Do You Pay More Taxes Than Mitt Romney Does?
At the risk of turning you off completely, I’m going to talk about a subject we all loathe: taxes. Specifically, I’m going to talk about Mitt Romney’s obstinate refusal to release more than two years of his tax returns and why it’s a button with me.
Just now as I was writing this, I decided to Google “Romney and tax returns” and lo and behold. Now I’m even madder.
According to the Los Angeles Times:
In excerpts released by ABC News, Romney was unable to say whether he had ever paid less than the 13.9% tax rate he paid in 2010. “I haven’t calculated that. I’m happy to go back and look, but my view is I’ve paid all the taxes required by law,” Romney told ABC’s David Muir.
Romney’s 13.9% rate falls far below rates typically applied to those with incomes approaching the $20.1 million he made in 2010.
“I know that I pay a very substantial amount of taxes, and every year since the beginning of my career so far as I can recall,” he later added.
Let’s look at that word “substantial.” First off, I hardly think a tax rate of less than 14 percent applies. Fifty percent, maybe. Second, what’s with him saying, “so far as I can recall”? Romney has based his entire candidacy on the premise that he was a genius in business while running Bain Capital. Yet he doesn’t even remember if he ever paid less than a 14 percent tax rate?
I prefer to say it won’t wash.
I suppose Romney thought by going to London and acting all presidential and Olympian he could deflect attention from the exploding controversy over his taxes. But he couldn’t even get that right. Romney alienated the entire British population with his insensitive remarks about Brits’ readiness and even their enthusiasm for the Olympics. (This is why I think Mitt should do more interviews. He’s spectacularly bad at them.) It would be like me being invited over to one of Mitt and Ann’s homes for dinner and bringing a case of Budweiser or a bottle of vodka. It just isn’t done. At least he didn’t cause a nuclear incident in Israel.
But let me go back to why I’m so irate about Romney’s failure to release his tax returns.
A year ago, one my older brothers invited me to a dinner party with some of his rich Republican friends and golfing buddies. This happened to coincide with last year’s BlogHer conference in San Diego. The couple who were hosting the party lived in a luxury high-rise condo just a couple of blocks from the Marriott. “Come on, it’ll be fun!” my brother said on the phone when I hesitated. Oh, why not? I thought.
When I got there, I had to give my name to a doorman to be admitted upstairs. First off, let me just say that no one has a doorman in San Diego. I grew up there, and it’s about as common as snowboarding at La Jolla Shores, or as people with custom-built four-car garages with elevators.
My brother’s friend—I’ll call him George—whose condo it was greeted me warmly at the door. “We’ve heard so much about you!” he said, hugging me. There were four couples, including my brother and his wife. And me. They were all very gracious, although two of the 60-something men had trophy wives and one of the men had been in prison for running a gambling scam in Vegas. Which just goes to show you that Republicans are not as boring as you think.
We sat down to dinner at a long elegantly set table. Expensive wine was poured. My brother is somewhat of a practical joker and instigator. So knowing my liberal politics, he directed me to a chair next to biggest conservative in the group--I’ll call him Dick. He’d also briefed his friends in advance about his little sister’s politics.
In addition to having an MBA from Stanford--a credential he loudly emphasized at least a dozen times as the night wore on--Dick had also run the Republican party in Vermont. We had barely lifted our salad forks when he launched into a diatribe about Obama. Obama was a socialist. Obama hated the banks. The stimulus was a failure. That was irritating enough, but then he started complaining about Obama wanting to let the Bush tax cuts expire for millionaires, and something in me snapped.
The year before I’d had to scrape together an extra $1,200 for the IRS because an editor hadn’t sent me a W-9 for a story I’d written, and I’d forgotten about it. It’s not that I didn’t want to pay, although it did bug me considering how small my check was. In our house $1,200 is a lot of money. But it also made me angry because of the people who don’t pay their fair share because of tax havens in the Cayman Islands, blind trusts, and other legal shenanigans.
Like Mitt Romney. As Vanity Fair reported:
“Romney’s personal tax rate is a particular point of interest. In 2010 and 2011, Mitt and Ann paid $6.2 million in federal tax on $42.5 million in income, for an average rate of just shy of 15 percent, substantially less than what most middle-income Americans pay. Romney manages this low rate because he takes his payments form Bain Capital as investment income, which is taxed at a maximum of 15 percent, instead of the 35 prcent he would pay on ordinary income (emphasis his).
Back at the dinner party, I asked Dick very sweetly, “What’s your federal tax rate? I bet it’s not as high as mine.”
He scoffed and said--I am not kidding--15 percent. What is it with 15 percent and rich people? I want to know. Is it some morally acceptable threshold, as in 20 percent is too much, but we can live with 15?
So I told Dick that my husband and I had paid 35 percent the previous year, and told him our income. "That couldn’t possibly be right!" he said dismissively. I had to be wrong. At which point we got into a discussion about taxes, with me calmly rebutting his points with facts, and Dick getting increasingly irate that I was winning the debate. (This is where the Stanford Business School mantra came in.) Was it really fair that someone in my income bracket was paying more taxes than a millionaire? I asked.
By now the rest of the dinner guests were fascinated, and most of them were siding with me, including Dick’s wife, an anesthesiologist. “Don’t pay any attention to him. He’s a bully,” she said. The man sitting next to me patted my thigh and whispered something about Dick’s “anger problem” and “arrogance.” My brother, as usual, was enjoying the fireworks.
When the evening was over I thanked my hosts and said I hoped I hadn’t ruined their dinner party. No! I hadn’t at all. They loved seeing Dick get his comeuppance. As I was leaving George handed me his business card and offered me a job. I guess he felt sorry for me. Which only goes to show you how weird Republicans are.
But the whole incident just confirmed for me how unfair our tax system is. And how thoroughly the system is rigged in favor of the rich. This is why I find Romney’s refusal to release his tax returns so outrageous. What is he trying to hide?
Here’s a clue from the New York Times:
The most serious risk outsiders have imagined is that some recent return, especially 2009’s, showed no tax liability, even though a campaign spokeswoman, Andrea Saul, insisted Romney had never paid zero income taxes. But paying “next to nothing,” resulting from capital losses and various legal deductions, normal and creative, is distinctly possible.
Lest you think I’m picking on Mitt, the Washington Post
extremely illuminating chart comparing Romney’s tax returns—the two, anyway, that we’ve seen--with those of five recent presidents. Guess who paid the least?
The results speak to why Romney wants to talk as little as possible about his tax returns (and, more broadly, his wealth) while President Obama’s campaign wants to bring it up as much as possible.
Romney’s earnings are by far the highest and his tax rate is the lowest of any of the individuals measured in the chart. As Sunlight’s Lee Drutman writes: “The reason is pretty straightforward. Romney’s income primarily comes from investments, and the resulting capital gains are taxed at a rate of 15 percent.”
Which reminds me. I need to go talk to my accountant about setting up some tax havens in Bermuda.