Will someone please teach the Left the rudiments of good tax policy? Today’s brouhaha started when Gov. Mitt Romney told reporters that his tax rate is approximately 15 percent. This fact should surprise no one, since he has not drawn a salary in many years and relies on his significant investment income, which is — for sound economic growth reasons — largely taxed at the dividend-income and capital-gains rates. Of course, the Democratic National Committee immediately issued a memo calling the capital-gains tax a “loophole” and attacking Romney for paying his taxes at the rate required by law. The memo also parrots an erroneous Citizens for Tax Justice report that claims a single person earning $60,000 would pay taxes at a 30 percent rate.
The DNC and their friends at the CTJ are wrong on the facts, the policy, and the principle. For starters, the CTJ report counts the employer’s payroll tax as paid by the employee. But the DNC conveniently forgets to include the incidence of taxes — including the corporate-income tax — that would affect Romney’s investment returns. So their comparison is apples-to-oranges, and overstates the hypothetical individual’s tax burden by about 25 percent. The DNC is also cherry-picking a very atypical taxpayer. In fact, as the CBO’s report on effective tax rates makes clear, the median household pays an effective income-tax rate of only 3 percent.
It was sadly inevitable that the Obama campaign and the DNC would demonize Governor Romney for succeeding in the private sector, abiding by the law, and seeking to keep taxes low for all Americans. But just as they have no plan to get the economy going again, they have no plan to improve the tax system. The president repeatedly says he favors tax reform. He has a Treasury filled to the brim with tax economists, lawyers, and accountants. And he has no plan.
Instead of leadership, the American taxpayer is served a vitriolic brew of bitter and divisive attacks pitting one American against another, and a bizarre “Buffett Rule” that would create a new minimum tax eerily similar to the Alternative Minimum Tax that today threatens massive tax increases on the middle class. Distorting our tax system to score political points is no way to run an economy. Good tax policy is part of a good pro-growth policy, which may explain why President Obama’s economic record is what it is.
"But the DNC conveniently forgets to include the incidence of taxes — including the corporate-income tax — that would affect Romney’s investment returns. "
BS. Romney can't point to this without also pointing to the fact that he's aggressively pushing for lowering the corporate tax rate - effectively lowering his OWN taxes and putting more money in his pocket. He doesn't get to have it both ways.
Not only that, but good luck selling that argument, that the taxes the company pays somehow equate to taxes Romney is paying, so everyone should just shut up about it...
Reply to this commentLinkReport AbuseYour myopic obsession with Romney's wealth is ridiculous.
Reply to this commentLinkReport AbuseOh, I happen to think it's going to come up pretty much constantly between now and November; which, to me, makes it a rather important topic for those who are interested in electoral politics to discuss.
But, thanks for your opinion.
Reply to this commentLinkReport AbuseYes, it will come up among smug little class warfare lovers like you. Are you that petty? What's Romney's wealth got to do with you, Fish? Does his money take away your money?
Reply to this commentLinkReport AbuseWhat's even sadder is that Governor Romney has to bear the attacks of Grindgrinch and Perry, as well as the OWS crowd, for the "crime" of his success. From the left, it's expected and par for the course. From so called Republicans, it's perverse. Cordially, Bill
Reply to this commentLinkReport AbuseThe up-shot of this silliness is that the American people are getting the second half of the story as to why Buffet pays the percentage of his money in taxes that he does.
So, these are the unintended results of more robust advertising from the left.
Now we all know Warren Buffet for the sanctimonious charlatan that he is.
Maybe if we are lucky Mitt can explain to Obama, face-to-face, the concept of entrepreneurship, of which the leader of our country has proven himself to have absolutely no clue.
I just cannot see how this war against the successful, and the private sector generally, will lead to electoral success, especially in a recession.
Earth to the idiots known as leftists:
People need a job from employers, not a fight with them before-hand.
And I think President Professor Millionaire with his sweetheart loan packages to his bankrupt friends will have a hard time closing the argument on cronyism.
The sidewalk rabble-rouser from Chicago is the epitome of corrupt capitalism. And that is because he is illustrating to us how he thinks unabridged capitalism is supposed to work.
