A family of four making an
upper-middle-class income of
$100,000 would save $5,500 on income
taxes if it were taxed at the Romney Rate.
(Democratic National Committee
When he was running for the U.S. Senate against Ted Kennedy in 1994, Mitt Romney called upon his opponent to show "the people of Massachusetts how much he pays in taxes" so they would know he had “nothing to hide.’’ Romney said he would also do so. But Kennedy never did, and neither did Romney then, nor when he ran for governor in 2002 or the presidential nomination in 2008. He has no plans to do so in the current contest either.
This hardly makes him unique among Republicans in seeking the 2012 nomination. Indeed, the unique person in that regard is Rick Perry, the only GOP candidate to release his income tax returns, something he has done consistently in his tenure as governor of Texas.
Romney may well have nothing to hide. But it's doubtful he's eager for taxpayers to know that, on a significant portion of his income, as Matt Viser and Beth Healy reported, he pays a far lower tax rate—15 percent—from what typical middle-class families or even upper-middle class families pays on their earnings.
The rate derives from something called "carried interest." It's a perfectly legal loophole that ought not to be. It gives partners at private equity firms and hedge funds a tax break from higher rates on income they collect from their part in hammering out corporate buy-outs and other deals. Instead of the top 35 percent the wealthiest Americans pay on income from their salaries and, say, on interest from their money market accounts, the carried interest rate is 15 percent.
Romney co-founded such an equity group in 1984, Bain Capital. Its business? Find struggling companies, break them up and sell the parts. The damage? Thousands of laid-off employees. The human toll, and toll to communities can be large, and the profits to the principals in these enterprises immense. When Romney left Bain in 1999, he got a 10-year deal by which he continued to draw income from previous deals, income taxed at 15 percent.
This is a loophole that President Obama and other Democrats would like to see closed, but no headway has been made except rhetorically. Naturally, Romney thinks this kind of a tax break is good for America (and Americans like himself), and you can wager the amount on line 37 of your 1040 that he would work to keep it that way if he wound up in the Oval Office. An incentive, doncha know. Spurs job creation. Boosts investments that keep the country going. Riiiiiight.
Yale political science Prof. Jacob S. Hacker, co-author of Winner-Take-All Politics thinks otherwise:
“The idea that private equity managers and hedge fund managers should pay 15 percent, when in fact they’re just getting a cut from the pool of capital under management—it’s completely egregious,’’ Hacker said.
“There’s very little risk that’s being borne by these people,’’ Hacker said. “It’s a big subsidy for a certain kind of financial management.’’
The oligarchy doing its thing.
The Democratic National Committee has posted a tool on its website so you can determine what you would save if you were taxed at the Romney Rate.