News Why Does Romney Only Pay 15% Taxes?

[Evo]

Isn't this over-generalizing though Evo? There are churches out there that use their donations to help the community and there are also some very rich, very money-grubbing charities out there. A lot of the money many charities raise gets poured into raising more money, not into helping anybody. The big charities have investment funds, engage in extensive marketing/campaigning/fundraising, and hire top-of-the-line CEOs to run them. For many charities, the goal is not to help anyone anymore but rather to self-perpetuate the charity.

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.

 

[CAC1001]

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.

Ahh, okay

 

[russ_watters]

Also there's a cap on social security, once you make a bit over $106,000 (USA), you stop paying any FICA (social security) taxes, a regressive tax bracket that goes from 6.25% (now 4.25% with tax cut) to 0%. Eliminating the FICA cap would greatly help the social security system from going bankrupt.

So are you in favor of completely separating the pay-in from the pay-out? I wouln't imagine SS fans would be in favor of that, since eliminating the connection means people may not get back what they pay in...

...or do you just want to do that for the rich?

 

[rcgldr]

Also there's a cap on social security, once you make a bit over $106,000 (USA), you stop paying any FICA (social security) taxes, a regressive tax bracket that goes from 6.25% (now 4.25% with tax cut) to 0%. Eliminating the FICA cap would greatly help the social security system from going bankrupt.

So are you in favor of completely separating the pay-in from the pay-out? I wouln't imagine SS fans would be in favor of that, since eliminating the connection means people may not get back what they pay in.

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.

 

[Moonbear]

I am in favor of closing this loophole for the rich (working age people who derive their income from capital gains), but don't trust liberals at all on the issue. Getting a clear definition of "rich" is like nailing jello to a wall: the 99% is the new buzzword, but I've never seen a tax proposal that didn't reach much further down in defining the "rich".

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. Money changing hands is all the same to me.

As for Romney, I have no problem with him paying 15% in taxes. It's consistent with current tax law, and he's actually paying his taxes, so what more is there to expect? His 15% is still a heapload more money than probably most here even earn as gross income.

 

[russ_watters]

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.

 

[russ_watters]

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?

 

[Evo]

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.

 

[turbo]

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.

 

[russ_watters]

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:

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.

 

[Moonbear]

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.

 

[ParticleGrl]

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?

 

[mheslep]

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.

 

[Jasongreat]

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.

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.

 

[lisab]

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!

 

[Evo]

You may want to research what his church does in the way of charity.

I already did.

The LDS Church uses most of its financial resources to construct and maintain buildings and other facilities.

http://en.wikipedia.org/wiki/Financ...esus_Christ_of_Latter-day_Saints#Use_of_funds

 

[Evo]

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

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?

 

[KingNothing]

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.

 

[mheslep]

And he makes over $21 million a year, has $100 million is a tax free trust, ...

So what?

 

[Evo]

So what?

In response to you saying how much he paid in taxes. Well, it's because of how much money he made.

 

[ParticleGrl]

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.

 

[Char. Limit]

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.

 

[OmCheeto]

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.

 

[rcgldr]

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?

That was one of the two options listed, the other was eliminating cap on pay-in and pay-out.

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.

 

[mege]

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.

 

[turbo]

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%.

 

[russ_watters]

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.

 

[russ_watters]

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.

 

[russ_watters]

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.

 

[mege]

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

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.