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(image: Mike Licht, NotionsCapital.com / flickr)
I really don’t want to waste my time talking about Governor Romney’s tax returns, but come on folks. He was asked on 60 Minutes about whether it was fair that he paid a 14 percent tax rate on his income, compared to the much higher tax rate paid by many middle income families. According to the Huffington Post’s account, he responded by saying:
“It is a low rate, … And one of the reasons why the capital gains tax rate is lower is because capital has already been taxed once at the corporate level, as high as 35 percent.”
If the question is why does Mitt Romney pay a low tax rate, this answer is wrong. The bulk of his income comes from Bain Capital. Bain Capital is organized as a partnership. This means that income is not taxed at the corporate level. It is only taxed when partners like Mitt Romney receive it. So the story of double taxation simply does not fly in Romney’s own case.
For those who are making a sport of dissecting the Romney tax returns, this is a really big one to let slide through the cracks. Other folks who get dividends or capital gains from owning shares of stock can tell the double taxation story (even here it doesn’t really fit; they got the benefits of corporate status in exchange for the corporate taxes), but in Romney’s case this justification doesn’t pass the laugh test.
Dean Baker is co-director of the Center for Economy and Policy Research. He also writes a regular blog, Beat the Press, where this post originally appeared.
16 Comments
I believe my question remains unanswered;
13% of what?
Not only has Romney’s income not been the subject of corporate taxes, but the figure upon which he paid that 13% in taxes is more than likely the product of artistry in accounting.
Most members of the 99%, can neither afford the price of tax accountants to craft the sort of deductions and shelters that Mitt benefits from, nor can they afford the cost of defending those strategies when challenged by the IRS.
What Mitt Romney admits to earning for the purposes of determining his tax bill, is most likely a useful fiction, and so from the perspective of the average American, means next to nothing.
I’ll put it more bluntly; Mitt is probably paying a 13% tax, on 20% of what you or I would call our income.
I think Romney should take the advice of his millionaire friends: just go out there on TV and throw it in our faces: Yeah, bitchez, I don’t pay no taxes. You know you love me for that.
Romney paid a ten percent value added tax to the Golden Tablets Magic Underwear Erstwhile Polygamy Cult.
Here’s a Mitt/Ryan Slogan I made up:
Nowadays, marriage is between one man and one woman – blacks included!.
President Obama always says he wants everyone to pay their “fair share”, and he’s right everyone should pay their fair share of income taxes. President Obama has been thinking and talking about fair taxation for quite a few years now, and he has an economic team that has put together a new taxation plan for the USA in which “the Rich” will have their tax rates increased so everyone in this country finally pays their “fair share” of Federal Income taxes!
After President Obama’s new tax plan goes into effect, Mitt Romney will be forced to pay his “fair share” of Federal Taxes. Romney’s effective tax rate will go from 14.1% all the way up to 14.1%!
Hey! wait a second it can’t stay the same! That would mean that according to President Obama, Mitt Romney already pays his “Fair Share”! There must be a mistake! how can that be???
Well it turns out that Mitt Romney’s income is from Capital Gains, and President Obama is not going to raise the Capital Gains tax rate.
I’m sick to death of the trope that we don’t tax things twice. Let’s just forget that until it gets into your hands, any taxation that has occurred shouldn’t really count. If taxing twice is a problem, every Republican in the world should be against sales taxes since that is most certainly being paid in dollars that have already been taxed in most cases.
IT IS UTTER CRAP. That Romney is lying through his teeth about why his income isn’t considered as taxable as a hospital orderly’s is just par for the course.
It’s not the percentages Willard is trying to hide. Its the fact Willard is not just a run of the mill millionaire but he’s really a billionaire.
Willard’s running for prez dont ya know. Can’t have that out there. What was that song…I want to be a Billion…
And how would Mrs. Willard be able to hold her head up at the temple once they found out Willard’s real income.
Not to defend Obama but I do think I read somewhere capitol gains would go up to 20%.
