Friday, August 17, 2012

I'm Glad You Told Us About Your Tax Rate, Mitt Romney

I have children, and I try to adopt a measured tone when they admit they did something terrible. I want to punish them - usually the thing involves property damage - but I also need to encourage them to be honest.

Okay, then... I'm sooooo happy you told the truth, Mitt Romney. 'Kay? That's good, when you do things like that. It's important for you to be honest. You made the right decision. I'm just also disappointed that you pay a goddamn 13 percent tax rate. I'm very, very, very disappointed in you, because you're a multi-millionaire, and you want to pay taxes like you're something between a new teacher and a Walmart greeter.

I should have known, of course. Capital gains taxes are nothing new, and the rates are not a state secret, and neither is the fact that rich people have really good lawyers and accountants. But having the number out there makes it more real and undeniable. It's the difference between...

I think your girlfriend is cheating on you.

and

Here's a Tumblr page of your girlfriend cheating on you.

Back in January you made the argument that the government really taxes this kind of income twice. Jon Ward's article in the Huffington Post stated:

"What capital gains tax breaks have done over time is recognize there are two levels of taxation in capital gains. One at the corporate level, which is a 35 percent rate, and then another at the individual level, which has been 15 percent. So combined, it's about a 50 percent tax," Romney said in a separate interview with CNBC's Larry Kudlow Wednesday.

Of course, then you had to walk it back a bit:

When asked whether Romney was saying in his Wednesday interview that he pays a rate of 50 percent, a Romney adviser told The Huffington Post that he was not. "He's simply explaining the concept of double taxation as it relates to corporate profits," the Romney campaign official said.

So, that's the concept of it, and evidently some rich people are getting soaked. But not you, actually. In fact you can structure a company as a "flow-through entity" so that its funds pass directly to the shareholders and avoid corporate tax. And the same structure allows you to incur the liability of a company. In other words, when it comes time to tax you, the government treats you as a person, a shareholder, and taxes you at a low rate. If a bad decision of yours ruins someone's life, suddenly the court system has to treat you as a company instead of an individual. You have it both ways. And this is well-known and common, but it's complicated enough that you can always fashion a talking point to convince people that you're the victim here, that you're the little guy. And you can distract the voters from the fact that the system has very different rules for rich people and the rest of us. And you're not going to release those returns, because then a huge pile of stark, undeniable facts attached to numbers would spill out.

If you released your returns, voters would realize this isn't a contest between a liberal and a conservative. This is a contest between a moderate and a Bond villain.

Here's what the number says to me: It says you guys can't run as the party of fiscal responsibility anymore. You can't try to maintain a system where the super rich get to dodge responsibility for their citizenship and then tell the rest of us you're going to tackle the deficit by converting Medicare into a coupon giveaway for gauze and Tylenol. You can't turn Nana into soylent green, so you can keep your car elevator and your dressage horse, and also say you're the grown-ups.

This isn't about social justice. It's not about greed. It's not about income disparity. It's not another stupid ideological battle between whether it's better to run a country based on Ayn Rand books or Springsteen lyrics. We have hard choices ahead of us - we have to get our debt under control, improve infrastructure and education, and turn an out of control military industrial complex into something that actually protects Americans. You clearly want to build a country of gated communities, private schools and security, and a legal system with all the transparency and free access of a country club. This is about whether you people are going to pay your fair share. This is about whether you people are going to be equally accountable.

You need to work on being a good citizen, Mitt Romney.

You can start by losing this race.

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