Mitt Romney doesn't pay 'a lot of money' in taxes

(Clayton Ashley/TPM)

(Clayton Ashley/TPM)

Brian Beutler points out that, based on his own statement, quarter-billionaire Mitt Romney pays federal taxes at an effective rate of 15 percent.

As noted here in December, the reason he gets to do this is because his earnings don't come from teaching, or building cars or fighting fires:

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.

Such a deal. The kind of deal you could get if you had an army of lobbyists and a vault full of campaign money to contribute.

If you would like to get an idea of how much you might save if you paid at the rate Romney does, check out this feature set up by the Democratic National Committee.