2012 Tuesday: The Romney tax return distraction
Mitt Romney’s tax returns are slowly leaking out, with full details to come later today. (UPDATE: The 2010 returns and 2011 estimates are available on Romney’s campaign website.) And as fully expected, progressives are in high sanctimony about his effective tax rate of 14 percent — as if they would have thought he’d fulfilled his patriotic duty by paying 25 percent, or 35 percent, or 50 percent, and still had well over $10 million they hadn’t gotten their claws on.
Lefties who always harken back to the Clinton-Gingrich-Lott years as a golden era of satisfactory, budget-balancing tax rates seem oblivious to the fact that the difference between what Romney paid under the current rates and what he would have paid under the rates that prevailed then is roughly $900,000. No, you’re not missing a decimal point: At a top income tax rate of 39.6 percent and a capital gains rate of 20 percent, Romney would have paid something like $900,000 more on his $21.7 million in 2010 income (capital gains of $20.8 million and other income of about $0.9 million).
If you actually believe an extra $900,000 in taxes paid would have spared Romney this political headache, I’m surprised you can actually read this blog post.
But that’s not all. Let’s say Romney’s capital gains not only had been taxed at the same top rate as regular income in 2010 (35 percent) but that he hadn’t been able to reduce his taxable income through charitable donations. In that case, Romney would have had something like $14.1 million left over after federal taxes (and a lot of charities would have failed to help a lot of people, but that’s another argument for another day). In reality, Romney donated $2.98 million to charity and paid $3 million in federal taxes, leaving him with $15.7 million.
Again, it’s foolish to believe the wealth-envy industry would have been satisfied with such a difference.
We could run any number of scenarios producing any number of hypothetical results (none of which would be truly accurate, because they all wrongly assume a differently structured tax code wouldn’t have affected Romney’s behavior). At the end of the day, it’s not really about that.
It’s not really about balancing the budget — not when the president and congressional Democrats make no secret of their desire to increase spending at least as fast as revenues might grow. Witness President Obama’s 2012 budget proposal, which assumed taxes would go up as he desired starting in 2013 — and yet, for the rest of his presidency, would not have cut the budget deficit even to 3 percent of gross domestic product. His budget deficits after raising taxes would have remained higher as a share of GDP than George W. Bush’s average budget deficit from the time he cut taxes until the housing bubble burst.
It is, however, about whose vision is best for the economy: Obama’s vision of a government that consumes a larger share of Americans’ production than this country has ever seen on a sustained basis, or the alternative of a government that returns to a rational size based on our historical experience and economic reality.
Because conservatives understand and acknowledge that tax rates affect individuals’ and businesses’ incentives and thus their behavior — the left understands this, but only acknowledges it when arguing for policies such as “green” taxes — we often get bogged down talking about the tax code. (Yes, my hand is raised here, too.)
But as Milton Friedman taught us, what really matters for the economy is the size of government spending. What the citizens don’t pay in taxes now, they pay in future taxes (debt) or price inflation. (Credit where credit’s due: Ron Paul is the only presidential candidate who consistently makes this case.)
The left is not making an issue of Mitt Romney’s tax rates out of an interest in closing the budget deficit. As Reagan learned to his chagrin, agreeing to raise taxes in exchange for promises of spending cuts only leads to higher taxes and higher spending. It would happen again if Obama-Pelosi-Reid got their way and took a larger chunk from “the rich,” as their unserious proposals for “cutting” spending demonstrate.
It is purely the politics of envy and redistribution: See those rich people like Mitt Romney? If you elect us, we’ll take more from him and give it to you.
That’s what the Romney tax returns story is really about. Shame on those Republicans who go along with it for their own temporary political gain, and woe to Romney if he can’t use this occasion to make the case for keeping money in the private sector rather than siphoning it off for ever-larger government.
– By Kyle Wingfield
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356 comments Add your comment
Kyle Wingfield
January 24th, 2012
3:45 pm
GT: “Get involved in this country”? The man paid more money in federal taxes in 2010 alone than I will probably pay in my lifetime! But I, and people at or below my income level, are “involved,” and Romney and people at his income level are not?
Hillbilly D
January 24th, 2012
3:59 pm
The man paid more money in federal taxes in 2010 alone than I will probably pay in my lifetime!
