Romney pays 15% tax rate

[Puppycow]

Are millionaires in America overtaxed?

According to a conservative group that thinks taxes are too high, Tax Freedom Day in 2011 came on April 12. That's the day when the average American has earned enough to pay his taxes for the year. For Mitt Romney however, Tax Freedom Day came on February 24th, 47 days earlier than the average American taxpayer.

Romney says his effective tax rate is 15%

 

[BenBurch]

I think we need no more than this. Set a tax that will put 50% on the scum in a way he can't slime out of.

 

[TragicMonkey]

Poor baby! Think of all the jobs he could create if only he didn't have to pay so much in tax! Is 1% too much? Oh, it is? Poor baby! When, oh when will we be free of this hellish world where multimillionaires have it so hard?

 

[WildCat]

I think we need no more than this. Set a tax that will put 50% on the scum in a way he can't slime out of.

Yes, we need to discourage investments, clearly too much investment is ruining the country!

Ben, you too can pay the low, low capital gains rate, all you need to do is quit whatever job(s) you have and live off investments.

 

[ponderingturtle]

Yes, we need to discourage investments, clearly too much investment is ruining the country!

Ben, you too can pay the low, low capital gains rate, all you need to do is quit whatever job(s) you have and live off investments.

And over abundance of such funds did cause a small bubble in the mortgage industry.

 

[WildCat]

And over abundance of such funds did cause a small bubble in the mortgage industry.

I'm not following your logic here.

You claim the real estate bubble was caused by capital gains tax rates?

 

[eeyore1954]

I think we need no more than this. Set a tax that will put 50% on the scum in a way he can't slime out of.

Why is he a scum? Is following the tax code considered sliming? I do agree that 15% is too low but 50% is too high in my opinion.


Puppy Cow

According to a conservative group that thinks taxes are too high, Tax Freedom Day in 2011 came on April 12. That's the day when the average American has earned enough to pay his taxes for the year. For Mitt Romney however, Tax Freedom Day came on February 24th, 47 days earlier than the average American taxpayer.

I wonder when tax day actually comes for the average American. Since as has been discussed here numerous times close to half pay no federal income tax. I suspect for close to half of Americans tax freedom day comes before late January/early February.

 

[Bri]

I wonder when tax day actually comes for the average American. Since as has been discussed here numerous times close to half pay no federal income tax. I suspect for close to half of Americans tax freedom day comes before late January/early February.

As has been discussed here numerous times, it's actually misleading to say that close to half pay no federal income tax. The truth is that nearly all Americans who have jobs pay income taxes, but many of them make so little money their tax credits exceed their income taxes. Of course, the rich receive much more tax credits than do the poor, but they make enough income that their income taxes are greater than their tax credits.

If you want to increase the number of Americans who pay more in income taxes than they receive in tax credits, reduce the income disparity between the rich and the working poor.

-Bri

 

[eeyore1954]

As has been discussed here numerous times, it's actually misleading to say that close to half pay no federal income tax. The truth is that nearly all Americans who have jobs pay income taxes, but many of them make so little money their tax credits exceed their income taxes. Of course, the rich receive much more tax credits than do the poor, but they make enough income that their income taxes are greater than their tax credits.

If you want to increase the number of Americans who pay more in income taxes than they receive in tax credits, reduce the income disparity between the rich and the working poor.

-Bri

In my mind if your net federal income taxes (Taxes- credits) are zero you did not pay any federal income taxes.

The cutoff for a family of four with 2 children and no itemized deductions in 2011 where their net federal income tax + FICA paid is greater than zero is around $39,000.

 

[Random]

Yes, we need to discourage investments, clearly too much investment is ruining the country!

Ben, you too can pay the low, low capital gains rate, all you need to do is quit whatever job(s) you have and live off investments.

Actually, for a long time high tax rates on large incomes over a certain level were considered good for the economy. That's why we had a 91% tax bracket until fairly recently. The argument went that if a rich person had a choice between cashing out and paying a 90% tax rate, or reinvesting the money in the economy in hopes of increasing the pile when he cashed out, he would be far more willing to reinvest the money into the economy. Worked pretty well actually.

 

[ponderingturtle]

I'm not following your logic here.

You claim the real estate bubble was caused by capital gains tax rates?

It was caused by an over abundance of money looking for investments. Hence very easy credit. So I would need to be convinced that there is now a lack of investment capital after the recent glut.

