Close the "Romney Loophole"

greenie20902

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Thursday January 19, 2012 · 12:46 PM PST

2012/01/19 · 12:46

Summary:
Congress should introduce a law closing the "Romney Loophole" to prevent corporate pirates like Romney from benefiting from favorable tax rules designed to encourage new investment in time for the 2012 election.

Background:
Mitt Romney pays a 15% tax rate on his income, which is conveniently categorized as "capital gains" income. It is tax policy in the United States to reward people who place their money at risk by investing it in new companies or other ventures, with a lower tax rate if those investments make money. In short - the capital gains tax rate is a reward for taking risk and putting money to work.

The Romney Loophole:
Mitt Romney is correct that current tax law allows him to treat the money he made at Bain Capital as capital gains. However, Mitt Romney never put his own money at risk at Bain, and instead invested other people's money. In finance terms, he never "wore the risk" that his investments would go bad; his own money was never at stake. Thus, there is no justification for this type of income qualifying for capital gains treatment. This is a perfect example of legalized cheating on your taxes!

The Solution:
Congress should introduce a bill to eliminate the Romney Loophole in time for the measure to be considered prior to the 2012 election. Only people who put their own money at risk should be eligible for the 15 percent tax rate. Let's put Romney's actions front and center, and make clear that Big Money fat cats pay their fair share of taxes.

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