But is your tax burden at 15%?
GT
January 24th, 2012
4:00 pm
Kyle “watch my hands they will never leave my fingers”. Your party has become the party of the slight of hand. You have a monkey on your back in Gingrich. The man is not just happy winning debates he has to nuke the room and his whole party doing it. It doesn’t matter what the White House calls attention to, it fall on deaf ears and hard heads. Your boys are so worked up Newt could come on the stage naked and one million men would walk the street the next morning naked in his support. SC proved one thing to me. They finally woke up over there and realized a black man is living in the White House, news moves a little slow down here. I found it no small wonder that this red meat pep rally they held was within a few miles of Fort Sumter. I am surprised they didn’t have it right on the ruins fireworks and all.
MarkV
January 24th, 2012
4:02 pm
Kyle Wingfield @3:42 pm
You implied that it was a paltry sum by your comment “No, you’re not missing a decimal point.”
As for you comment about motivation, your lack of logic is apparent. Defining “fair share” and having as a motive envy and pandering are different concepts. What you are saying is that if someone does not consider the taxes fair, even if he/she cannot exactly define what fair would be, his/her only motive can be envy or pandering. That is both illogical and insulting.
Linda
January 24th, 2012
4:03 pm
Tonight in Obama’s State of Union Address (political speech), you will hear him say, “…pay their fair share” twenty-eleven times.
The fed. marginal income tax rates are already progressive AND fair. They are: 10%, 15%, 25%, 28%, 33% & 35% for married filing jointly. The 35% bracket is for those making over $379,150.
The only capital gains rate of 15% is for long-term capital gains. The other 5 capital gains tax rates range from 25% to 35%.
Wage earners pay taxes on their income. If they invest their disposable income, they pay taxes AGAIN.
Romney probably paid 35% when he was employed & ANOTHER 15% since he became an investor.
The fed. govt. has proved beyond a shadow of a doubt that it is a poor steward of taxpayer dollars & the Dems. have proved that they have no intention of reducing spending NOR reducing the natl. debt. They are the ones who have been UNFAIR to the American people in their words & deeds (lies & deceptions).
Somewhere over there
January 24th, 2012
4:03 pm
GT
Why are you here?
Kyle Wingfield
January 24th, 2012
4:09 pm
No, MarkV, that comment was all about comparison to the rhetoric of the “fair share,” which would have you believe Romney alone should be paying millions more every year.
GT
January 24th, 2012
4:10 pm
Kyle my point exactly. I want a debate of ideas, doesn’t bother me to lose a few, because I am not really losing if I am a real American and the winner has a better idea. There are more good Republicans not running in Atlanta, Georgia than are running in the whole country. Most of those good American are right up there in the 1% the rest of us can’t afford the time off and like in my case don’t have the imagination that a self made billionaire may have. Gingrich sounds like a drunk at the bar talking about politics, surely there is something better out there calling himself a Republican.
Somewhere over there
January 24th, 2012
4:12 pm
“Most of those good American are right up there in the 1%”
If you love communism so much, move to NK.
JDW
January 24th, 2012
4:14 pm
@Linda…”Wage earners pay taxes on their income. If they invest their disposable income, they pay taxes AGAIN. Romney probably paid 35% when he was employed & ANOTHER 15% since he became an investor.”
I know you struggle with complicated concepts , but you only pay taxes on the PROFITS from investments not the ORIGINAL CAPITAL that was already taxed as income.
Sarah Coulter
January 24th, 2012
4:15 pm
” Wanting the upper 1% to get involved in this country is now called envy”
It’s not the rich folks fault that your poor. Maybe you should quit crying, change your diaper and save your money.”
Wouldn’t it be cheaper to just rinse the diaper out? But it is the rich folks fault that you don’t know the difference between “your” and “you’re”.
JDW
January 24th, 2012
4:16 pm
BTW this just in…$12.9 million of Romney’s income came from carried interest taxed as capitial gains…now we know why he likes that particular loophole.
Somewhere over there
January 24th, 2012
4:18 pm
“Wouldn’t it be cheaper to just rinse the diaper out? But it is the rich folks fault that you don’t know the difference between “your” and “you’re”.”