He should read a little more "Wealth of Nations", and enough already with "Das Kapital". No need to keep reading it when you've got all its lines memorized.
Reply to this commentLinkReport AbuseThis is such ridiculous hyperbole. Obama wants to return to Clinton era tax rates for the top 2% as one component of a deficit reduction plan, and this is a war against the rich?
I believe even a majority of GOP voters want a balanced approach that includes higher taxes on top earners.
Is it possible to favor higher taxes on top earners without being jealous of them or on a war against them? Or without also believing that everyone should have the exact same income?
Reply to this commentLinkReport AbuseMadisonian: Bad day with the Walker recall and all, and you continue to whine about what you don't understand.
The issue, as commentors above note, is the legitimacy of individuals turning earned income into capital gain through a legal but baseless (from a tax policy standpoint) provision in the Internal Revenue Code that has been criticized by responsible tax policy analysts for a long time.
Mr. Holz-Eakin understands this, though he feigns ignorance and chastises us for "envy." Another rusty partisan tool in the NR shed.
Reply to this commentLinkReport AbuseYes, quite a winning argument you have there that a multi-millionaire should pay a lower tax rate than a bus driver.
Reply to this commentLinkReport AbuseThere is redistribution in this country - via government-imposed taxes - but it is distribution of income from the middle and upper middle class (who pay 25-35% in taxes) to the super rich (who pay only 15% taxes and only on income that they are unable to hide in one of the numerous loopholes and tax shelters available to them).
The only way to fix this income redistribution and bring tax fairness is:
Reply to this commentLinkReport Abuse1. Tax all income at exactly the same rates. The income of the super rich (capital gains and dividents) should be taxed at the same marginal rates as regular income - just as when federal taxes were originally introduced in the USA.
2. Close ALL tax shelters and loopholes that the super rich use to hide a large part of their income.
3. Reform (or, better, eliminate) the AMT to only target the super rich - as originally intended! Now the AMT mostly targets the middle class!
4. Introduce new tax brackets for incomes over $1M and $10M. When federal taxes were originally introduced in the USA only incomes of over $1.2M (in 2011 adjusted $) were taxed, at progressive rates, but now there is not even a separate tax bracket for incomes larger that $1M.
Can I just say that, assuming it's true, it's ridiculous that the median effective tax rate is 3%? I like low taxes as much as the next person, but there are legitimate government services that need to be paid for. And at a 3% median rate we're either stealing from our kids or soaking the rich.
Reply to this commentLinkReport AbuseI'd actually like the budget rule to be that government spending should be capped at whatever we're willing to tax the average taxpayer. If we want to spend $4 trillion per year, then figure out what the tax rate would be for the average income in order to raise that amount. If you want to add progressivity then have a higher rate for the rich and a lower rate for the poor. But everybody would pay something and the average person would pay the average rate. Then we'd get the government we were willing to pay for rather than everyone thinking they can get their benefits and stick someone else with the bill.
Well, the 'median' rate is 3%, because so many (the number is subject to argument) people make next to nothing at all, and pay almost no taxes whatsoever.
A better metric would be, 'what is the average amount paid by taxpayers in the 'middle class' range?
Reply to this commentLinkReport AbuseMedian is the midpoint. So your argument is only true if at least half the taxpayers in the country make next to nothing. That's clearly not true.
Reply to this commentLinkReport AbuseIMO the median person in society should be paying his own way, not relying on subsidies from his richer neighbors or borrowing from his grandkids.
"Median is the midpoint. So your argument is only true if at least half the taxpayers in the country make next to nothing. That's clearly not true."
Uh, I believe it clearly IS true. Median personal income for US taxpayers over age 25 is somewhere around $32,000. If you have even one kid on that level, you're paying nothing in taxes whatsoever; if you have none, you likely pay very little.
So, yeah. I think my argument is sound, that the wrong metric is intentionally being used here, in order to misrepresent the level of taxation middle-class taxpayers pay.
