Friday, July 20, 2012

Romney Releases 12 years of tax returns!

Whoops.  Wrong Romney!  Mitt and Dad, circa 1967.

When Mitt Romney's father, Auto Executive George Romney ran for President in 1967, he established the precedent of releasing his tax returns - 12 years of them - to a reporter, in order to allay fears that he had taken advantage of tax loopholes or had otherwise earned his fortune in inappropriate ways.

Since then, nearly every Presidential candidate has released their tax returns (Nixon being the one big exception, with predictable results).

Now, 45 years later, the son doesn't follow in the Father's footsteps.   What could be in the returns that is damaging?

This article raises some interesting possibilities.  Romney closed a Swiss Bank Account (which all red-blooded Americans have, right?) back in 2010, right after the IRS announced tax amnesty on such accounts.  Could Romney have been sheltering money overseas?  Or maybe he just wanted to have ready access to cash in Switzerland when visiting, in case he had a Jones for Swiss Chocolate or saw a cuckoo-clock he really liked.  Yes, it might be the latter.

Perhaps also, going 12 years back, we would see that he would claim, on his taxes, income from Bain Capital as "CEO" when he claimed not to be in charge of the company that he was sole owner of.

That raises an interesting thing about his taxes.  He pays capital gains rates on his income, of less than 15% marginal rate.  This is the same rate you and I would pay, if we had combined incomes less than $63,000 a year.  A guy making $75K pays a higher rate than Romney.

Why is this?  Well, it is one reason a lot of people are calling for "tax reform."  When you make twenty-two million a year in income, you can afford to do a lot of things to avoid paying taxes:
For 2010, the Romneys enjoyed a federal tax rate of only 13.9% on their adjusted gross income of roughly $22 million, which gave them a lower federal tax burden (including payroll, income and excise taxes) than the average American wage-earning family in the $40,000 to $50,000 range. The principal reason for this munificently low tax rate is that much of Romney's income, even today, comes from "carried interest," which is just the jargon used by the private equity industry for compensation received for managing other people's money.
Seems kind of odd, that this income is treated as an "investment" and not ordinary income.

But Mitt Romney is no ordinary income kind of guy!   But of course, deep down, he connects with ordinary Americans who make, say, only a million dollars a year.   And he really understands the needs and desires of most Americans who would consider it a major accomplishment to save up a million dollars in their lifetimes.

I am not sure why ordinary folks, who pay taxes in the 15% or 25% bracket, think that cutting taxes on the very upper brackets (which they will never be in) and reducing programs like Medicare and Social Security - which they will likely collect from - are ideas that are in their best interests.

Oh, right.  It has something to do with Gay Marriage.  Gotcha.