Awe, the little baby wants some more attention. Sarah, I’ve noticed you haven’t added one single opinion to the topic. Instead, you throw out mindless insults.
Keep trying, little one.
Bless yer heart.
Somewhere over there
January 24th, 2012
4:19 pm
” But it is the rich folks fault that you don’t know the difference between “your” and “you’re”.”
Awe, Sarah found a typo. Good fer you, little one. And no, it wasn’t any rich persons fault that I made a typo. It’s called being human, sport.
Have a nice day.
JDW
January 24th, 2012
4:21 pm
@Kyle…”The man paid more money in federal taxes in 2010 alone than I will probably pay in my lifetime!”
Point is that he profited from the system to a much larger extent as well…it’s a simple concept…those that benefit from the system to the greatest extent should pay the lion’s share of the maintenance costs. After all, even you can’t think Romney could have made that level of income without the imputed aid of the rest of us. You know the people that work in the companies, buy the products, fight the wars, provide the services, and otherwise give ole’ Mittens the free time to reap the benefits.
JohnnyReb
January 24th, 2012
4:22 pm
Is there anyone from the Left that can explain “fair share” in terms other than the rich should pay more? What is fair?
Can the Left explain how they justify the current Progressive tax structure as being fair?
Is it fair that 47% pay no federal income tax? If they paid something, even if small, would it not be more fair than them paying nothing while others pay progressively more?
Let the bleeding hearts begin.
Rafe Hollister
January 24th, 2012
4:23 pm
I’m willing to bet the $3M Romney gave to charity did more good for mankind than the $3M he paid in to the federal treasury.
We probably used the $3M in federal income to finance the study on why pigs stink, funded some green energy boondoggle, or handed it out to some Katrina victim, who actually lived in Nebraska and has never visited the Gulf coast.
Doesn’t it scare even you libs/progressives to think of living in a country where Barry Oblamer was the sole judge of “fairness” and did they “pay their fair share”. Seems the only people who have benefitted during this Obama depression have been friends of Oblamer, like the Solyndra guys, Brazil’s potentates and Warren Buffet.
Have all you libs seen the charts showing all the thousands of pipelines crossing the Ogalla acquifer in Nebraska. I thought, listening to Obama, this area was virginal. Looking at the charts makes one wonder, what is wrong with #1001 pipeline?
Not sure if you guys who depend of the MSM will ever see the charts showing all the pipelines, but you should do some research.
Election year politics obviously trumps jobs and energy prices.
Somewhere over there
January 24th, 2012
4:23 pm
“those that benefit from the system to the greatest extent should pay the lion’s share of the maintenance costs.”
So you’re a communist.
Tiberius - Your lightning rod of hate!
January 24th, 2012
4:23 pm
“I know you struggle with complicated concepts , but you only pay taxes on the PROFITS from investments not the ORIGINAL CAPITAL that was already taxed as income.”
Either way, that profit wouldn’t have been realized if the capital hadn’t been risked, thus the reward should not be taxed at all.
GT
January 24th, 2012
4:24 pm
Whose crying? We are winning this thing, they have already ordered the champagne in the White House. You’re right about one thing it is you’re not your, I took my lessons in an Atlanta Public School house, it is a wonder I can speak at all.
Somewhere over there
January 24th, 2012
4:24 pm
“Is there anyone from the Left that can explain “fair share” in terms other than the rich should pay more? What is fair?’
The left ONLY cries about how the right should pay more in taxes. You’ll never hear any of them say that Obama, a millionaire, or Clinton, a millionaire, should pay more in taxes.
Again, left wingers don’t get the concept of capitalism.
Somewhere over there
January 24th, 2012
4:25 pm
JDW
Let’s talk about how Clinton made 76 million in speaking fees.
Tiberius - Your lightning rod of hate!
January 24th, 2012
4:26 pm
“those that benefit from the system to the greatest extent should pay the lion’s share of the maintenance costs. ”
They actually do already.
But let’s take that a step further, shall we? Shouldn’t those who benefit the most from social programs pay at least SOME of the maintenance costs under your theory?
Somewhere over there
January 24th, 2012
4:26 pm
“We are winning this thing, they have already ordered the champagne in the White House. ”
Good, it’ll be fun watching them get drunk as they get booted out.
