News Why Does Romney Only Pay 15% Taxes?

[Lapidus]

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.

 

[turbo]

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.

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.

 

[Evo]

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

http://www2.goldmansachs.com/gsam/docs/funds_international/brochures_and_sales_aids/fund_literature/pf_ulrf_ds_en.pdf

 

[turbo]

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.

 

[mheslep]

...
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?

 

[mheslep]

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/

 

[turbo]

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.

 

[mheslep]

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?

 

[ParticleGrl]

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.

 

[russ_watters]

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.

 

[mheslep]

...I suspect that category also includes most professional athletes, actors, experienced doctors and lawyers and very successful small business owners.

Yes that sounds right to me.

 

[ThomasT]

Whatever justifications might be given for Romney's tax payment(s), I have to agree with the polemicists who think that his disclosure will hurt his chances. But he had to do it. And now we know why he didn't want to.

So now Romney isn't just the sleazy political opportunist, or the adherent to a religious cult in the minds of some, he's also an extremely rich guy who pays a smaller percentage of his income in taxes than a huge number of Americans who are stuggling to make ends meet.

 

[russ_watters]

So now Romney isn't just the sleazy political opportunist, or the adherent to a religious cult in the minds of some, he's also an extremely rich guy who pays a smaller percentage of his income in taxes than a huge number of Americans who are stuggling to make ends meet.

Er, didn't we just see a stat that showed Romney paid a higher rate than 80% of Americans?

 

[ThomasT]

Er, didn't we just see a stat that showed Romney paid a higher rate than 80% of Americans?

I missed that. So, 80% of Americans pay less than 14% tax on their incomes?

 

[russ_watters]

Yup, roughly: looking back, the stat was 80% paid less than 15% and Romney paid 14.5%. But that shouldn't be surprising since 47% pay 0% or less, right?

 

[Evo]

But that shouldn't be surprising since 47% pay 0% or less, right?

And why do they pay no taxes? Below the poverty level?

Here's the answer, they're dirt poor.

31: Percent of nonpaying American households making $10,000 or less per year in 2010 (PDF link to study). An American household of any size making this amount of money, including just one person, is automatically under the poverty threshold.

61: Percent of nonpaying American households making $20,000 or less per year.

http://news.yahoo.com/numbers-47-percent-pay-no-income-tax-look-170500327.html

 

[Char. Limit]

I've got two jobs, but dad tells me that apparently I pay negative tax. Since I let him do my taxes, I trust him on that. Just sayin', not everyone who doesn't pay taxes is a worthless freeloader.

 

[mheslep]

I've got two jobs, but dad tells me that apparently I pay negative tax. Since I let him do my taxes, I trust him on that. Just sayin', not everyone who doesn't pay taxes is a worthless freeloader.

It's not that legally paying no fed. income tax means anyone is worthless. It is simply the law, wrongly in my view. Everybody making enough to eat ought to pay something, half of 1% maybe, but something.

 

[ThomasT]

And why do they pay no taxes? Below the poverty level?
Here's the answer, they're dirt poor.
http://news.yahoo.com/numbers-47-percent-pay-no-income-tax-look-170500327.html

Yeah, I think it would be very difficult living, in America, on an income of, say, less than $25k, much less $10k per year.

 

[lisab]

It's not that paying no fed. income tax means anyone is worthless. It is simply the law, wrongly in my view. Everybody making enough to eat ought to pay something, half of 1% maybe, but something.

Where I live (Washington State), there is a sales tax. So here, and in all places where there is a sales tax, they do pay something.

Not to mention gas tax, car registration tax, utility taxes, etc.

 

[Char. Limit]

Where I live (Washington State), there is a sales tax. So here, and in all places where there is a sales tax, they do pay something.

Not to mention gas tax, car registration tax, utility taxes, etc.

Hey, I live in the same place!

*acts like he just found this out*

But yeah, there's sales tax, and I'm sure other taxes as well. Gas tax I think is going up.

 

[mheslep]

Where I live (Washington State), there is a sales tax. So here, and in all places where there is a sales tax, they do pay something.

Not to mention gas tax, car registration tax, utility taxes, etc.

Everybody pays a local sales or local income tax somewhere, but I referred to federal taxes. Almost everybody should pay a little something to the federal govt. in my view, to encourage people to pay attention to federal elections if nothing else.

 

[mheslep]

Yeah, I think it would be very difficult living, in America, on an income of, say, less than $25k, much less $10k per year.

