Taxing credibility

Debate over Romney's taxes is a confusing distraction from the real issues

  • Follow Editorials

Much has been made of Mitt Romney’s remark that he is taxed at 15 percent on a lot of his income because it’s from investments.

His answer should be simple enough: “This election isn’t about my money; it’s about yours!”

But OK, let’s talk about it.

It’s interesting that the government is never asked how much money it really needs; it’s just our obligation to unquestioningly feed it what it wants. The debate, nicely framed by Democrats and their
compliant media, isn’t about what the proper size and role of government is – it’s whether someone is paying his or her “fair share.”

Often, the accusation of not paying one’s fair share is made by someone who pays little or nothing in federal taxes.

Regardless, the question has come up: Why are capital gains – money earned from investments – taxed at lower rates than other income?

Well, for one thing, investments are made with income that has already been taxed at the higher rate. And corporate profits are taxed before being disbursed to shareholders. But mostly, the lower rate is because of the societal benefit that accrues from incentivizing people to invest and create jobs and economic activity.

As for Romney’s 15 percent: That’s still more than most people pay after income tax deductions. And, as The American Enterprise Institute’s James Pethokoukis notes, nearly half of all households pay no federal income taxes at all.

“We shouldn’t tax what we want more of,” he writes. “And the real problem with the capital gains tax isn’t the rate or how it is structured, but what is taxed: gains on investments, which are savings put to work. Economists of all stripes have been saying Americans have consumed too much and invested too little over the past decade. So why would we want to tax investment even heavier ...?”

And this, from the Concise Encyclopedia of Economics:

“Strange as it may sound, most economists would agree that having zero taxes on capital income is theoretically the best thing to do. But many reject putting this theory into practice because they think that too much of the benefit would go to the ‘wrong’ people, namely high-income households and the wealthy.”

In other words, logic and numbers suggest lower capital gains tax rates – or none at all – but we won’t do that because it doesn’t feel right.

Envy and subjective notions of fairness sure are an odd way to run a free country.

Comments (69) Add comment
ADVISORY: Users are solely responsible for opinions they post here and for following agreed-upon rules of civility. Posts and comments do not reflect the views of this site. Posts and comments are automatically checked for inappropriate language, but readers might find some comments offensive or inaccurate. If you believe a comment violates our rules, click the "Flag as offensive" link below the comment.
augusta citizen
9355
Points
augusta citizen 01/22/12 - 11:50 pm
0
0
Mitt Romney hasn't wanted to

Mitt Romney hasn't wanted to say that he pays a 15% tax rate due to his income being capital gains because most people don't even know what that means. The liberal media has spewed so many lies, the most obvious and recent being the "Warren Buffet shouldn't pay less taxes than his secretary" line to keep the wealth envy in full swing by the uninformed and apathetic.

omnomnom
3964
Points
omnomnom 01/23/12 - 12:07 am
0
0
What about a war tax for

What about a war tax for those who support it?

carcraft
25892
Points
carcraft 01/23/12 - 06:31 am
0
0
What about an entitlement tax

What about an entitlement tax for those that support or recieve it?

roebling
25
Points
roebling 01/23/12 - 07:48 am
0
0
Well said!

Well said!

TParty
6003
Points
TParty 01/23/12 - 08:57 am
0
0
Remember it has been Newt

Remember it has been Newt Gingrich complaining about Romney's capitalistic ways. And it has been Newt bringing up Mitt Romney's taxes during debates. A guy who does not want to talk about his own history, is complaining how Mitt has not released his taxes yet.

Frankly, so long as Mitt is not cheating on his taxes, who cares? Newt seems to care though. Everyone has to pay taxes, and everyone has to die. It's our goal to live as long as possible, and pay as little in taxes.

Just keep in mind, it has been Newt Gingrich trying to make this tax thing an issue.

allhans
23651
Points
allhans 01/23/12 - 09:12 am
0
0
Bob Schieffer says that

Bob Schieffer says that Romney is releasing his tax return Tuesday, the same day that Obama makes his speech, so that it won't receive so much notice..
Now, is that liberal left wing media or what.
If nobody knows the returns are posted then the question will remain hanging over him,(the one his good buddy Newt made an issue of).

Riverman1
84040
Points
Riverman1 01/23/12 - 10:15 am
0
0
Mitt pays tens of millions in

Mitt pays tens of millions in taxes to breathe the free American air just like almost half the nation that pays nothing. Most don't even understand the 15% is the effective tax rate. The media throws that out trying to make those who do pay think Mitt pays less than they do percentage wise when he doesn't and is in fact paying millions more than they are in actual dollars.

JRC2024
8879
Points
JRC2024 01/23/12 - 10:45 am
0
0
Would you rather Mitt put his

Would you rather Mitt put his money in tax free bonds and pay no tax on the investment or reinvest and create jobs and pay capital gains at a lower rate? I am sure he has a great deal of bonds already. I say put the money back in the investments that create jobs for the country and income for him. Everyone knows he is extremely wealthy and if he wins wouldn't you want a smart person at the top. I know I would.

dichotomy
32988
Points
dichotomy 01/23/12 - 10:48 am
0
0
Quite frankly, I would not

Quite frankly, I would not want to elect anyone stupid enough to pay more taxes than they have to under the existing laws.

