“Now you see it, now you don’t!” In the astute way of the street “Monte” card players, and for many months, Mitt Romney had been threatening to show his tax returns. Now, finally, he has fulfilled his promise. He has just presented his 2011 tax return. It shows that he paid 14.1% of his income in taxes. Are we supposed to feel proud for the Republican presidential candidate? With a joint income several hundred times less than that of Mr. Romney my wife and myself paid almost 30% taxes on our income.
Democrats stated that Romney had claimed fewer deductions than he was entitled to so as to keep his rate at such a level since, had he taken the full charitable deduction he was allowed to, he would have pushed his tax liability to below 13%. But he still refuses to release his tax returns from before 2010, particularly those years when he worked at Bain Capital, the private equity firm he co-founded. He has only released a statement on the overall federal tax rate paid for the previous 20 years.
There are several ways businessmen have to lower their taxable income. Romney takes advantage of loopholes and tax shelters that allows private equity managers to treat their income as capital gains, and thus be taxed at only 15 percent. As Robert Reich has indicated, this is a loophole that only exists because those managers have considerable political clout as a result of the huge amounts of money donated to political candidates of both parties.
In addition, Romney’s investments in offshore accounts in Bermuda and the Cayman Islands had not been made public. Romney’s campaign insists that these offshore accounts are taxed at the same rate as if the share were held in the U.S. What they don’t say, however, and as has been stated by Timothy Noah in The New Republic, “…the Romneys aren’t evading income taxes by putting their money in the Caymans. The fund they put their money into is evading taxes by parking itself in the Cayman Islands. As a result, that fund (and therefore the Romneys) get to keep more of their profits. Why evade taxes when you can get somebody to do it for you?”
With the cunning ability of an oily weasel, Romney has refused to release his tax returns previous to 2010. George Romney, his own father, however, released 12 years of tax returns before his presidential campaign. He thus established a precedent that was followed by nearly every presidential candidate since, as remarked by Nicholas Shaxson, writing for Vanity Fair.
Romney’s tax proposals include making the Bush-era income tax cuts and capital gains tax cuts permanent, cutting all income tax rates by an additional 20 percent across the board, and repealing the Alternative Minimum Tax (which affects primarily upper-income tax payers) as well as the estate tax (which applies to estates valued at $5 million or more.)
Mitt Romney has stated that he would offset the loss of personal tax revenue by lowering tax deductions and credits, while making sure that those with higher incomes will continue paying the “same share of the tax burden they are paying now.” In the opinion of the non partisan Tax Policy Center, however, what he promises is not possible. The Tax Policy Center is a joint venture of the Urban Institute and Brookings Institution.
According to the Tax Policy Center, an analysis of Romney’s corporate, individual and estate tax plan would cost $480 billion a year, or $4.8 trillion over 10 years, beginning in calendar year 2015. Furthermore, Romney’s plan would result in an average tax cut of $256,603 for 99.97 percent of those making $1 million a year or more, while further down the scale the benefits would be considerably less. Mr. Romney stressed, however, that “he is not looking for a tax cut to the very wealthiest.”
Still, Mr. Romney’s taxes leaves many questions still unanswered. He has stated that further releases of his tax returns would just give his opponents “hundreds of thousands of more pages to pick through, distort and lie about.” If he doesn’t have anything to hide, however, an analysis of his returns over the years can prove that he is the truthful candidate that he claims he is. Mr. Romney has proven to be an astute Monte card game player. Let’s see what other tricks he has up his sleeve.