Why Does Romney Only Pay 15% Taxes?

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In summary, the conversation revolves around Mitt Romney's tax returns and the percentage of taxes he paid in 2010 and is expected to pay in 2011. The discussion also delves into the issue of tax deductions and the tax code, particularly in relation to capital gains and church contributions. Some individuals argue for a change in the tax code while others defend it. Overall, the conversation highlights the discrepancy in tax rates between the rich and the average citizen.
  • #36
rcgldr said:
The study on this included two options. This is a quote from yahoo article (the orignal link is broke, but I saved the quote):

Modify the Social Security tax cap. Workers pay into the Social Security system on earnings up to $106,800 in 2010. About 83 percent of worker earnings were subject to Social Security payroll taxes in 2008. If all earned income above $106,800 annually were subject to Social Security contributions but did not count toward benefits, Social Security's projected deficit would be completely eliminated. If the higher income counted toward Social Security benefits, about 95 percent of the shortfall would be absolved. Other ideas: apply a new Social Security formula to earnings above the current cap or raise the amount of the income cap to apply to 90 percent of all worker earnings.
For clarity, that's eliminating the cap on pay-in without changing the cap on pay-out, right? Yeah, I get that: I asked if that's what you want and I asked how you see how that affects the logic upon which the program was created.

You didn't answer my question at all.
 
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  • #37
Moonbear said:
Why specify rich? If someone isn't yet retirement age and derives income from capital gains, why should it matter how much of the rest of their income comes from other sources? I really do think it makes sense to tax all income the same, regardless of the source, but then let you apply previous losses as reductions in adjusted gross income without a cap on those either.
I may not have been clear, but I agree with you -- or I should say, I'm not 100% sold, but I do agree that logically, it really should be that way.

But let's also be clear about this: this issue is an issue because Romney is rich. It's in the first several posts of the thread and in every article I've seen on the issue. But the ideas we're discussing have implications much further down that people need to consider. So I'll give specific case studies similar to what I and a friend did when younger:

A 30-year old who lived cheap by living with his parents through his 20s built-up a nice stock portfolio during the roaring '90s and sold it at jus the right time in early 2000, which put him in the top 5% of wage earners for the year (lower limit $145k). He used the money as a downpayment on a house. This person is not rich by most peoples' definitions, but the difference between paying the capital gains rate and the top income tax rate on those capital gains is enormous for him - several tens of thousands of dollars that affect his ability to buy the house he wants. Should he have paid more taxes?

A young adult stretched a little to buy real estate in the mid-90s to early 2000s and moved from a condo to a townhouse to a house, with a nice profit in between each, as the housing bubble grew. Lotta potential taxes in there on not much real effort - a similar amount to the first guy. Should he have paid more?
 
  • #38
This is not the place to discuss taxes in general. Please keep posts specific to how Romney has paid his taxes, his tax shelters, his offshore investments, etc...

Please feel free to start a separate tax thread to discuss examples of how average Americans pay taxes.
 
  • #39
Evo said:
This is not the place to discuss taxes in general. Please keep posts specific to how Romney has paid his taxes, his tax shelters, his offshore investments, etc...

Please feel free to start a separate tax thread to discuss examples of how average Americans pay taxes.
Thank you.
 
  • #40
Ryan_m_b said:
An important part of the argument against this sort of thing is that it ends up with the richest in society paying proportionally less tax than those at the bottom on all of their money coming in which many would say is not a fair system.
An awful lot of people believe that, but it just simply isn't true. I can't see any reasonable way to define "the bottom" that doesn't have them paying a lower rate than "the richest in society"*. First problem, of course, is just about all of "the bottom" up to about 47% pay a zero percent federal income tax rate. And second:
CNN said:
Nevertheless, and contrary to popular perception, Romney's effective federal income tax rate is still above that of many Americans -- 80% of whom have an effective rate below 15%.
http://money.cnn.com/2012/01/24/news/economy/Romney_tax_return/index.htm?hpt=hp_c1

*Caveat: things may look different when the payroll tax is included, but the Romney 14% and the above from CNN is about the federal income tax.
 
  • #41
russ_watters said:
I may not have been clear, but I agree with you -- or I should say, I'm not 100% sold, but I do agree that logically, it really should be that way.

