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January 18, 2012 1:55 PM Romney’s tax rate is only half the problem

By Steve Benen

In the wake of his concession yesterday that he pays a lower tax rate than much of the American middle class, Mitt Romney has renewed discussion about his “15% problem.” As Alec MacGillis put it, “The country is going to spend much of the next year talking taxes. And leading one side of the debate is going to be a silver-templed exemplar of how inequitable the system has become. Again: is this really the man Republicans want for this moment?”

But as I’ve been arguing for a few weeks, it’s only half the problem.

To be sure, the fact that Romney, who amassed a vast fortune as head of a vulture-capitalist firm, is able to take advantage of tax loopholes to pay a lower rate is a political nightmare. In a debate over tax fairness and income inequality, Romney is practically a case study for What’s Gone Wrong.

But the second part of this is more forward-looking: what does Romney intend to do about the problem if he’s elected? As Greg Sargent reported today, citing a new analysis by Citizens for Tax Justice, Romney has no interest in correcting a wrong — rather, he intends to give himself an enormous tax cut.

Under his plan, Romney in 2013 would see his taxes cut by nearly half of what they would be if you use current law as a baseline.

Another way to put this: If Romney, whose wealth is estimated at as much as $250 million, is elected president and gets his way on tax policy, he would pay barely more than half as much in taxes than he would if Obama is reelected and gets his way — and the Bush tax cuts on the wealthy expire and an additional Medicare tax as part of the Affordable Care Act kicks in.

Robert McIntyre, the director of Citizens for Tax Justice, added, “This doesn’t even include Romney’s proposal to cut corporate taxes from 35 percent to 25 percent, which would primarily benefit wealthy shareholders like himself.”

One could argue that Romney’s “15% problem” isn’t really his fault. He’s taking advantage of a tax system that’s already badly flawed, but which he wasn’t responsible for creating. The Romney example helps make clear how unjust the status quo really is, and the fact that he’s hiding his tax returns only makes this worse, but it’s not fair to blame him for loopholes, shelters, and tax breaks he didn’t create.

But one should absolutely blame him choosing to ignore the problem and vowing to make it worse.

On a related note, the DNC released a new video overnight on coverage of Romney’s tax issue. It’s probably not what the Republican frontrunner was hoping for.

Steve Benen is a contributing writer to the Washington Monthly, joining the publication in August, 2008 as chief blogger for the Washington Monthly blog, Political Animal.

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  • Burr Deming on January 18, 2012 2:11 PM:

    up until the Obama administration, it was the Democratic Party that protected at least some of the privileged from irrationally low taxes - lower than the tax rates of the secretaries who typed out their contracts. Obama, to his credit, changed that. But Democrats are now paying a literal price.

  • James on January 18, 2012 2:17 PM:

    The next question that Democrats should ask is: "How many jobs has Mitt Romney created with the present tax rate and if he passes his tax plan and drops the rate to half of what he now pays - how many more jobs will he create?"

  • Danp on January 18, 2012 2:19 PM:

    No discussion of Romney's taxes is complete without the term "carried interest", which a lower tax rate for betting other people's money.

  • majun on January 18, 2012 2:22 PM:

    Romney can't fix a problem he doesn't see. From his vantage point the ridiculously low tax rates his income is subject to are a feature, not a bug.

    Romney probably truly believes that he deserves to pay a much lower rate on his income because he is a job creator. By allowing him, one of the "creators" of society" to keep most of his money he will re-invest it in much more productive ways than the government would spend it. I would really like to see a detailed report on exactly what he does with the money he earns, to ascertain if he really re-invests it in a manner that is designed to aid the economy and increase employment - of if it is mostly invested to increase his personal return on investment. I would be willing to bet the latter, but I don't have $10,000 - maybe Romney will spot me some betting money?

  • Hedda Peraz on January 18, 2012 2:25 PM:

    Perhaps the news has yet to reach the faculty lounge, but we are Taxed Enough Already!
    We would rather spend out money on Kobe beef for us, instead of food stamps for them.

  • sue on January 18, 2012 2:28 PM:

    I'm waiting for coverage of the exptremely generous 10 year platinum parachute given to Romney by Bain as a going-away-to-run-for-office present.

  • Diane Rodriguez on January 18, 2012 2:28 PM:

    This simple information: 15% tax rate and $250M in wealth that likely created no jobs should be a relentless, short, clear talking point for Democrats.

  • jb on January 18, 2012 2:36 PM:

    What Romney should have said to his accountant: "I can't pay only 15% in taxes. I am running for President for pete's sake!"

