Governor Mitt Romney has finally capitulated to the nation’s wealth-haters, releasing his tax records months before primary candidates typically do to quell swelling resentment fueled by Occupy Wall Streeters, left-leaning media, and boobs like Newt Gingrich, Rick Perry, and John Huntsman. (Thanks, GOP candidates!)
Of course Romney’s forthrightness isn’t good enough for the left, who now argue that he must release a dozen or perhaps 20 years of tax records, so we can spend the next ten months scrutinizing them for rounding errors and keep the focus off President Obama’s record.
Obama-friendly journalists are suggesting Romney also release information on his complete financial portfolio, his retirement accounts, his trust funds for his wife and children, and sworn affidavits from eyewitnesses that he never cheated at Monopoly. (When is the media going to demand that Obama release his college transcripts?)
Romney’s tax records showed apoplectic liberals and gullible mainstream media that he paid 14% federal income tax on the $42 million he earned in 2010 and 2011.
Doesn’t sound like a lot? It’s much higher than the percentage shelled out by the 47% of Americans who pay no federal income taxes, and it’s more than the effective tax rate of 97% of Americans.
Mitt’s tax rate was lower than it otherwise might have been, in part because he lost tens of millions of dollars during the recession and carried those losses over, thus reducing his tax burden in subsequent years. Our system handsomely rewards smart risk-taking in investment, because it’s just as likely that you’ll lose your shirt as strike it rich.
But the main reason Romney wasn’t taxed at a higher rate is that he wasn’t paying ordinary income tax. He was paying long-term capital gains taxes, which have been levied at a preferential rate to encourage capital investment since their inception nearly a century ago. Romney already paid the highest federal rate on the income he earned in years past, then paid again for the profits he made investing that income.
How many Occupy Wall Streeters understand that Mitt Romney paid a 14% tax rate on his long-term capital gains after he had already paid over 30% in federal taxes on the earnings he invested to acquire those gains?
Not to defend Warren Buffett, whose fabled secretary was trotted out as a campaign prop during the 2012 State of the Union address on Monday, but the reason Buffett got away with claiming he paid a lower percentage in taxes than his secretary was that he omitted that he had already paid handsomely in taxes on the income he earned and invested in capital gains. If Debbie Bosanek ever becomes a celebrity business magnate and gets filthy rich, she’ll be forking it over to the government twice, too.
Lest we forget, all the wealth that Romney’s wise investment choices created will in turn be taxed, and the next generation of investments funded from this wealth will be taxed, and on down the line in a snowballing cycle of tax revenue generation.
The most fascinating aspect of the brouhaha over Romney’s tax returns is that it’s largely Democratic presidents who signed into law such favorable capital gains terms of which he has taken advantage—and of which they now disapprove.
Democratic presidents throughout the 20th century have certainly been less likely than Republican presidents to cut the marginal federal income tax rate. But it’s Republicans, including Ronald Reagan, who have foolishly raised capital gains taxes again and again—admittedly often under pressure from overwhelmingly Democratic Congresses.
Richard Nixon raised the maximum capital gains tax rate from 36.5% to 39.875%, before Jimmy Carter slashed it to 28%. Reagan raised it from 20% at the beginning of his first term to 28%, George H. W. Bush inched it up to 28.93%, and then Bill Clinton hacked it from 29.19% to 21.19%.
This ironic partisan trend wasn’t broken until the presidency of George W. Bush, the first Republican president to lower the maximum capital gains tax since it was instated under Warren Harding in 1921. Maybe Democratic presidents lowered capital gains taxes to compensate for having raised income taxes. But Republicans’ embarrassing record on capital gains taxes speaks for itself.
So why didn’t Romney make his tax records available to the public immediately after he was asked? Perhaps he didn’t want to embarrass Obama.
As revealed in his War and Peace-length tax returns, Romney gave 370 times as much to charity in 2011 as Barack and Michelle Obama gave in the four years from 2000 to 2004. By percentage of income, Romney gave 20 times as much.
Romney gave 1,000 times as much to charity in 2011 as Joe Biden did in the ten years from 1999 to 2009.
Mitt gave so much to charity in 2010 and 2011—$7 million—that it eclipsed the not-insignificant $6 million in federal income taxes he paid.
If liberals refuse to believe that high-income earners like Mitt are the ones who do the bulk of the investing in our economy, foster the largest share of job creation, and shoulder the overwhelming majority of the federal tax burden, can they at least admit that rich people are the ones who keep most charitable organizations afloat?
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