Thursday, January 26, 2012

Romney Claims His Real Tax Rate Is ‘Closer To 45 Or 50 Percent’

From ThinkProgress:

Watch Mitt Spin: Romney Claims His Real Tax Rate Is ‘Closer To 45 Or 50 Percent’

By Judd Legum on Jan 25, 2012 at 4:05 pm

During an interview with Univision, Romney was pressed on whether it was fair for him to pay about 13 percent of his income in taxes — as he did in 2010, according to his recently released tax returns — when many middle class families pay far more. Romney proceeded to claim that his actual rate is “closer to 45 or 50 percent.”

To justify his figure, Romney relied on his belief that “corporations are people.” When Univision’s Jorge Ramos asked Romney if his 13 percent tax rate is “fair,” Romney suggested adding the maximum corporate tax rate (35 percent) to his personal taxes to calculate his real rate:

RAMOS: You just released your tax returns. In 2010 you only paid 13 percent of taxes while most Americans paid much more than that. Is that fair?

ROMNEY: Well, actually, I released two years of taxes and I think the average is almost 15 percent. And then also, on top of that, I gave another more 15 percent to charity. When you add it together with all of the taxes and the charity, particularly in the last year, I think it reaches almost 40 percent that I gave back to the community. One of the reasons why we have a lower tax rate on capital gains is because capital gains are also being taxed at the corporate level. So as businesses earn profits, that’s taxed at 35 percent, then as they distribute those profits as dividends, that’s taxed at 15 percent more. So, all total, the tax rate is really closer to 45 or 50 percent.

RAMOS: But is it fair what you pay, 13 percent, while most pay much more than that?

ROMNEY: Well, again, I go back to the point that the, that the funds are being taxed twice at two different levels.

Romney glosses over the fact that he is not a corporation and doesn’t pay corporate taxes. Additionally, most corporations pay far lower than a 35 percent rate. In fact, many profitable corporations pay nothing at all.

In the alternative, Romney suggested that his tax rate should be considered “almost 40 percent” because he gave a substantial amount of money to charity, mostly to the Mormon church. Romney should be lauded for his charitable contributions — and received a tax deduction for them — but charitable contributions are not taxes.

Ed Schultz did a piece on this:

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From Krugman:

January 24, 2012, 9:30 am
Romney’s Taxes

Just about what we expected. He really needs to provide earlier years, if only to clear up suspicions that he began sanitizing his portfolio in preparation for his presidential run.

The right-wing apologetics now focus on the claim that Romney’s taxes aren’t really low, because we should impute the taxes that corporations effectively paid on his behalf. But there are at least two things wrong with this argument.

First, $13 million of the total was carried interest, which gets taxed like capital gains but is really just commissions that receive special treatment for no good reason. No profits taxes were paid on that income; right there, a minimally defensible tax code would have levied $2.6 million more in taxes on Romney.

Second, just the other day the usual suspects were calling for big cuts in corporate taxes, arguing that these taxes don’t really fall on stockholders, they fall mainly on workers and consumers. Now, suddenly, the taxes fall on stockholders after all. Interesting.

Meanwhile, the Romney campaign is signalling that it’s going to try to spin this as “he pays lots of taxes”! How stupid do they think we are? Actually, don’t answer that.

Again, the point here is not that Romney did something wrong by paying the low rates current tax law lavishes on people like him. It is, instead, that in an election campaign that will be in part about issues of inequality, the likely GOP candidate is a living, breathing, coupon-clipping example of how favorable our system is to the very rich; and he also happens to be advocating policies that would greatly benefit people like him, while hurting the poor and the middle class.

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