 

[eeyore1954]

Actually, for a long time high tax rates on large incomes over a certain level were considered good for the economy. That's why we had a 91% tax bracket until fairly recently. The argument went that if a rich person had a choice between cashing out and paying a 90% tax rate, or reinvesting the money in the economy in hopes of increasing the pile when he cashed out, he would be far more willing to reinvest the money into the economy. Worked pretty well actually.

I don't think long term capital gains were taxed at 91% and I would venture a guess that no one paid near that rate on any income. At least not "recently".

 

[Puppycow]

Ben, you too can pay the low, low capital gains rate, all you need to do is quit whatever job(s) you have and live off investments.

Let him eat cake!

 

[Bri]

In my mind if your net federal income taxes (Taxes- credits) are zero you did not pay any federal income taxes.

And that would be misleading since for those whose tax expenditures exceed their income taxes, their expenditures are reduced by the amount of income taxes they owe. If they didn't pay any federal income taxes as you implied, they would get the full amount of the expenditures due to them, but they don't.

ETA: This situation is actually caused by the fact that income tax payments and tax expenditures are handled by the same tax system at the same time. If the government simply sent everyone a check for tax expenditures, nearly everyone who works would income pay taxes.

-Bri

 

[Unabogie]

Yes, we need to discourage investments, clearly too much investment is ruining the country!

Ben, you too can pay the low, low capital gains rate, all you need to do is quit whatever job(s) you have and live off investments.

Romney isn't paying 15% on just investments, he's also paying 15% on actual earned income he gets as "carried interest" where hedge fund managers' fees are taxes as investment income instead of earned income.

So you're being a little disingenuous here by saying this is about discouraging investment. It also puts the lie to the "already taxed once" nature of this kind of income.

http://www.nytimes.com/2011/07/07/opinion/07kristof.html?_r=1

This carried interest loophole benefits managers of financial partnerships such as hedge funds, private equity funds, venture capital funds and real estate funds — who are among the highest-paid people in the world. John Paulson, a hedge fund manager in New York City, made $4.9 billion last year, top of the chart for hedge fund managers, according to AR Magazine, which follows hedge funds. That’s equivalent to the average per capita income of 184,000 Americans, according to my back-of-envelope calculations based on Census Bureau figures.


Mr. Paulson declined to comment on this tax break, but here’s how it works. These fund managers are compensated mostly with a performance bonus of 20 percent or more of the profits they make. Under this carried interest loophole, that 20 percent is eligible to be taxed at the long-term capital gains rate (if the fund’s underlying assets are held long enough) of just 15 percent rather than the regular personal income rate of 35 percent.

This is how Romney made and still makes money. Bain is still paying him fees and he's still paying just 15% on this new income.

 

[Random]

I'm not following your logic here.

You claim the real estate bubble was caused by capital gains tax rates?

I think he's refering to the theory that too much money in the financial sector helped fuel the mortgage bubble. Short version: At the start of the century, there were a lot of people with more money than sense.

Long version: At the beginning of the century, there was more money floating around the financial sector looking to be invested than there were actually worthwhile things to invest in. It was like a hundred millionaires all trying to buy the same fifty shares of a company. No matter how much people are willing to invest, there are not enough shares to go around. Mortgages were historically profitable, but buying and selling individual mortgages was way too much paperwork to justify getting into the business directly.

Then someone came up with the mortgage backed security, where they would take a bunch of mortgages, bundle them together into a security (a Colatoralized Debt Obligation, or CDO for short), and then sell that. This solved a lot of problems for investors, who only had to own one thing, and since there were many mortgages in the CDO, it had diversifiction built in.

Mortgage brokers took all the mortgages they had made to responsible lenders, bundled them together into CDOs, and sold them off. The securities were a big hit, and investment firms went to the brokers to buy more, since they still had lots and lots of money to invest.

But the brokers had a problem. They had already bundled and sold off the mortgages that they had, and everyone who was a good credit risk who wanted a mortgage already had one. So the brokers lowered standards a little bit, sold some more mortgages, bundled those together into securites, bought some good ratings from a ratings agency, and sold off the securities.

Investment groups went back to the brokers again, and well, we all know how the story ended...

Even then, the mortgage crash probably wouldn't have been nearly so bad if someone hadn't invented the "Synthetic CDO". Basically, several people were looking at declining mortgage standards and saw how it was going to play out, and decided to short the market by buying insurance on the mortgage backed securities. They found some suckers who were willing to sell them insurance at stupidly low rates, this was called a "Credit Default Swap".