  • Equal Opportunity Cynic on January 18, 2012 2:40 PM:

    jb: What makes you think that the final version for this year won't suddenly have a jump to 30 or 35%? Small price for one year in exchange for becoming president and delivering even better goodies.

  • gus on January 18, 2012 2:54 PM:

    What if Mitt were one of us?
    Not rich, like one of us?

    (i don’t know the rest of the words to the original song but surely someone can finish a parody of it. Creative Commons on this one, ya’ll! Make it so, musical ones! Just make an attribution ol’ Gus here!)

  • Highguy on January 18, 2012 3:10 PM:

    What if Mitt
    Had just missed the bus
    When trying to buy in
    His latest hoooo-ooooommmme.

  • beejeez on January 18, 2012 3:30 PM:

    When are the people who vote for these psychopaths going to learn that a million bums with one extra dollar create more jobs than one guy with a million-dollar tax cut?

  • Jack Charles Schoenholtz on January 18, 2012 4:28 PM:

    It’s not simple “growth” that Mitt Romney was interested in; he was also interested in getting around the antitrust laws. At the time of the proposed merger in 1997, when Staples and Office Depot tried to displace competitor Office Max, Mitt Romney─later, to be the 2012 Republican presidential hopeful─was CEO of Bain Capital, the major venture capital partner in Staples, and on the Staples board for ten years throughout the period of the scheme. Antitrust Division filings showed Staples and Office Depot were charging higher prices in parts of Florida counties where they weren’t competing against each other and lower prices in areas where they were rivals of Office Max.
    The Federal Trade Commission found out about this collusion by analyzing scanner data at the stores' checkout counters and decided to seek an injunction. Washington, DC, federal district Judge Thomas F. Hogan, after “visiting various stores,” enjoined the merger as appearing to violate the antitrust laws saying that the “Likelihood of success on the merits in cases such as this means the likelihood that the Commission will succeed in proving, after a full administrative trial on the merits, that the effect of a merger between Staples and Office Depot ‘may be substantially to lessen competition, or to tend to create a monopoly’ in violation of Section 7 of the Clayton Act . . . in a suit for a preliminary injunction, the government need only show that there is a ‘reasonable probability’ that the challenged transaction will substantially impair competition. . . [and] the Court cannot find that those efficiencies [alleged by the defendants] would result in the creation of so many additional jobs that the public equity would outweigh those argued by the plaintiff.” Recognizing that their “adventure capital” could cause trouble, the proposed merger between staples and Office depot was dropped, and American capitalism was the better-off for it.

  • Texas Aggie on January 18, 2012 8:40 PM:

    "One could argue that Romney’s “15% problem” isn’t really his fault. He’s taking advantage of a tax system that’s already badly flawed"

    His father didn't. Why does he, other than his father was a decent man and he doesn't even come close?

    http://www.rollingstone.com/politics/blogs/national-affairs/what-mitt-romney-learned-from-his-dad-20120117

    "As a CEO he (George Romney) would give back part of his salary and bonus to the company when he thought they were too high. He offered a pioneering profit-sharing plan to his employees. Most strikingly, asked about the idea that "rugged individualism" was the key to America's success, he snapped back, "It's nothing but a political banner to cover up greed.""

    I suspect that Mitt never gave back a nickel to the companies that he trashed. The man is completely and totally unable to personify the qualities of his father. He lacks even a modicum of personal integrity, not even his word is his bond. Look into articles about how he would bid low for a company and then after getting it, try to change the conditions of the contract.

  • Shannon on January 18, 2012 8:44 PM:

    I'm no fan of Mitt Romney or his tax rate, but it's not really accurate to say that he would vote himself an enormous tax break. Because his income is already taxed at the 15% capital gains rate, a cut in the ordinary income rates, which what he advocates, wouldn't really affect his tax rate at all - it would simply cut taxes for OTHER rich people who are taxed on non-investment income. Romney is in favor for keeping the 15% rate on capital gains for taxpayers making over $200,000. So his tax rate would essentially remain the same. The only change that would affect him personally is eliminating the 3.8% Medicare tax on investment income enacted as part of health care reform. But this wouldn't nearly "cut his taxes by half."

  • LA-CC on January 19, 2012 3:21 AM:

    @Shannon - I think the comment was that his taxes would be half as much under his own plan than it would be if Obama was elected and his policies (including letting the 'temporary' tax cuts expire) including, I assume, a change to the carried interest tax rate Romney benefits from. It's not saying half what his tax is now.

  • John Corzine on January 19, 2012 12:22 PM:

    Texas Aggie on January 18, 2012 8:40 PM:

    That's how capitalists operate. Vulture capitalists, mind you...

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