which millions of his fellow Americans lost their jobs, homes and careers — would suffer much if asked to contribute more.
– Jay Bookman