Since half of the people are on the take (pay no taxes) they certainly do not understand that the 15% tax rate on capital gains is a 15% tax on money people have already paid up to 35% Income Tax on when they EARNED the money orignally, or an even higher 50% or more rate they paid on money they inherited. The 15% Capital Gains tax rate was adopted to encourage people to take a risk and invest their cash in businesses.

The entitlement mentality, and those addicted to it, have finally boiled down to the essence of what it's all about nowadays. "If someone has money let's take it". Here is a news flash for you. If you claim to be poor and have a cellphone with a data plan and unlimited texting, you could be putting $50 a month into an investment and paying %15 taxes on your profits if you just had a basic cellphone. If you had bought that $300 32" flat screen instead of the $1200 50" flat screen you could have bought 16 shares of 3M last year and almost doubled your money by now. If you were running the free stock 17" inch tires and rims on your car instead of the $4000 20" tires and rims, you could have $8000 worth of 3M today. Now I know half of you are not smart enough to have done this but let's just assume that you had sacrificed and not bought that new Apple I4 or Droid with the data plan. Or maybe you stuck with the 17"s rims instead of the 20"s. Or heaven forbid you were watching football on a 32" instead of that 50". Now just remember that either way, you have already paid Income Tax on the money you are either spending or investing. Would you want the government to take 15% of your profits or the "tax the rich" rate of, oh say, 50%? It would be the same thing if we charged you a 50% tax when you bought those rims or that big flat screen. It's already Income Tax paid money either way. Capital Gains tax.......don't talk about it if you ain't smart enough to understand it.

As I walk around town or the mall I see lots of these supposedly "poor" people. They've all got nicer, newer cellphones than I do, they've got tattoos, they've got jewelry hanging out of their nose, eyebrows, lips, nipples, and who knows where else. They arrive at the mall in a $1000 car with $4000 worth of tires and rims and a $1500 stereo. They are wearing $150 tennis shoes and pay extra for jeans that come new already looking worn out and ill fitting. I'm not sure there is so much poverty as there is a lot of stupidity. The wealth disparity in this country has nothing to do with the evils of capitalism. It has a lot to do with some people just being smarter than others. It's not just wealth envy it is also intelligence envy. "And that's the rest of the story".

Conservative Man
5564
Points
Conservative Man 01/23/12 - 10:51 am
0
0
When you tax any activity you

When you tax any activity you get less of it..

seenitB4
87304
Points
seenitB4 01/23/12 - 10:56 am
0
0
I'm not sure there is so much

I'm not sure there is so much poverty as there is a lot of stupidity. The wealth disparity in this country has nothing to do with the evils of capitalism. It has a lot to do with some people just being smarter than others. It's not just wealth envy it is also intelligence envy. "And that's the rest of the story".

well.....you said it dichotomy....THAT is the 100% truth,...

effete elitist liberal
3116
Points
effete elitist liberal 01/23/12 - 11:03 am
0
0
Do a little research,

Do a little research, Conservative Man and the rest of you who swallow ACES's right wing ideological theory; it won't take much time or effort to discover the facts that ACES has conveniently left out here. That is that study after study, many made by conservative groups, shows that lower tax rates on capital gains have little or no demonstrable influence on savings and investment levels. In fact few studies indicate, counterintuitively, the opposite may be true. There are the worlds of theory and fact--which one do you live in?

bjphysics
36
Points
bjphysics 01/23/12 - 11:04 am
0
0
Assuming there are no tax

Assuming there are no tax issues with Mitt’s Cayman Island accounts he paid his required capital gains taxes – end of story.

However, Mitt does have an optics problem; I’ll bet 10 thousand dollars on that:

“’It's probably closer to the 15 percent rate than anything,’ said Romney on Tuesday. ‘For the past 10 years, my income comes overwhelmingly from investments made in the past, rather than ordinary income or earned annual income. I got a little bit of income from my book, but I gave that all away. Then, I get speakers fees from time to time, but not very much.’

Not very much? According to his personal financial disclosure, from February 2010 to February 2011, Romney earned $374,327.62 in speaking fees. A few months later, Romney joked that he was ‘unemployed.’”

http://www.huffingtonpost.com/2012/01/17/mitt-romney-not-much-definition...

Saying 374 kilobucks is “not very much” is definitely bad optics.

effete elitist liberal
3116
Points
effete elitist liberal 01/23/12 - 11:06 am
0
0
seenitB4: "it has a lot to

seenitB4: "it has a lot to do with some people just being smarter than others." When it comes to paying taxes, however, it has even more to do with who has the most effective lobbyists in Washington.

itsanotherday1
43258
Points
itsanotherday1 01/23/12 - 11:11 am
0
0
Conservative ManMonday, Jan.