But let's also be clear about this: this issue is an issue because Romney is rich. It's in the first several posts of the thread and in every article I've seen on the issue. But the ideas we're discussing have implications much further down that people need to consider. So I'll give specific case studies similar to what I and a friend did when younger:
I agree, people are ready to complain when the rich get taxed at a low rate, but still want the lower taxes for themselves.
A 30-year old who lived cheap by living with his parents through his 20s built-up a nice stock portfolio during the roaring '90s and sold it at jus the right time in early 2000, which put him in the top 5% of wage earners for the year (lower limit $145k). He used the money as a downpayment on a house. This person is not rich by most peoples' definitions, but the difference between paying the capital gains rate and the top income tax rate on those capital gains is enormous for him - several tens of thousands of dollars that affect his ability to buy the house he wants. Should he have paid more taxes?

A young adult stretched a little to buy real estate in the mid-90s to early 2000s and moved from a condo to a townhouse to a house, with a nice profit in between each, as the housing bubble grew. Lotta potential taxes in there on not much real effort - a similar amount to the first guy. Should he have paid more?

Because he made his money from investments instead of labor, why should he get a break? He should be lauded for scrimping and saving, but just because he got lucky on timing doesn't mean he deserved the house more than someone else who earned their money as wages. I don't begrudge him for going that route, just as I don't begrudge Romney for paying lower taxes if the law allowed it, it just highlights the discrepancy in source of income as a determining factor for taxation rate.
 
  • #42
An awful lot of people believe that, but it just simply isn't true. I can't see any reasonable way to define "the bottom" that doesn't have them paying a lower rate than "the richest in society"*

If you include state and local taxes,which tend to be regressive, its easier to do.

Also, the issue isn't Romney- the issue is that, in general, the top 0.1% pays a lower percentage of their income then the top 10%. Why does this make sense? Why should the tax burden turn around as you make more money?

Now, before capital gains were lowered, was America suffering from an investment problem? It seems to me that both the dot com and housing boom were caused by too much money chasing too little investment opportunity (in different markets). Would increasing the capital gains rate move some of the marginal speculative money out of a bubble market? Is that a good thing?

Right now, we encourage investment. BUT, do we need to? Is it worth the loss of government revenue?
 
  • #43
Better placed here ...

On the tax question I think Romney should say,

"I paid $3 million in taxes in 2010."

In answer to follow up questions about percentages, he should say,

"I paid $3 million in taxes in 2010. I gave away another $3 million in charitable donations in 2010"

Romney paid, I think, 200 times what the median tax payer pays in income taxes, and that doesn't include his property tax. But he doesn't get to vote 200 times on election day, he gets no bigger share of national defense than anyone else, he can't go to anymore than one national park at a time, can only ride in one car at a time on the government road, can only fly in one FAA controlled plane at a time.
 
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  • #44
Evo said:
That's why I was specific "churches that keep most of the money" meaning most of the money they collect does not go to charitable work, and "charities that give most back to benefit society", as opposed to the ones that keep most of it. For example, a church "charity" could fall into the category of giving most back to society. I apologize if I didn't make that clear. I knew what I was thinking. :redface:

You may want to research what his church does in the way of charity. If one looks at what they do, I think you will see just how charitable his church and its members are. Iirc, his church beat the red cross and fema to help during katrina with over a hundred truckloads of supplies, had a huge presence in haiti as well as every disater there has been, the mormon church and its members are very charitable.

On top of that his church has a huge welfare system, available to all, not just for its members. They own their own farms, dairies, feedyards canning facilities etc;. I have seen them come out and pay peoples rent, or fill their pantries and cupboards with food.

The whole argument about taxes is ridiculous, imo, its as if society feels they have more right to ones money than the earner has and they will decide what he gets to keep. Imo, income should be exempt from direct taxation, profits should be where we tax, either through sales taxes or tariffs. In the system we have Romney has already paid taxes on his income once, then again after he invested as capital gains, and if he wouldn't have setup a legal trust it would of been taxed once again as his estate when he died. Seems to me he has paid his fair share, atleast his legal share. This whole storyline is irrelevant imo.
 
  • #45
mheslep said:
Better placed here ...

On the tax question I think Romney should say,

"I paid $3 million in taxes in 2010."

In answer to follow up questions about percentages, he should say,

"I paid $3 million in taxes in 2010. I gave away another $3 million in charitable donations in 2010"

Romney paid, I think, 250 times what the median tax payer pays in income taxes, and that doesn't include his property tax. But he doesn't get to vote 250 times on election day, he gets no bigger share of national defense than anyone else, he can't go to anymore than one national park at a time, can only ride in one car at a time on the government road, can only fly in one FAA controlled plane at a time.

