Republican presidential nominee Mitt Romney proudly proclaimed from the front pages of the New York Times his income tax rate for the last ten years was 13%. He and his campaign sought out reporters to announce this important revelation. This was damage control. Senate Majority Leader Harry Reid accused Romney of paying no taxes in that 10-year period. While continuing to refuse to release any more tax returns, Romney assures America he has reviewed them and thus the 13% figure is a result of his compilations. What is truly mind-bending is Romney, and his advisors, believe this is a good news story and will end the controversy once and for all. It is an example of how out of touch he is with the realities of everyday life for most Americans.
In the last 10 years, if 2010 is any indication, Romney received as much as $200 million in income. He is in the top 1% of the top 1%. He wants us to know that while the top tax rate for an average American receiving that much income would be about 38%, he only paid an effective rate of 13% and he is not ashamed to admit it. Through the use of Swiss bank accounts and trusts set up in the Bahamas and Grand Cayman Islands, and numerous other tricks of the accounting trade, Romney denied the American treasury of millions of dollars. This lost revenue must be replaced by either government borrowing (which Romney says he abhors) or by revenue collected aggressively from working Americans taxed at higher rates and who don't have access to the financial legerdemain Romney is able to perform. You should now vote for him because he did pay some taxes. Yes, they are at a rate lower than the income tax rates were in 1950, and yes, he denied the government millions of dollars in revenue, and yes, other Americans have to make up the shortfall with more out of their pockets, but no one can claim he didn't pay "any" taxes during that 10 year span and he is proud to announce that to the world.
One problem with all of this fiscal giddiness is we have nothing but Romney's word he paid any taxes at all. Without the actual returns, there is no proof he is telling the truth. (Imagine if no official Hawaiian birth certificate had been released for the President...would the regressive media and pundits have accepted his word?) President Obama was asked why his campaign is spending so much time on Romney's taxes. Aren't there more important issues Mr. President? Obama responded with two concerns. First, anyone running for president is expected to release their private medical records for the public to analyze about their health and fitness for the office. Because of scandals, like the terrible health of President Kennedy, which was kept from the public, they want to know the medical history of each candidate. The same is true of tax returns. Obama reminded the reporters, running for president ain't beanbag. The American citizens expect a level of disclosure, which is invasive, uncomfortable and leaves one fully exposed before they decide on how they are going to vote. Second, Obama pointed out the Swiss bank accounts and the corporations (false?) and trusts set up in the Bahamas and Grand Caymans. We learned of all of this from one return. What else is there to know? What other loopholes was Romney able to access? Many of these loopholes were passed by Congress after intense lobbying by Romney and Wall Street and the 1%. How much has Romney benefitted from such legislative largesse? Where has Romney ever lobbied or advocated for similar loopholes to benefit average working Americans? It is, according to Obama, a character issue.
Only regressive Republicans could want a New York Times headline trumpeting the low tax rate paid by their standard bearer and think this is politically good news. Only someone who had never faced the gut-wrenching, stomach-dropping moment on April 15th when they discover they owe thousands of dollars in taxes and don't have that kind of money lying around, would think announcing how well he has gamed the system would boost his political fortunes. Only Romney would ask Americans to trust he only took advantage of some of the escape routes the tax code makes available, but only some of them, not all of them.
If you invented an app, or an Internet company or you struck gold under the Bering Straight, and you made $200 million this year, you would pay taxes at around the 38% rate because your windfall was "ordinary" income. However, because Romney's money comes from investments made by Bain Capital, his money is considered "carried interest" and taxed at a 15% rate. There is no reason to distinguish between ordinary income and carried interest. Numerous studies have shown carried interest does not result in the creation of more jobs. (The reason lobbyists claimed for why it should be taxed at a lower rate...to reward risk takers like Romney) This is a gigantic give-away to the 1% which they pressured Congress to create. Obama tried to change the tax rate on carried interest. Guess how much success he had on that? Guess what Romney and his regressive supporter's position was on that issue?
I suspect the 13% figure is an average of some sort. I suspect Romney won't release his tax returns because there were years he paid a lot less, if not zero, in taxes. I am amazed at how tone-deaf Romney and his campaign is to the concerns of average Americans. Tone-deaf enough to proudly announce what chumps the rest of us are and how brilliant Romany and his accountant turned out to be.