This poster has no idea what he’s talking about.

“Tax havens are definitely a problem, and if Romney is found to actually have some, there are laws involved.”

This suggests that using offshore accounts or “tax havens” to defer or avoid tax is illegal. In general, it is not. Legal offshore tax strategies are widely used by businesses and wealthy individuals of all political persuasions. Many firms (especially tech and financial) would be at a substantial competitive disadvantage if they did not use offshore tax strategies (for example, many tech firms put their IP assets into a Irish subsidiary for tax reasons). If you want to blame someone, blame Congress for failing to design a tax system that keeps capital within US accounts.

“The low tax rate comes mostly because capital gains are taxed that way.”

That’s overstating things. Assuming his 15% tax rate is largely attributable to a deferred compensation arrangement from Bain under which he takes advantage of the carried interest rules, it is both the carried interest rules and the 15% capital gain rate that are relevant. It is very possible (and common) to object to the carried interest rules which still supporting a 15% (or other low) long-term capital gain rate.

“”The ostensible reason for the favoritism in tax treatment here is to incentivize more investment and faster productivity growth.”"

That is only one of many policy reasons for the lower LTCG rate. Other reasons: (1) cost basis is not adjusted for inflation, so much of the “gain” that is taxed is illusory — it is only gain in nominal, not real, terms; (2) reducing the double-tax caused by the corporate tax; (3) encouraging asset sales and gain realization (under the U.S. constitution, the federal government generally cannot tax gain on appreciated assets unless there is a sale or exchange).

Finally, it’s worth remembering that the overall effective federal tax rates are very progressive, despite a lot of banter to the contrary. In 2007 (most recent year for which the CBO has released data), the bottom 20% paid an average effective federal tax rate of 4%. The top 1% paid an average effective tax rate of 29.5% in 2007. The effective rates of the intermediate percentiles are a fairly smooth curve. http://www.cbo.gov/publications/collections/tax/2010/AverageFedTaxRates2007.pdf

(cont.) In other words, if you want to pass judgment on someone, pass it on Congress for failing to create a tax system that keeps capital within US accounts.

Using offshore entities for tax purposes is extremely common, both for businesses and wealthy individuals of any political persuasion. Firms in many industries (especially tech and finance) would be at a substantive competitive disadvantage if they did not use offshore tax strategies. The IRS and Congress are well aware of these structures, which is most cases are perfectly legal. These typically (not always) only defer US tax rather than avoid it — you still have to pay the tax eventually. Whether using tax deferral structures is “moral” is not easily answered.

It would be extremely surprising if Romney has any unreported assets in Swiss bank accounts as some commenters are suggesting. Under FATCA, those banks generally will be entering into reporting agreements with the IRS.

“But it kills over 1,000 jobs at a time when the economy can ill afford more layoffs.”

Did you even read the proposal?

andreww: Your first point isn’t coherent (responding to an intuition with a personal counterexample and related explanation *is* a logical way to reply) your second two points are too flippant to respond to. You, like the original poster, should spend some time learning what the other side’s arguments actually are before laughing them off.

gtomkins: You’re getting beyond my ability to respond — like I said, I’m not well-versed on the factual specifics of the health care industry. My point was that blog posts like this one make liberals look bad because they suggest we aren’t capable of understanding the other side’s positions, so instead we just knock down straw men with bad arguments and pat ourselves on the back, saying, “Those Republicans are so dum, lulz.”

This isn’t an issue I’m well-versed in, and others can make these points much better than I. Your post cites data point (50% of health care spending goes to 5% of the population) and one gut-check about human behavior.

1. The gut-check about human behavior I don’t agree with. I’ve gone to the dermatologist many more times than necessary, and experimented with many types of largely-cosmetic skin prescriptions because there is essentially no cost to me. I’ve gone to mental health professionals quite a few times, even though I didn’t really need to — again, because it’s basically free, so might as well check it out. I don’t think these experiences are uncommon, and if the cost to me were higher (say, $100 per visit rather than $20, or whatever I pay), I might have bothered to weigh the costs versus the benefits, or made sure I squeezed as much as possible into each visit.

When it comes to more serious medical conditions, I think your gut-check analysis misses the point. Suppose I’m on my death bed and there is an expensive, low-probability “heroic” surgery that might prolong my life. If I had to weigh the cost to my family/heirs against the odds of heroic measures being successful, I’m more likely to skip the surgery than if there is practically no cost to me. It might be the case that it’s better social policy to require all other healthcare consumers to subsidize my heroic surgery without my having to make an economic cost/benefit analysis, but that’s not at all obvious and good arguments can be made on both sides.

2. Your data point (5% of the population use 50% of the spending) also isn’t dispositive of anything. First, there’s the other 50% of spending. Second, per the paragraph above, it’s not obvious that the best social policy is to have all healthcare consumers subsidize expensive treatments for sick people without the sick people having to make a cost/benefit analysis of their own.

I think only low-income individuals get refundable tax credits in the US, but I could be missing something. What are the refundable corporate tax credits?

I think posts like this are pretty misleading.

There certainly are all sorts of tax loopholes and questionable tax strategies that benefit particular industries, but presumably corporate tax payments were down during the years in question (2008-2010) partly because many of those companies had significant loss carryforwards relating to the financial crisis. If you have a loss of 100x in 2008 and net income of 50x in 2009 and 2010, you’re economic income is zero for all three years, so you don’t pay income tax. That’s a much less “evil” story, and the articles you point to don’t carve out how much of the phenomenon is attributable to losses.

In addition, there’s no consensus on who bears the burden of the corporate tax. It could be shareholders and management, sure, but it could also be effectively paid by consumers and labor. In addition, remember than pension/retirement plans own trillions of dollars in and a huge percentage of the outstanding US stock — to the extent that the corporate tax is ultimately borne by shareholders, it hits pension funds hard.