He only gets one vote?! Damn that Constitution!
 
  • #47
mheslep said:
Better placed here ...

On the tax question I think Romney should say,

"I paid $3 million in taxes in 2010."

In answer to follow up questions about percentages, he should say,

"I paid $3 million in taxes in 2010. I gave away another $3 million in charitable donations in 2010"
of which half actually went to the incredibly wealthy Mormon Church, not really a charity, IMO, but did lower his taxes.

http://nbcpolitics.msnbc.msn.com/_news/2012/01/24/10222105-q-a-what-romneys-tax-returns-reveal-and-omit [Broken]

http://news.yahoo.com/blogs/ticket/mitt-romney-tax-returns-show-more-43-million-135129751.html[/

Romney paid, I think, 200 times what the median tax payer pays in income taxes, and that doesn't include his property tax.
And he makes over $21 million a year, has $100 million is a tax free trust, and his investments in a Cayman Islands tax haven, and until 2010 had his money in Swiss bank accounts, possibly the reason he's not willing to disclose those tax returns?
 
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  • #48
obafgkmrns said:
If you actually believe the Government should receive that cash, run for office and get the law changed.

Wow! What a pointless thing to say. What if I said "If you don't like the way the pyramids look, tear them down and rebuild them." When a person has to become a politician just to influence politics, that doesn't sound like much of a democracy.
 
  • #49
Evo said:
And he makes over $21 million a year, has $100 million is a tax free trust, ...
So what?
 
  • #50
mheslep said:
So what?
In response to you saying how much he paid in taxes. Well, it's because of how much money he made.
 
  • #51
In the system we have Romney has already paid taxes on his income once, then again after he invested as capital gains

Not true. A fair chunk of it is carried interest. That means it was a commission fee that was only taxed one time, at the capital gains rate.

Romney paid, I think, 200 times what the median tax payer pays in income taxes, and that doesn't include his property tax.

Because there is no such thing as diminishing marginal utility of money? Really?

he gets no bigger share of national defense than anyone else

Of course he does! The networth of the US is something like 55 trillion. Romney controls at least 250 million (about 10^-6) of that. His tax revenue is also about 10^-6 of the defense budget. If we aren't over-defended, he pays pretty much the cost to defend his chunk of America.

The median household in the US controls a few hundred thousand (maybe, does anyone have the number for median wealth?). So they control 10^-9 of the wealth, but pay 10^-8 of the defense budget. Under the same assumption, the median tax-payer pays 10x what it costs to defend his chunk of America. Romney gets a better deal.

If the country fell to communists tomorrow, and they confiscated all private property, I'd be out a few thousand and my rust-bucket car. Romney would be out millions.
 
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  • #52
mheslep said:
Romney paid, I think, 200 times what the median tax payer pays in income taxes, and that doesn't include his property tax. But he doesn't get to vote 200 times on election day, he gets no bigger share of national defense than anyone else, he can't go to anymore than one national park at a time, can only ride in one car at a time on the government road, can only fly in one FAA controlled plane at a time.

I can't tell whether you're just being sarcastic, or whether you're actually suggesting that vote count should be based on net worth. Given Poe's Law, I'm inclined to lean toward the latter.
 
  • #53
Char. Limit said:
Hey look, another thread about taxes.

Doh!

Send me the links to the other ones...

btw, have you done your taxes yet? I'm curious what a college student with two jobs pays as a percentage nowadays.

If you share that, I'll tell you what I pay in wealth tax. :wink:
 
  • #54
rcgldr said:
The study on this included two options. This is a quote from yahoo article (the orignal link is broke, but I saved the quote):

Modify the Social Security tax cap. Workers pay into the Social Security system on earnings up to $106,800 in 2010. About 83 percent of worker earnings were subject to Social Security payroll taxes in 2008. If all earned income above $106,800 annually were subject to Social Security contributions but did not count toward benefits, Social Security's projected deficit would be completely eliminated. If the higher income counted toward Social Security benefits, about 95 percent of the shortfall would be absolved. Other ideas: apply a new Social Security formula to earnings above the current cap or raise the amount of the income cap to apply to 90 percent of all worker earnings.

russ_watters said:
For clarity, that's eliminating the cap on pay-in without changing the cap on pay-out, right?
That was one of the two options listed, the other was eliminating cap on pay-in and pay-out.

russ_watters said:
Yeah, I get that: I asked if that's what you want and I asked how you see how that affects the logic upon which the program was created.
These days it's just another tax, but at least one where the pay-out go to social security related payments as opposed to wherever the government wants to spend it. If the cap was removed, then FICA would be a flat tax, the kind of tax that republicans are supposed to favor.
 