Kyle Wingfield
January 24th, 2012
4:28 pm
JDW @ 4:21: But he and other high earners ARE paying the lion’s share of the maintenance costs. As every analysis of the tax structure of this country, the most progressive one in the industrialized world, demonstrates.
Like you said: simple concept.
Somewhere over there
January 24th, 2012
4:29 pm
“You know the people that work in the companies, buy the products, fight the wars, provide the services, and otherwise give ole’ Mittens the free time to reap the benefits.”
Ok, so you hate rich people. Got it.
Somewhere over there
January 24th, 2012
4:30 pm
JDW
What kind of trailer park do you live in since you are obviously poor.
Linda
January 24th, 2012
4:31 pm
JDW@4:14, You really get off trying to insult those with which you disagree. What’s your problem? You seem to be a fairly intelligent person. Can’t you see that it’s impossible to have an intellectual discussion with someone when you lead off with a putdown? You reveal your own inadequacies in trying to underestimate the intelligence or knowledge of others.
The fact that I am a fiscally conservative when the natl. debt is over $15 T means that I have more sense than all the Democrats in the beltway combined.
Georgia, The "New Mississippi"
January 24th, 2012
4:32 pm
We can win this thing as long as us 1% continue to stick together. Mr. Romney does not need the “small change” the Presidency pays. He is a”real American” that loves his country and that is why he is seeking the Republican nomination to turn this country around.. He along with Rush Limbaugh are the only ones that know what they are doing because they have the most money…..etc,etc,etc …
Bob
January 24th, 2012
4:34 pm
Read Thomas Sowell’s column today…Romney=McCain=Thomas Dewy. All are candidates that don’t offend anyone, but don’t stand for anything either. They are acceptable to the Republican establishement, but not the voters. Which QB would you rather have in the Super Bowl, one less likely to throw and interception, or one most likely to throw a touchdown pass?
redneckbluedog
January 24th, 2012
4:34 pm
@Tiberius – Your lightning rod of hate!
January 24th, 2012
4:26 pm
But let’s take that a step further, shall we? Shouldn’t those who benefit the most from social programs pay at least SOME of the maintenance costs under your theory?
——————————————————-
Love this idea…But it’s a heavy lift to implement…without creating another program…
Kyle Wingfield
January 24th, 2012
4:35 pm
As for this: “the people that work in the companies, buy the products, fight the wars, provide the services.”
I’ll leave out the “fight the wars” part. The people who work in the companies do so willingly, as do the ones who buy the products and provide the services. If they feel they are underpaid and/or overworked, they can try to find work elsewhere; if they feel they aren’t getting their money’s worth for what they buy, they can take their business elsewhere. Pretty much everyone thinks they ought to be paid more and get more for their money. But there’s nowhere else on Earth where they have as much freedom to seek out the alternatives as they do in this country.
Bob
January 24th, 2012
4:35 pm
And, good article Kyle…you learned well in Dalton.
JDW
January 24th, 2012
4:35 pm
@Kyle…”When someone can define “fair share,” I’ll start taking seriously the notion that this conversation is driven by more than envy and pandering.”
I know I have defined this for you before, but “fair share” is approximately the amount he would have paid under Clinton plus a closed loophole for carried interest…in this case Romney’s “fair share” would have been your $900K plus 39% of the $12.9 million earned as carried interest or another $3.1 million on those earnings.
Additionally I think the threshold for long-term capital gains should be 5 years which could have added another as much as $2 million more…
Romney’s “fair share” should have been between $7 million and $9 million depending on the holding period of his other investments.
Kathy
January 24th, 2012
4:36 pm
I wouldn’t care one witt about how much Mitt paid in taxes, if he would employ some people with all his millions. But for all his money, I don’t see him investing in a few good American workers.
redneckbluedog
January 24th, 2012
4:38 pm
Rafe Hollister
January 24th, 2012
4:23 pm
I’m willing to bet the $3M Romney gave to charity did more good for mankind than the $3M he paid in to the federal treasury.
———————————————————-
$1.5M of that went to the Church of Jesus Christ of LDS….They primarily help fellow Mormons….
And yes….the federal government wastes WAY more than $1.5M a year….