That's hard for a family with kids, not so much for a single person. I lived on less than $25k (today's dollars) for a couple years, though I had no school debt burden. Took a trip to Europe for about $1200 (today's $) including air. I worked hard, played hard, and I was not 'poor'.

 

[ThomasT]

Yup, roughly: looking back, the stat was 80% paid less than 15% and Romney paid 14.5%.

But wasn't Romney's income around $20m?

Imho, the tax code needs to be seriously revised ... basically eliminating all loopholes and deductions. Then somebody with an income like Romney's pays a much higher percentage in taxes than the average salary or wage earner.

The point being that when you get into the millions of dollars of yearly income, it's likely that much of that income is not the result of any sort of productive or creative work that benefits the general economy, but rather due to ridiculously inflated incomes/bonuses and investments.

But that shouldn't be surprising since 47% pay 0% or less, right?

There are people who pay less than 0% tax?

Anyway, isn't anybody who's working, and on the grid, subject to social security and medicare/medicaid taxes -- so that nobody who's filing a tax return, even if they get a refund wrt federal income tax, is untaxed?

 

[ThomasT]

Anyway, to return to my point, I think that this disclosure will hurt Romney. It simply adds to the list of things that average Americans might be expected to not like about him, imo.

 

[skippy1729]

85 posts in 2 days! Assuming that this topic stimulates similar attention in the general election I think Romney is not a good choice for the GOP; a big distraction from the real issues.

Skippy

 

[russ_watters]

And why do they pay no taxes? Below the poverty level?

Here's the answer, they're dirt poor.

http://news.yahoo.com/numbers-47-percent-pay-no-income-tax-look-170500327.html

That's "dirt poor" by a definition you pulled out of the air, Evo. The US poverty line does not cover 47% of Americans. The first block in the link (31% of the 47%) is roughly all the poor in the US, by the federally defined poverty level.

"Why" is an interesting question, though: why has the number of Americans paying 0% or less shot up dramatically in the last 30 years while the poverty rate has been relatively flat?

 

[russ_watters]

Where I live (Washington State), there is a sales tax. So here, and in all places where there is a sales tax, they do pay something.

Not to mention gas tax, car registration tax, utility taxes, etc.

Sure, but now we're comparing apples and oranges. This thread is about Romney and his 14.5% is only about his federal income tax. If you want to throw in other taxes so you can say the poor pay taxes, you have to also add those other taxes to Romney's percentage too.

 

[russ_watters]

But wasn't Romney's income around $20m?

Yes. So what?

Imho, the tax code needs to be seriously revised ... basically eliminating all loopholes and deductions. Then somebody with an income like Romney's pays a much higher percentage in taxes than the average salary or wage earner.

Er, are you not listening or do you simply not believe the stats that you're seeing with your own eyes? He already does! 14.5% is much higher than 0%, isn't it?

Moreover, because people get down to 0% largely through deductions, your proposal (eliminating all loopholes and deductions) would almost certainly have exactly the opposite effect of what you are looking for.

And in addition, I think we should examine whether this "problem" is getting better or worse. I think most people would be surprised...but that's another thread.

There are people who pay less than 0% tax?

Yes. Please look at the stats that were provided for you. Again (thanks to mege):
http://www.cbo.gov/publications/collections/tax/2010/AverageFedTaxRates2007.pdf

http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=456

(Similar data in both links, one in PDF and one in html)

Anyway, isn't anybody who's working, and on the grid, subject to social security and medicare/medicaid taxes -- so that nobody who's filing a tax return, even if they get a refund wrt federal income tax, is untaxed?

Yes, but again if we want to compare apples to apples, you need to stick with the federal income tax because that's what Romney's 14.5% is about.

 

[ThomasT]

@russ watters,

Yes, I looked at the publications, and have no reason to doubt their veracity. But my point was that Romney, who made about $20m, and paid 14.5% on that income is paying a smaller percentage than a lot of people who made between $50k and $100k. Eg., my best year, when I was working and paying taxes, was about $80k, and I'm pretty sure that I paid the federal government more than 14.5% of that.

Anyway, imo, the important point wrt this thread is that Romney's disclosure will hurt his chances of getting elected to the presidency ... simply because, imo, most Americans are going to want someone making $20m to pay more than 14.5% of that in federal income tax.

Wrt including the payments for SS and Medi, the fact of the matter is that they're payments made to the federal government by everybody who reports less than $106k, so, imo, it makes sense to include these in any comparative consideration of taxes paid to the federal government.