  • #55
For perspective - here's the effective tax rates for a few years - http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=456 (this is CBO data, just easier to read IMO)

So for every 1 Romney that is paying 15% taxes... there are 5 others in the same income paying at least 35% taxes. The justification for the 'Buffett rule' doesn't align with the 'Buffett facts' IMO.
 
  • #56
mege said:
For perspective - here's the effective tax rates for a few years - http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=456 (this is CBO data, just easier to read IMO)

So for every 1 Romney that is paying 15% taxes... there are 5 others in the same income paying at least 35% taxes. The justification for the 'Buffett rule' doesn't align with the 'Buffett facts' IMO.
Please back this up with actual citations. The wealthy never pay 35%.
 
  • #57
mege said:
For perspective - here's the effective tax rates for a few years - http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=456 (this is CBO data, just easier to read IMO)

So for every 1 Romney that is paying 15% taxes... there are 5 others in the same income paying at least 35% taxes. The justification for the 'Buffett rule' doesn't align with the 'Buffett facts' IMO.
You're misreading the data. The Romney disucssion is about the federal income tax, not the total federal tax (does not include the payroll tax). At 14% Romney pays just a little below the average for a 1%er, which was 19% in the most recent data.
 
  • #58
rcgldr said:
These days it's just another tax, but at least one where the pay-out go to social security related payments as opposed to wherever the government wants to spend it. If the cap was removed, then FICA would be a flat tax, the kind of tax that republicans are supposed to favor.[emphasis added]
You've got the shoe on the wrong foot here. Republicans don't favor removing the cap not because we're holding a position inconsistent with our values on flat taxes, but because SS is not "just another tax". Even (in my perception) the media understands this, which is why the issue of this thread was presented without a payroll tax component by the media - regardless of what liberals like to argue in this forum.

The reason this issue was brought to us without consideration of SS is that SS was created as a forced-savings retirement plan, not as a tax serving general government funding. Yeah, I know it has been abused somewhat, but removing the cap on pay-in without raising the pay-out for some people removes all remainging pretense. And we have liberals here arguing vehimently that (paraphrase) 'I paid in and the government made a promise that they'd pay me back plus interest. The government needs to keep that promise.' If we eliminate the cap on pay-in without also eliminating it on pay-out, we'd become a country that keeps that big promise to some while not keeping it for others. I don't think that's really a country liberals want to be, but more to the point, if the government broke that big promise for some I would think it would cause worry for the rest as well. And frankly, I think the media sees this, which is why they typically frame the issue the way they do, ignoring the SS component.
That was one of the two options listed, the other was eliminating cap on pay-in and pay-out.
Sorry, I missed that one. But I'd be surprised if many people would support a change to the program that resulted in the government writing million dollar benefit checks to rich people. I'm also distrusting of the prediction on how it would help the program, since it doesn't have a timeframe attached to it. It doesn't change the structure of the program, so the pyramid-scheme-type flaw still exists. SS did fine for a long time, but is on a trajectory to not do fine. Extending it would be like starting over with a different pool of people: it would work fine again -- but only for a while.
 
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  • #59
ParticleGrl said:
If you include state and local taxes,which tend to be regressive, its easier to do.
As I pointed out - but unless someone says they are reframing the issue, I must assume they are responding to the issue that was presented to them.
 
  • #60
turbo said:
Please back this up with actual citations. The wealthy never pay 35%.

Same data from the CBO source:
http://www.cbo.gov/publications/collections/tax/2010/AverageFedTaxRates2007.pdf [Broken]

What do you want? The data is pretty self-evident. If I am making mistakes conveying it - that doesn't change the point: Romney is an outlier in taxes.

Seems to me he contributes much more than his 'fair share' even so.
 
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  • #61
mheslep said:
Better placed here ...

On the tax question I think Romney should say,

"I paid $3 million in taxes in 2010."

In answer to follow up questions about percentages, he should say,

"I paid $3 million in taxes in 2010. I gave away another $3 million in charitable donations in 2010"

Romney paid, I think, 200 times what the median tax payer pays in income taxes, and that doesn't include his property tax. But he doesn't get to vote 200 times on election day, he gets no bigger share of national defense than anyone else, he can't go to anymore than one national park at a time, can only ride in one car at a time on the government road, can only fly in one FAA controlled plane at a time.