The Credit Default Swap consisted of the smart people at one end, who paid insurance premiums against mortgage backed securites failing, and the people at the dumb end, who cheerfully counted the money they were getting in insurance premiums, blissfully unaware that the housing market was going to implode and that they were going to have to pay out.

This probably would have stopped at some point when the people at the dumb end wondered why people were so eager to buy insurance from them and thought about raising their rates at least, but then some genius had the greatest idea of all. Why not take the dumb end of these insurance bets and bundle them together like they did for the mortgage backed securities, and sell them off to investors with too much money on their hands? Thus, the "Synthetic CDO" was born.

It created a similar feedback loop as we saw in the mortgage backed securites. People bought insurance against CDOs failing, the insurers bundled the bad end of the bets into Synthetic CDOs, bought AAA ratings from rating agencies, and sold it off to suckers.

But the Synthetic CDO was different from the mortgage backed securites in one important aspect. A mortgage backed security was backed by mortgages, and there are only so many mortgages you can sell, no matter how far you lower standards. A Synthetic CDO is backed by insurance policies, and there is no physical limit to the amount of insurance you can sell. All you needed was someone willing to bet that the housing market would tank, and there were plenty of those floating around especially when the insurers were selling bets at 80:1 odds. And thus, a trillion dollars of loss could be created out of thin air.

When the market collapsed, the smart money people called up the people holding the insurance policies and asked for their money (as one caller is claimed to have said, "Dude, you owe us one point two billion dollars."), and everything went to hell.

 

[Puppycow]

Romney Caricatures Himself

Mitt Romney, in all likelihood, is going to walk away with his party’s presidential nomination. Yet from the standpoint of positioning himself for the general election, the primary season has been a disaster for him. Romney’s campaign has worked hard to avoid taking any substantive positions that would unduly burden him in a race against President Obama – no (additional, post-2007) policy flip-flops and an avoidance of any positions more right-wing than necessary to skate through the primary. That part has worked reasonably well. The utter failure is that Romney has come to be defined, through a recurring series of off-the-cuff gaffes, as a callous, out-of-touch rich man.

The latest is Romney’s response to questions about his tax returns. Romney declared that he would wait until April to release his returns, but previewed the event by predicting he pays a 15 percent federal tax rate, making him the beneficiary of conservatives’ favorite tax breaks, the capital gains preference and the carried-interest loophole, both of which allow very rich investors to pay a lower tax rate on their income than many people who make a fraction of their income. Romney compounded his problems by noting, as an aside, that he gets “not very much” income from speakers’ fees, a sum that turns out to be, um, $374,327.62.

Romney declared “I like to be able to fire people who provide services to me.” He described concern about rising inequality as “envy,” suggested only people who are independently wealthy should run for office, suggested inequality should be discussed only in “quiet rooms,” laid down a $10,000 bet in a debate with Rick Perry, deemed corporations to be people, and jokingly referred to himself as “unemployed.” He has done the work of an opposition researcher on himself.

 

[ZirconBlue]

In the audio clip I heard on NPR yesterday it sounded to me like he starts to say its 11%, then switches to "It's probably closer to the 15 percent rate". I can't find a link to the audio, at the moment, though.

EDIT: I think it was this story, but the transcript doesn't back me up, and I can't listen to the audio at the moment.

 

[Travis]

Well I think this burden on the richest is just unfair. Think of the investments in Qatar and Shanghai they are missing out on!

Clearly we need to not only eliminate all taxes on the rich we need to institute higher taxes on the poor to subsidize them! Think of the plush condominium complexes in Moscow these uber rich could build if only the poor working class in Ohio had their taxes raised and that money transferred right into the bank accounts of the rich! They might even get enough money from the working poor to complete the closure of American factories where the working poor are employed so they can move their manufacturing base to Uruguay.

Think of the possibilities.

 

[WildCat]

Actually, for a long time high tax rates on large incomes over a certain level were considered good for the economy. That's why we had a 91% tax bracket until fairly recently. The argument went that if a rich person had a choice between cashing out and paying a 90% tax rate, or reinvesting the money in the economy in hopes of increasing the pile when he cashed out, he would be far more willing to reinvest the money into the economy. Worked pretty well actually.

Please stop the nonsense about the 90% tax rate of the 1950s. Nobody paid that rate, there were far more and more generous deductions and exemptions back then. Hell, credit card interest was allowed to be deducted until the 1980s.