Conservative ManMonday, Jan. 23 9:51 AMnew
Report Ignore user
When you tax any activity you get less of it..

And when you subsidize activity you get MORE of it... (think welfare and having illegitimate children)

seenitB4
87304
Points
seenitB4 01/23/12 - 11:14 am
0
0
eel.....There are some things

eel.....There are some things that I can agree on...you are right about lobbyists.....but what if.....what if some made different choices in life like -----fewer kids w/o fathers.....saving $$$ instead of buying junk just like dichotomy stated.....less crime in neighborhood.....money runs the world-like it or not that won't change....it is time to stop blaming OTHERS for negative & troubled lifetimes.

seenitB4
87304
Points
seenitB4 01/23/12 - 11:15 am
0
0
anotherday...we are thinking

anotherday...we are thinking alike again....watch that!!:)

effete elitist liberal
3116
Points
effete elitist liberal 01/23/12 - 11:19 am
0
0
TParty: nice! Didn't we all

TParty: nice! Didn't we all notice the conspicuous absence of Newt's name in this piece? It is a very interesting omission. Yes, it still looks like MR and ACES, no doubt at the orders of their big-money corporate bosses, are committed to Romney. Remember Friday's "Overdone Anger" column? Corporate AC is scared to death of Gingrich, scared he is ultimately unelectable. Big corporate money will not abandon Mitt, and the Morris Communications Corp. is big money indeed. That is, until it becomes apparent that Romney is going down in flames and even more corporate money cannot save him It will be fun to watch ACES try to hedge their bet, to have it both ways. Not mentioning Newt today is an interesting early symptom.

Chillen
17
Points
Chillen 01/23/12 - 11:21 am
0
0
There are 2 schools of

There are 2 schools of thought in the USA.

1. What's mine is mine. And I will contribute a nominal amount of mine for national defense and minimal projects.
2. What's mine is the governments - to distribute as they see fit. In a large part to those who will not and do not work.

We are fundamentally at odds with each other and the Republic will not survive this in my opinion. There are too many do-gooders who enable the moochers and far too many moochers.

Just today, the Chronicle is running an article that 3 out of 5 Georgia babies are born using medicaid benefits. If that doesn't cause you to stop & think, nothing will.

seenitB4
87304
Points
seenitB4 01/23/12 - 11:39 am
0
0
Romney may go down in

Romney may go down in flames....but this is what I heard yesterday----the big boys (with $$$) may just pull somebody from the sidelines & throw him into the race.....wouldn't surprise me....& when I say throw that is what they will do.....
Many are NOT happy with the race/selections....strange things have happened B4.

harley_52
23387
Points
harley_52 01/23/12 - 11:46 am
0
0
chillen said "There are 2

chillen said "There are 2 schools of thought in the USA.

1. What's mine is mine. And I will contribute a nominal amount of mine for national defense and minimal projects.
2. What's mine is the governments - to distribute as they see fit. In a large part to those who will not and do not work."

Actually, chillen, your second group's position is:

'What's YOURS is the government's to distribute as they see fit. In a large part to those who will not and do not work.'

These folks are very generous with other people's money, not theirs.

harley_52
23387
Points
harley_52 01/23/12 - 11:52 am
0
0
If you pay Federal Income

If you pay Federal Income Taxes at the 15% rate it means that you have wisely invested money that has already been taxed at a much higher rate when you earned it, or when you inherited it.

allhans
23651
Points
allhans 01/23/12 - 11:54 am
0
0
What we do know that Romney

What we do know that Romney is paying for a lot of those people who are on the take.

allhans
23651
Points
allhans 01/23/12 - 12:00 pm
0
0
Will someone please say

Will someone please say something nice about Gingrich so the lefties can bring up Juan Williams.

harley_52
23387
Points
harley_52 01/23/12 - 12:02 pm
0
0
Gingrich may not be the

Gingrich may not be the better candidate.

bjphysics
36
Points
bjphysics 01/23/12 - 12:16 pm
0
0
Poll: Gingrich Leads Romney

Poll: Gingrich Leads Romney in Florida

http://www.realclearpolitics.com/articles/2012/01/23/poll_gingrich_leads...

Bad for Romney, good for Obama.

Bruno
780
Points
Bruno 01/23/12 - 12:17 pm
0
0
Did he pay the amount

Did he pay the amount required by law?

harley_52
23387
Points
harley_52 01/23/12 - 12:27 pm
0
0
bjphysics said "Bad for

bjphysics said "Bad for Romney, good for Obama."

In what way?

bjphysics
36
Points
bjphysics 01/23/12 - 12:36 pm
0
0
Because in the general

Because in the general election it’s all about the middle.

Chillen
17
Points
Chillen 01/23/12 - 12:43 pm
0
0
The middle will not be voting

The middle will not be voting for obama no matter who his opponent is. He's failed America and they know it.

Back to Top

Top headlines

Many black colleges struggling

Although Paine has struggled with its own failures over the past several years, HBCUs across the nation are dealing with some of the same troubles that are threatening their missions and existence.
Search Augusta jobs