The 20 Millions he earned in 2010, where did they come from?

These 20 Millions were almost exclusively generated by the capital he owns and by the many, many people that work with that capital.
 
  • #62
mege said:
Same data from the CBO source:
http://www.cbo.gov/publications/collections/tax/2010/AverageFedTaxRates2007.pdf [Broken]

What do you want? The data is pretty self-evident. If I am making mistakes conveying it - that doesn't change the point: Romney is an outlier in taxes.

Seems to me he contributes much more than his 'fair share' even so.
The data in your link soundly refutes your assertion. Nobody in the top 10% on average pays even 20% in income taxes.

Disclaimer: I maxed out on SS contributions for more years than I can count over the years, and spent the last 5 of my working years comfortably in the top 2% of all earners, even without my wife's wages added in. My wife and I planned our finances and retirement in detail. I don't need too much help understanding wage-and-tax structure.
 
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  • #63
How Mitt makes his money.

Mitt Romney’s $21.6 million of income in 2010 included profits from elite funds run by Goldman Sachs Group Inc. and Golden Gate Capital Corp., illustrating how one of America’s wealthiest presidential candidates has diversified his private-equity fueled fortune.

Trusts set up for Romney and his wife held investments in Goldman Sachs US$ Liquid Reserves Fund and a Golden Gate Capital fund, as well as a Credit Suisse Group AG-backed collateralized- debt obligation, according to tax returns released yesterday by his campaign. Romney, who stepped down as head of private-equity firm Bain Capital LLC in 1999, also owns a stake in a buyout fund started by the Boston-based company in 2008.
continued...

http://www.businessweek.com/news/2012-01-25/romney-reports-income-from-funds-at-goldman-sachs-golden-gate.html [Broken]

http://www2.goldmansachs.com/gsam/docs/funds_international/brochures_and_sales_aids/fund_literature/pf_ulrf_ds_en.pdf
 
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  • #64
Thanks for the links, Evo. It is quite enlightening to see how the uber-wealthy can tap into interest rates that the rest of us can only dream of.
 
  • #65
ParticleGrl said:
...
Of course he does! The networth of the US is something like 55 trillion. Romney controls at least 250 million (about 10^-6) of that. His tax revenue is also about 10^-6 of the defense budget. If we aren't over-defended, he pays pretty much the cost to defend his chunk of America.

The median household in the US controls a few hundred thousand (maybe, does anyone have the number for median wealth?). So they control 10^-9 of the wealth, but pay 10^-8 of the defense budget. Under the same assumption, the median tax-payer pays 10x what it costs to defend his chunk of America. Romney gets a better deal.

If the country fell to communists tomorrow, and they confiscated all private property, I'd be out a few thousand and my rust-bucket car. Romney would be out millions.
Yes he has more in the bank to lose, though I credit most of the protection of Romney's assets to contract law. I credit protection of Romney's life and liberty against foreign threats, of which he has only one the same as you and me, to national defense. Put another way, if you, me and Romney had all been in the WTC 11 years ago of what relevance would be his bank account vs yours?
 
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  • #66
turbo said:
The data in your link soundly refutes your assertion. Nobody in the top 10% on average pays even 20% in income taxes.
...
It has been a big news story for a week now that Gingrich, who's $3.1m income places him well into the 1%, paid 31.6% in taxes.
http://thepage.time.com/2012/01/19/newts-taxes/
 
  • #67
mheslep said:
It has been a big news story for a week now that Gingrich, who's $3.1m income places him well into the 1%, paid 31.6% in taxes.
http://thepage.time.com/2012/01/19/newts-taxes/
This thread isn't about Gingrich and it's not about his total tax liability. Romney pays far less than 20% in income taxes. Case closed.
 
  • #68
turbo said:
This thread isn't about Gingrich and it's not about his total tax liability.
Then don't make statements about what 'Nobody in the top 10%' does.
Romney pays far less than 20% in income taxes. Case closed.
So?
 
  • #69
Yes he has more in the bank to lose, though I credit most of the protection of Romney's assets to contract law

So then Romney benefits much more than I do from the government's enforcement of contract law, and therefore pays to support it. My point being- Romney clearly owns more of America than the median taxpayer. He therefore pays much more to keep his assets safe.

