Addressing Americans for Prosperity on Friday, Mitt Romney laid out a bevy of federal spending cuts which doubtless were music to the ears of AFP's funders, Charles and David Koch. To be sure, raising the eligibility age for Medicare and Social Security, capping Medicaid and converting the system into block grants for the states and shrinking federal spending below 20 percent of GDP are helpful parts of Romney's intense effort to woo the Koch brothers. But his biggest gift of all - eliminating the estate tax - would let the Kochs' heirs pocket billions of dollars at the expense of the United States Treasury. And as it turns out, the Romney clan wouldn't fare too badly, either.
Despite Republican mythology about family farms and businesses being lost to the so-called "death tax," by 2009 only 0.24 percent of estates even paid the levy. And that was before the December 2010 compromise President Obama inked with Congressional Republicans extending the Bush tax cuts further slashed the estate tax. The reduced 35 percent tax is now applied only to couples with estates greater than $10 million, a change which will cost Uncle Sam roughly $15 billion a year. Now, the Tax Policy Center calculated, only 0.1 percent of estates are impacted. Only 50 family farms and small businesses will be affected, and they contribute "less than one tenth of 1 percent point of the total revenue the tax will collect." Who pays the estate tax?
TPC estimates that 8,600 individuals dying in 2011 will leave estates large enough to require filing an estate tax return (estates with a gross value under $5 million need not file a return in 2011). After allowing for deductions and credits, an estimated 3,270 estates will owe tax. Roughly 90 percent of these taxable estates will come from the top ten percent of income earn-errs and nearly half will come from the top one percent alone.
Estate tax liability will total an estimated $10.6 billion in 2011. The top ten percent of income earners will pay 98 percent of this total. The richest 1 in 1,000 will pay $5.4 billion or 51 percent of the total.
Among that richest 1 in 1,000 are Charles and David Koch.
And as ThinkProgress explained, the elimination of the estate tax supported by Mitt Romney and every other Republican presidential candidate means a staggering windfall for the Koch heirs:
According to a quick back-of-the-envelope calculation, the Koch brothers' heirs' would save a combined $17.4 billion in estate taxes thanks to Romney's plan.
Each of the Koch brothers -- Charles and David -- is worth about $25 billion. They are each married, so they would receive an exemption on the first $10 million that they pass down, and then theirs heirs would pay a 35 percent tax, or $8.7 billion, on the rest of their vast fortunes.
Now, this is an exceedingly rough calculation, as it's almost certain that the Koch's have engaged in extensive estate planning and would pay nowhere near that amount. But 35 percent is the rate on the books, and Romney's plan to eliminate the estate tax entirely would undeniably save the Kochs a boatload of money.
As would the Romneys.
Despite his claims that "I'm also unemployed" and part of the "middle class," Mitt Romney is worth an estimated $250 million. So, the five Romney sons - the same ones who serve their nation by "helping me get elected because they think I'd be a great president" - when their parents Mitt and Ann leave the scene. Their payday courtesy of all other American taxpayers could reach $84,000,000 (35 percent of $240 million).
Of course, the Romneys' winnings would start well before their demise. After all, Governor Romney has called for making the Bush tax cuts permanent, lowering his own income tax rate from 39.6% in 2013 to 35%. Mitt would also see some gains from the elimination of the capital gains tax on the first $250,000. Despite his boast that "I focused my tax cut right there" on "the people in the middle," the Tax Policy Center found that "67 percent of the entire benefit from lower capital gains tax rates goes to millionaires." Millionaires, that is, like Mitt Romney.
Just how much Romney pays in taxes is, for the moment, a private matter. But his income is public knowledge. In August, Romney disclosed that in 2010 he and his wife made between $1.1 million and $2.8 million in royalties, salary, speaking fees and interest, most of which was likely taxed at a marginal rate of 35%, after accounting for deductions. The Romneys made an additional $5.5 million to $37.3 million from dividends and capital gains, which is generally taxed at a much lower rate of 15%.
Calculating the Romneys' exact tax burden is not possible from the public records because of a number of factors, like the amount of money that Romney deducted from his taxes and the length of time that he owned investments, are unknown. But ballpark estimates are possible. Assuming that Romney declared roughly the same number of deductions as others in his income level and that his dividend and capital gains income qualified for the 15% bracket, Romney would have paid roughly 14% of his gross income in taxes to the federal government in 2010 according to Bob McIntyre, who crafts tax policy at the left-leaning Citizens for Tax Justice.
As it turns out, Mitt Romney would actually reap an even bigger windfall if either Herman Cain or Rick Perry became President of the United States. Their respective flat tax rates and total zeroing out of the capital gains tax would literally put millions of dollars into Mitt Romney's bank account. That explains why Romney, who recently claimed "I love a flat tax," has yet to embrace it. He just was being honest in 1996 when he called it "a tax cut for fat cats."
That's also why Rick Perry called on Mitt Romney to release his tax returns. After all, in his past campaigns, Romney demanded the same of his Democratic opponents. That included Ted Kennedy during Romney's failed 1994 Senate run:
With the tax-filing deadline looming, Republican Senate candidate Mitt Romney yesterday challenged Sen. Edward M. Kennedy to disclose his state and federal taxes to prove he has 'nothing to hide.'
As the Christian Science Monitor asked last week:
Mitt Romney has never made his returns public. Why not?
To ask the question is to answer it. Like the McCains four years ago, the Romneys would save millions if their patriarch becomes President of the United States. As for the yawning budget gap left by his $6.6 trillion tax cut giveaway to America's richest people and corporations, Mitt Romney will make that up by cutting Medicaid, Medicare and Social Security.
(This piece also appears at Perrspectives.)