Somewhere over there
January 24th, 2012
4:38 pm
“I wouldn’t care one witt about how much Mitt paid in taxes, if he would employ some people with all his millions.”
Since when is it mandatory for a millionaire to employ people.
“But for all his money, I don’t see him investing in a few good American workers.”
Not sure if you know this or not, but Mitt doesn’t own a company. Shhh, don’t tell anyone else.
Somewhere over there
January 24th, 2012
4:39 pm
“I know I have defined this for you before, but “fair share”
I think you should have to pay an AJC toll just for wasting so much comment space with your wealth envy nonsense.
JDW
January 24th, 2012
4:39 pm
@Kyle…”If they feel they are underpaid and/or overworked, they can try to find work elsewhere”
In the best of times that’s pompous…right now it smacks of “let them eat cake”. You do remember how that story ended don’t you?
You, I and select others have those options to a degree. Average Joe…not so much.
Somewhere over there
January 24th, 2012
4:39 pm
” You do remember how that story ended don’t you?”
France.
Kyle Wingfield
January 24th, 2012
4:40 pm
JDW @ 4:35: Ira Stoll deals with this argument quite well here. See “Myth No. 4.”
JDW
January 24th, 2012
4:41 pm
@Kyle…”But he and other high earners ARE paying the lion’s share of the maintenance costs”
NO …they are paying the lion’s share of the taxes at this time. The maintenance costs are considerably higher, therefore the deficit exits.
Somewhere over there
January 24th, 2012
4:46 pm
JDW
Why do you hate people who make money?
JDW
January 24th, 2012
4:47 pm
@Kyle…”Ira Stoll deals with this argument quite well here. See “Myth No. 4.””
Ira glosses over the fact that neither the hedge fund manager nor Romney has an actual investment at play. They are simply taking a commission just like every salesperson in the world and paying capital gains taxes instead of income taxes.
JohnnyReb
January 24th, 2012
4:47 pm
The idea that Romney’s millions does not employ peope is ridiculous. He may not directly employ people, but the money is not laying in a safe deposit box somewhere. It is invested. That means other companies have borrowed its use and they in turn employ people. Without the Mitt investment, it is safe to state there would be less employed.
JohnnyReb
January 24th, 2012
4:50 pm
Addendum to my 4:47 – A concept the Left in all their intellectual superiority cannot seem to grasp.
JDW
January 24th, 2012
4:50 pm
@Linda…”What’s your problem?”
My problem is that any moron should know that this is a disingenuous statement….
“If they invest their disposable income, they pay taxes AGAIN.”
They do not pay taxes AGAIN. They pay taxes on the profits which have never before been taxed.
Linda
January 24th, 2012
4:51 pm
Kathy@4:36, Did you hear about the new home for Tom Brady & his wife? They are officially the top earning couple in the world. It set them back about $20 M, taking about 20 mts. to construct. Think of the carpenters, floor guys, installers, framers, concrete finishers, landscapers, pool men, painters, wallpaper hangers, etc. Think of the people who work for the companies that manufacture appliances, windows, lumber, tools, bricks, carpet, furniture, accessories, etc.
The Bradies were instrumental in the employment of many blue collar workers, jobs created without the fed. govt. That’s trickle down economics.
Kyle Wingfield
January 24th, 2012
4:51 pm
JDW @ 4:39: Then let me ask this: If someone can’t find better work for the same pay or the same work for more pay, then by what objective measure is he underpaid/overworked?
Are options always more limited for the less skilled or otherwise less in demand (due to overcrowding in the field)? Of course. Are they even more restricted during economic downturns? Obviously. But government has never proved capable of “fixing” this situation in a way that doesn’t have unintended consequences at least as bad as the underlying problems. The notion of letting a handful of smart folks try to outwit the collective decisions of 310 million people (6.8 billion people, really, since the only closed market is the world market) is pure folly.
We provide a safety net for people thrown for a loop by circumstances they couldn’t have foreseen or controlled. We have all manner of educational programs to help them reinvent themselves. Beyond that, there’s not much government can competently do.
JDW
January 24th, 2012
4:52 pm
“Let’s talk about how Clinton made 76 million in speaking fees.”
And paid income tax rates not capital gains rates..what’s your point?