Reply to this commentLinkReport AbuseAssuming your numbers are correct it's a matter of opinion whether $32,000 is "next to nothing." People don't "need" $32,000 worth of food, clothing, shelter, etc. If we're a nation of people earning $32,000 then imo we ought to have a government that reflects that and not one that spends more than $10,000 per person. We just think we're entitled to it and someone else should pay for it.
Reply to this commentLinkReport Abuse"So, yeah. I think my argument is sound, that the wrong metric is intentionally being used here, in order to misrepresent the level of taxation middle-class taxpayers pay."
Excuse me, what in the hell is it you think you're disputing? The 3% income tax rate is "subject to argument" in much the same sense that a few folks still think the sun revolves around the earth. The source is CBO, not an ideological source. This refers to the middle income quintile, or the middle fifth. The average TOTAL federal tax rate (that's accounting for all of the predictable objections about not including FICA and all other federal taxes) for this quintile is 14.3%.
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Romney and Warren Buffett are extreme anomalies among their income group, the top 1% average about 29.5% on this total tax rate.
How do you find this an insufficient answer for "what is the average amount paid by taxpayers in the 'middle class' range?"
Reply to this commentLinkReport AbuseThere is redistribution in this country - via government-imposed taxes - but it is distribution of income from the middle and upper middle class (who pay 25-35% in taxes) to the super rich (who pay only 15% taxes and only on income that they are unable to hide in one of the numerous loopholes and tax shelters available to them).
The only way to fix this income redistribution and bring tax fairness is:
Reply to this commentLinkReport Abuse1. Tax all income at exactly the same rates. The income of the super rich (capital gains and dividents) should be taxed at the same marginal rates as regular income - just as when federal taxes were originally introduced in the USA.
2. Close ALL tax shelters and loopholes that the super rich use to hide a large part of their income.
3. Reform (or, better, eliminate) the AMT to only target the super rich - as originally intended! Now the AMT mostly targets the middle class!
4. Introduce new tax brackets for incomes over $1M and $10M. When federal taxes were originally introduced in the USA only incomes of over $1.2M (in 2011 adjusted $) were taxed, at progressive rates, but now there is not even a separate tax bracket for incomes larger that $1M.
Why would anyone be surprised that obama would completely politicize the economy. He has done the same thing with foreign policy. Thats why he is withdrawing the troops from Iraq and Afghanistan and feeding those countries to iran, so he can appease his lunatic hate america base.
Reply to this commentLinkReport AbuseThere is income redistribution in this country - via government-imposed taxes - but it is distribution of income from the middle and upper middle class (who pay 25-35% in taxes) to the super rich (who pay only 15% taxes and only on income that they are unable to hide in one of the numerous loopholes and tax shelters available to them).
The only way to fix this income redistribution is:
Reply to this commentLinkReport Abuse1. Tax all income at exactly the same rates. The income of the super rich (capital gains and dividents) should be taxed at the same marginal rates as regular income - just as when federal taxes were originally introduced in the USA.
2. Close ALL tax shelters and loopholes that the super rich use to hide a large part of their income.
3. Reform (or eliminate) the AMT to only target the super rich - as originally intended! Now the AMT mostly targets the middle class!
4. Introduce new tax brackets for incomes over $1M and $10M. When federal taxes were originally introduced in the USA only incomes of over $1.2M (in 2011 adjusted $) were taxed, at progressive rates, but now there is not even a separate tax bracket for incomes larger that $1M.
I don't begrudge Romney paying 15% into a totally pathological tax regime. But where he's going to get hammered is the underlying rationale of the 15% and how he evaded it at Bain.
Supposedly, dividend and capital gains rates are set low to encourage investors to take on the risks associated with those investments. But with Bain, often there was no risk! Those guys got in, levered up, sucked out cash parasitically and got out. So they paid 15% on what was essentially a sure thing.
That's Romney. I don't fault Romney for Reptile behavior. But Plutocrat Romney believing that Reptile behavior deserves a tax break while Joe Sixpack pays FICA and regular rates will get him roasted over the populist coals.
Obama is empty suit atrocious and Romney is an empty suit Reptile. Pick one...
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