A poor distraction

Mitt Romney, chose to re-enforce his wealth among the general populace, in an attempt to get away from the innumerable gaffes and sluggish poll numbers has, in an attempt to move the debate on has finally released his tax returns.

The Washington Post reports that “Mitt Romney paid $1.9 million in taxes on $13.69 million in income in 2011, most of it from his investments, for an effective rate of 14.1 percent”. The report goes on to note that Romney “could have paid less in taxes, but he engineered his 2011 returns to overpay the government to ensure that his effective tax rate would ‘conform’ with his statement last month that he had paid at least 13 percent, according to his trustee, R. Bradford Malt”. It could be easily argued that this was only done in the knowledge that these figures would have to be released eventually and that to pay less than 14% would be politically damaging.

The article goes on to write that “In their joint return, he and his wife, Ann, listed $4.02 million in donations to charity last year — nearly 30 percent of their income — which substantially reduced their tax obligation. They claimed a deduction for only $2.25 million of those contributions. Had the Romneys deducted all of their charitable donations, they would have paid about $467,000 less in taxes for an effective rate of 10.55 percent”. It is certainly laudable to give to charity but this does not change how Romney made his vast wealth. It continues that “If the Romneys had not taken any charitable deductions, their rate would have been 18.8 percent”.

Later on in the article mentions that “Romney’s 379-page 2011 returns show that he earned $6.8 million from capital gains and $3.6 million in interest. Romney earned about $190,000 in author and speaking fees, as well as $260,390 for sitting on the board of Marriott International. None of his income was from wages. Capital gains are taxed at a flat rate of 15 percent, substantially lower than the 35 percent rate typically levied on the wages of those with the highest incomes”. The article goes on to mention that “Romney also released a summary of his effective tax rates between 1990 and 2009, reporting that his average annual rate was 20.2 percent and that he never paid less than 13.66 percent. But the summary does not detail the size of Romney’s income and the amount of taxes during those years”.

There is however a general point to be made here. Romney’s actual, and nominal tax rate, be in 14% or 20% is far too low. The notion that those who play, and win, on the stock market, should pay a lower rate of tax then many middle class workers is a great shame. It is not only a shame but not in America’s long term economic interests to have such a tax system.