Monday morning President Obama laid the foundation for the core battle of this election: preserving tax cuts for those earning $250,000 or less while rolling them back for the 2 percent who earn more than that.
Immediately, the Romney campaign responded with this:
President Obama’s response to even more bad economic news is a massive tax increase.
Lie #1: "Massive Tax Increase"
Only in Karl Rove's America could it be true that maintaining lower tax rates for 98 percent of individual taxpayers is a "massive tax increase." Just in case there's any doubt here, we are talking about less than a 5 percent increase in taxes on anyone with earned income in excess of $250,000. Will someone at the Romney campaign please let me know how this "massive tax increase" compares with the Affordable Care Act as the "biggest tax increase in US history"? Settle down, boys. Your caviar might rebel if you don't. Onward.
It just proves again that the President doesn’t have a clue how to get America working again and help the middle class. The President’s latest bad idea is to raise taxes on families, job creators, and small businesses.
Lie #2: "Raising taxes on families, job creators and small businesses."
First, a look at what Mitt Romney calls "small business." Romney is referring to those "small businesses" known as pass-through entities. Rachel Maddow explained how these work to the benefit of the ultra-wealthy a couple of years back.
In a nutshell, those "pass-through entities", usually LLCs (Limited Liability Companies) or LPs (Limited Partnerships) pass through all of the income and expenses to owners instead of paying taxes as a business entity. Those owners then include that business income and/or expense on their tax returns. On the one tax return Mitt Romney released, for example, nearly all of the $26 million he declared as income was attributable to pass-through entities, some of them located in the Cayman Islands and Bermuda and others located here in the United States. Because some of that pass-through income came to him as "carried interest", he also paid a far lower tax rate on $12.5 million in income in 2010.
Here are some of the "small businesses" that generated income for the Romney Family Trust in 2010:
(click image for larger version)
For the record, there isn't one single "job creator" on that list. Not one. Those are investment funds through Bain, Goldman Sachs, and other ventures. If you think of these funds as Russian nested dolls, inside each fund is a little piece of another business. That's how Bain bought Dominos, Staples, and others. They created a "business" for the purpose of receiving investment funds, then use that business to distribute income.
There are many unopened nested boxes still, which is why Romney should release more years of his tax returns. But for this post, let's just deal with this nonsense claim about "job creators" being penalized as a result of a small increase in the personal tax rate of those earning more than $250,000 per year.
Paul Krugman compares and contrasts one Romney's job creation record with another:
What did George Romney do for a living? The answer was straightforward: he ran an auto company, American Motors. And he ran it very well indeed: at a time when the Big Three were still fixated on big cars and ignoring the rising tide of imports, Romney shifted to a highly successful focus on compacts that restored the company’s fortunes, not to mention that it saved the jobs of many American workers.
It also made him personally rich. We know this because during his run for president, he released not one, not two, but 12 years’ worth of tax returns, explaining that any one year might just be a fluke. From those returns we learn that in his best year, 1960, he made more than $660,000 — the equivalent, adjusted for inflation, of around $5 million today.
Those returns also reveal that he paid a lot of taxes — 36 percent of his income in 1960, 37 percent over the whole period. This was in part because, as one report at the time put it, he “seldom took advantage of loopholes to escape his tax obligations.” But it was also because taxes on the rich were much higher in the ’50s and ’60s than they are now. In fact, once you include the indirect effects of taxes on corporate profits, taxes on the very rich were about twice current levels.
Now fast-forward to Romney the Younger, who made even more money during his business career at Bain Capital. Unlike his father, however, Mr. Romney didn’t get rich by producing things people wanted to buy; he made his fortune through financial engineering that seems in many cases to have left workers worse off, and in some cases driven companies into bankruptcy.
And there’s another contrast: George Romney was open and forthcoming about what he did with his wealth, but Mitt Romney has largely kept his finances secret. He did, grudgingly, release one year’s tax return plus an estimate for the next year, showing that he paid a startlingly low tax rate. But as the Vanity Fair report points out, we’re still very much in the dark about his investments, some of which seem very mysterious.
Put it this way: Has there ever before been a major presidential candidate who had a multimillion-dollar Swiss bank account, plus tens of millions invested in the Cayman Islands, famed as a tax haven?
Krugman's contrasting tale of two Romneys is a perfect illustration of why Romney the younger's whimpers about Mean Mister Obama's penchant for punishing so-called job creators is nonsensical and stupid. The only jobs Mittens has created are in the "wealth preservation" industry -- an army of accountants and lawyers to keep up with the myriad companies he's bankrupted in the name of "capitalism."