As the outcry grows over Mitt Romney's shockingly low 15 percent tax rate, his bitter rival Newt Gingrich rushed to his defense. "My goal is not to raise Mitt Romney's taxes," Gingrich declared," It's to let everybody pay Mitt Romney's rate." Of course, as with his marriage vows, Newt isn't telling the truth. As it turns out, Gingrich has proposed a new capital gains tax rate - zero - that would almost eliminate Mitt Romney's already meager payment to Uncle Sam.
In South Carolina yesterday, Gingrich for once passed on an opportunity to take Mitt Romney to task. As ABC reported:
"We can confirm that I paid a 31 percent rate, and although let me be clear, the 21st century Contract With America has an optional 15 percent for every American," Gingrich said at a press availability in South Carolina. "My goal is not to raise Mitt Romney's taxes. It's to let everybody pay Mitt Romney's rate. And so I'm not going to criticize Mitt Romney. I'm going to say, shouldn't we all have the option of a flat tax at the same rate he was paying."
But that's not what Newt has actually proposed. His optional 15 percent flat tax rate is for ordinary income, not capital gains. And it is the capital gains rate which, thanks to the "carried interest" exemption for private equity managers, accounts for the minimal tax bill Mitt Romney pays on the millions he continues to earn each year from his former employer, Bain Capital.
In a nutshell, President Gingrich wants Governor Romney to pay 15 (and not 35) percent on his regular income and nothing on the millions in investment income that makes up most of his cash flow.
Here's how Gingrich's scheme for a budget-busting payout works for denizens of the gilded class like Mitt Romney. Like his former rival turned supporter Rick Perry, taxpayers could choose to pay an optional flat tax rate (15 percent in Newt's case, 20 percent in Perry's proposal). The corporate tax rate would be slashed from 35 percent to 12.5 percent. Like, Perry, Gingrich would eliminate the capital gains tax altogether. (As the Washington Post recently explained the impact of the already historically low 15% capital gains tax rate, "Over the past 20 years, more than 80 percent of the capital gains income realized in the United States has gone to 5 percent of the people; about half of all the capital gains have gone to the wealthiest 0.1 percent.")