Wednesday, January 25, 2012
Mitt Romney's taxes
The defenders of an ineffective state whine about effective tax rates.
by John Hayward
Mitt Romney’s long-awaited tax returns for 2010, and his estimated taxes for 2011, are finally in the hands of the media. The New York Times combed through hundreds of pages of documents…
… whoa, wait a second. Romney’s taxes are hundreds of pages long? I guess that might seem par for the course, as he’s pulling in $20 million per year. But when did we become comfortable with American citizens, even the rich ones, shuffling stacks of paperwork thicker than a Stephen King novel while Uncle Sam shakes the loose change out of their pockets? Americans are said to spend over 6 billion hours per year filling out tax forms. We have, sadly, come to accept that as reasonable.
At any rate, here’s the big picture, according to the Times:
Mr. Romney and his wife, Ann, had an effective federal income tax rate in 2010 of 13.9 percent, paying about $3 million in taxes on an adjusted gross income of $21.6 million, the vast majority of it flowing from a myriad of stock holdings, mutual funds and other investments, including profits and investment income from Bain Capital, the private equity firm Mr. Romney retired from in 1999.
That rate will rise to 15.4 percent for 2011, when the couple expects to report an adjusted gross income of about $20.9 million.
There will be much wailing and gnashing of teeth about that 13.9 percent tax rate. As it happens, the lowest effective tax rate paid by a recent presidential contender was 13.1 percent. That fat-cat tax-evading money-grubbing greedy snob was none other than John Kerry, the Democrat candidate for President in 2004. As Romney pointed out in the Monday night GOP debate, he inherited nothing and earned his wealth. Kerry inherited everything, by marrying a rich man’s widow. Do you remember a lot of Democrats howling with rage over Kerry’s amazingly low effective tax rate? Was it ever mentioned at all?
Even at an effective rate of 13.9 percent, Romney forked over $3 million dollars, which is more than the combined payment of several hundred middle-class taxpayers. Barack Obama’s $3.6 trillion government spent Romney’s three million bucks in precisely 27 seconds. If every penny of Romney's annual tax was used to pay down the national debt, Obama's government would borrow it all back in 73 seconds. If the government had confiscated Romney’s full 2011 earnings of $20.9 million, it would have enough money to run for just over three minutes.
Since the average cost of Obama's "green jobs" works out to about $4.8 million apiece, Mitt Romney's annual taxes are not quite enough to fund one green job.
Romney's income puts him squarely in the special "super rich" category, the top one-tenth of one percent of all Americans. The Weekly Standard recently noted that this tiny group - there are less than 150,000 of them - pays 16.4 percent of the total federal tax burden. They pay more taxes than the lower 80 percent of income earners combined... but they're still not paying their "fair share." Confiscate 100 percent of their income, and you could fund the federal government for about two months.
The Times complains that “thanks to rules that tax income from investments at rates far lower than income earned in wages, Mr. Romney has a lower effective tax rate than many affluent Americans. Indeed, Mr. Romney will have given more to charity in 2010 and 2011 than to the federal treasury: more than $7 million in charitable donations, or about 16.5 percent of the family’s income, both directly and through the couple’s family foundation.”
And that’s supposed to be bad? Society would be better off if Romney gave all that money to Obama’s government, where it would be devoured by bureaucrats, doled out to politically connected supporters, and eventually burped out as a handful of coins for the needy? Romney said in the last debate that he was proud to pay a huge sum in taxes, but he should be much prouder of those charitable donations. At least they didn’t vanish into an insatiable black hole of waste and graft.
In a similar vein, the corners have already been chewed off those capital gains dollars, through some of the highest corporate taxes in the world, before they get taxed again as personal income. But we’re not supposed to think about the double taxation at all. Instead, the Left wants us to view capital gains as another rich potential source of government revenue. Never mind that we also want to encourage private investment… but we’ll see less of it when taxes rise, and then liberals will scratch their heads about the mysteriously stagnant economy, and start looking for someone else to blame. They'll crank up the tax rates, introduce a new round of brilliantly crafted deductions to control how money is spent, and then start complaining about the greedy sons-of-guns who actually take all those deductions.
The whole point of the encyclopedia-sized maze of paperwork someone like Mitt Romney files with the IRS is to protect income by taking lawful deductions, which the government offers to encourage certain forms of behavior. The immense power conveyed by using the tax code to fine-tune our populace is not something politicians would surrender without the fight of their lives, which is why they’ll battle Fair Tax and Flat Tax reform plans to the death. And yet, someone who dutifully obeys the State and spends his money in the desired manner becomes a target of hatred and envy. Instead of just asking how much money Mitt Romney paid in taxes, why don’t we total up how much he spent in ways the authors of our tax code directed him to?
Instead of fiddling around with huge volumes of tax law to produce ideologically acceptable outcomes, the government should be taking as little as possible from its citizens, using the most clear and simple methods possible, and spending no more than it collects. That will never happen, but the acolytes of leftist Big Government also don’t have the guts to do what they really want, and call for the seizure of all income above a politically determined limit. “I do think at a certain point you’ve made enough money,” as lifelong politician Barack Obama once observed.
Instead, we get the Times sniffing about how Romney’s tax disclosure is likely to “spur new questions about the structure of his investments, including those in partnerships and funds based overseas.” Big Government will never stop “spurring” itself to ask “new questions” about a vast number of things that should be none of its business. The penumbra of State power extends far beyond merely enforcing clear, duly passed laws. Its acolytes presume to pass judgment on lawful behavior they find unacceptable… and they keep repeating that judgment until it becomes unlawful.
That’s how we’ve reached the point where a law-abiding, successful man can submit a phone book worth of paper to the government every year, and be told he still hasn’t submitted enough.
To read another article by John Hayward, click here.
Posted by Brett at 12:03 PM