What Mitt's Taxes Could've Paid For (If Not For Those Cushy Tax Breaks)

Mitt Romney probably pays a lower percentage of Federal income tax than you do. At a press conference today, Romney said that the effective rate he's been paying is "probably closer to the 15 percent rate than anything."

2 years ago by David
up

Mitt Romney probably pays a lower percentage of Federal income tax than you do. At a press conference today, Romney said that the effective rate he's been paying is "probably closer to the 15 percent rate than anything."

Mitt makes out like a bandit because capital gains are only taxed at 15 percent, whereas ordinary folks who earn above $35,000 are taxed at 25 percent (the rate gradually goes up to 35 percent above that). He also scored big because nonproductive game-players like Bain Capital take most of their fees as a percentage of the money they invest -- which is also taxed at 15 percent!

Then there are all the other tax breaks for millionaires, which is why 1,470 households made more than a million dollars and yet paid nothing -- zero, zip, nada -- in Federal income tax in 2009.

Sure, these tax breaks benefit Mitt. And they help the people he cares most about. (Some of those "people" are corporations ...) But they're hurting everyone else. Before we cut Social Security to reduce the deficit (to which it doesn't contribute), let's see what would have happened if Mitt had paid his fair share of taxes.

Romney's worth $250 million. Let's see: What would Mitt Romney's proper tax contribution on that money -- just Mitt's, nobody else's -- have provided for the nation that has given him so much?

Romney's Share

Taxing Romney under the same rules most of us follow would have put something in the neighborhoode of $61 million more into the US Treasury2. $61 million could:

Restore the $2 million that Republicans cut from the Minority Business Development Agency -- 25 times over. Why are we subsidizing Bain Capital and not people who can help lift their communities out of poverty? (And unlike the Bain Capitals of this world, they create jobs.)

Replace the $30 million that Congressional Republicans voted to cut from National Oceanographic and Aeronautics Administration (NOAA) for "Flood and Coastal Emergencies." Those storms cost our economy an average of $11.4 billion every year, which is nearly four hundred times the amount they cut from this fund. There'd be $31 million left over.

Replace most of the $74 million Republicans cut from the FBI.

Provide one year of health care for 7,700 Americans at US costs of $7,694 per person (for 2009). (If the US had one of the "socialized" systems that all other developed countries do, it would provide health care costs for more than 14,000 people.3)

What if the top tax rate was 70 percent, as it was under Reagan at one point? Then Mitt would have contributed another $137 million to his nation. It's morning again in America!

And that's just Mitt.

Mitt's Friends

Now let's widen our field of vision a little. The top 25 hedge fund managers in the US made $22 billion in 2010. As we wrote earlier, eliminating these tax breaks would add as much as $44 billion to our bottom line in the next ten years. Or to put it another way:

Ending cushy breaks for these 25 billionaires could also reduce the deficit by as much as $44 billion. Paging all deficit hawks!

In 2008 the taxable income of everyone earning above $100,000 was $3.4 trillion. If we concentrate our tax reform on the upper end of that spectrum -- the Romneys, not the folks in the $100-$400 thousand range -- we know that every percentage point in increased collection comes out to another $34 billion per year. That ain't chicken feed.

The Point-Oh-One Percent Solution

Mitt Romney isn't the candidate of the 1 percent. He's the candidate of the 0.01 percent. The 1 percent category begins four or five hundred thousand per year in income. They're what's called "the little people" in Romney circles.

Is all this talk "envy," as Romney suggests? Not at all, unless we "envy" the people who take our things without paying for them. ("I wish I had a nice car like that ... Hey, that's my car!")

People like Romney became wealthy thanks to our government's laws, its favoritism, and its tax-paid efforts to educate the population, build our infrastructure, and preserve the peace. They're exploiting the system without paying their fair share. It's time for that to end.

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[1] As Pat Garafolo observes, that could mean he's paying about 14 percent, the rate that Citizens for Tax Justice has estimated for him. Or he could be paying 17.5 percent, which is what the Congressional Budget Office says our wealthiest families are paying in combined income and payroll taxes.

[2] I'm assuming that Romney paid an effective rate on 15 percent on income of $250 million, and then comparing that to a top marginal tax rate of 39.5 percent. The top rate's been both higher and (as it is currently) lower during the course of Romney's career. As for the $250 million, his total earnings undoubtedly came out to a different figure. But presumably he's earned at least that much, making it useful for illustrative purposes.

[3] US health care costs as pct of GDP/average OECD costs as pct of GDP * US cost per capita.

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