And its not just more in the bank- Romney has stakes in properties all over the country (and probably world). Much of what the military does is defend US interests- which in turn means US assets.

Put another way, if you, me and Romney had all been in the WTC 11 years ago of what relevance would be his bank account vs yours?

Given that neither one of us WAS in the trade center, which one of us lost more wealth from the destruction of the trade center? I'm willing to bet Romney, by a mile.
 
  • #70
mheslep said:
It has been a big news story for a week now that Gingrich, who's $3.1m income places him well into the 1%, paid 31.6% in taxes.
http://thepage.time.com/2012/01/19/newts-taxes/
Interpretation:

The previous reference appeared to add-up all the tax revenue and income in each bracket to come up with an average tax rate for the bracket. So the average tax rate for a 1%er is 19%.

Newt, on the other hand, is not an "average" 1%, he's on the low end of the 1% and makes most of his money as ordinary income, taxed at the top marginal rate. So his rate is quite high (comparitavely), at 31.6%.

So what separates a low-end 1%er like Newt (in terms of taxes paid, not income) from an "aveage" one like Romney is how much of their income is "normal" vs capital gains and how much they contribute to charity. For those who derive little from capital gains and don't contribute much to charity - like Newt - their effective income tax rates are among the highest of any Americans. I suspect that category also includes most professional athletes, actors, experienced doctors and lawyers and very successful small business owners.
 
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<h2>1. Why does Romney only pay 15% taxes?</h2><p>There are a few reasons for this. One is that Romney's income comes primarily from investments, which are taxed at a lower rate than traditional income. Another reason is that he may have utilized tax deductions and loopholes to lower his taxable income. Additionally, the tax code allows for certain tax breaks for high-income earners like Romney.</p><h2>2. Is it legal for Romney to only pay 15% taxes?</h2><p>Yes, it is legal for Romney to pay 15% taxes. The tax code allows for different tax rates for different types of income and also allows for deductions and loopholes that can lower taxable income. As long as Romney is following the tax laws and regulations, his tax rate is considered legal.</p><h2>3. How does Romney's tax rate compare to the average American?</h2><p>Romney's tax rate is significantly lower than the average American's tax rate, which is around 25%. This is due to the fact that the majority of Romney's income comes from investments, which are taxed at a lower rate than traditional income. Additionally, the tax code allows for certain tax breaks for high-income earners like Romney.</p><h2>4. Can the government do anything to change Romney's tax rate?</h2><p>The government can potentially change the tax code to eliminate or reduce tax breaks and loopholes that benefit high-income earners like Romney. However, this would require legislative action and would likely face opposition from those who benefit from these tax breaks.</p><h2>5. How does Romney's tax rate affect the economy?</h2><p>Some argue that Romney's low tax rate allows him to reinvest more money into the economy, which can stimulate economic growth. Others argue that his low tax rate contributes to income inequality and does not benefit the economy as a whole. The effects of Romney's tax rate on the economy are a subject of debate and vary depending on one's perspective.</p>

1. Why does Romney only pay 15% taxes?

There are a few reasons for this. One is that Romney's income comes primarily from investments, which are taxed at a lower rate than traditional income. Another reason is that he may have utilized tax deductions and loopholes to lower his taxable income. Additionally, the tax code allows for certain tax breaks for high-income earners like Romney.

2. Is it legal for Romney to only pay 15% taxes?

Yes, it is legal for Romney to pay 15% taxes. The tax code allows for different tax rates for different types of income and also allows for deductions and loopholes that can lower taxable income. As long as Romney is following the tax laws and regulations, his tax rate is considered legal.

3. How does Romney's tax rate compare to the average American?

Romney's tax rate is significantly lower than the average American's tax rate, which is around 25%. This is due to the fact that the majority of Romney's income comes from investments, which are taxed at a lower rate than traditional income. Additionally, the tax code allows for certain tax breaks for high-income earners like Romney.

4. Can the government do anything to change Romney's tax rate?

The government can potentially change the tax code to eliminate or reduce tax breaks and loopholes that benefit high-income earners like Romney. However, this would require legislative action and would likely face opposition from those who benefit from these tax breaks.

5. How does Romney's tax rate affect the economy?

Some argue that Romney's low tax rate allows him to reinvest more money into the economy, which can stimulate economic growth. Others argue that his low tax rate contributes to income inequality and does not benefit the economy as a whole. The effects of Romney's tax rate on the economy are a subject of debate and vary depending on one's perspective.

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