And BTW much of Romney’s money is from carried interest a little trick they use to get their income taxed at 15% instead of what it should be.
It’s just another clear example of Obama = More Bullsh*t than Romney if that’s possible.
Exactly. We know he’s hiding a massive amount offshore, under his wifes name etc etc, which is collecting interest, right? So really, I’d wager his tax bill is a net zero.
I think it is all together possible that R’money really doesn’t understand much of any of this…and that’s probably giving him the benefit of the doubt. He just doens’t get it…..
Who’s this Governor Romney?
As far as I can tell, Mitt Romney is worthy of merely Mister these days.
Hereditary titles are not part of the American program.
Originally, Bain Capital may have been a partnership, formed by the partners/owners of another Bain entity.
However, then “I built that” Romney froze out every partner but himself–including Mr. Bain—whereupon Mitt Romney became the sole stockholder of Bain Capital, as reported to the SEC in a document that makes Romney either a felon or a garden variety liar. (AFAIK, “stockholder” would mean a corporation.)
In any event, when, if ever, after that SEC filing did Romney cease being the sole owner of Bain? I don’t think you can have a one person partnership.
The statements in my prior post were based on my reading of the wikis of Romney, Bain & Company, and Bain Capital when Romney became the nominee. I just did a little more checking.
The original entity founded by Mr. Bain, referred to in my prior post, was Bain & Company.
The partners of Bain & Company, including, by that time, Romney, started Bain Capital. Later, Romney froze out Mr. Bain and the other original partners of Bain Capitol.
http://en.wikipedia.org/wiki/Bain_Capital
Stockholder and director are both corporate terms
Further down, though, the wiki of Bain Capital refers to Romney as a “retired partner” of Bain.
I am not sure how or why you go from sole stockholder of a corporation in 1999 to a retired partner in 2002? Then again, a wiki article is not necessarily a legally correct and precise essay.
I wonder what the latest legal documents of Bain on file with state and federal government say?
Most members of the 99%, can neither afford the price of tax accountants to craft the sort of deductions and shelters that Mitt benefits from, nor can they afford the cost of defending those strategies when challenged by the IRS.
So lets get rid of the deductions and go to a graduated flat tax that gets us the money we need and then the 1% cant get out of the taxes legally. I think Romney is probably very legal in his taxes.
I think the federal government should have about 22% of GDP to spend.
Right now is the time to get rid of the home load deduction. Rates as low as 2.5% can be had so the value of the deduction is virtually nil. Its more a perception than a reality. By getting rid of the home load deduction people would be less inclined to buy more house than they can afford because they think they can get a refund. The home loan deduction has for the most part always been more hype than value until the housing bubble inflated the values of homes and lenders offer loans to people who should not have ever got one.
Get rid of the charitable deduction.
I am not in the 1% but I am in the 10% and I fully support getting rid of all tax deductions.
My son is in the 82nd Airborne and I support targeted cuts to the military and changes in spending. No new M1A1′s yes new transports. No KBR mess halls, yes bring back KP duty. No private security at emabassies, yes more marine guards backed by rapid reaction forces.
Limit farm supports to 5000 acres.
Yes to single payer health care but be prepared for some terminal conditions to not be covered because of cost versus benefit.
So President Clinton should be addressed as Mister also?
Bain Capitol has a Holding company that all the partners companies are under, Mitt was only sole share holder in the Holding Company, as well as being a partner in some of the companies held by the Holding Company. The Holding Company has no income because it’s disbursed throughout the partners sub companies, so the Holding Company pays no taxes, but is still powerful and valuable. So When Mitt wants to retire he can sell the Holding Company to the partners( I believe he made a deal for multi year payment for the Holding Company), but since this is a sale of stock it is Capitol Gains, and taxed as such, but the Holding Company itself accrued value without ever paying any taxes because it had no income.
So Mitt was only sole shareholder of the Holding Company, and he was a also a partner in the other companies underneath. Private Equity firms are often set up this way to accrue value for the main Partner/Pertners without being taxed and with only Capitol Gains being due when they cash out.