I am not entirely sure what the deal is with Presidential candidates and their tax returns. Apparently, there is no law on the books that requires candidates to disclose their income tax return, but since 1968, when Mitt Romney’s father ran for President and released his own records, it has become tradition.
Recently, Romney revealed that he was taxed around the 15% level. His income comes primarily from financial investments made years ago, which keeps the bulk of his income taxed at the capital gains rate. By contrast Newt Gingrich revealed his tax rate was 31%.
So what.
What is the big deal that Romney was taxed at a lesser rate than Gingrich? Does this somehow affect either of the men’s ability to govern? Does it change their politics or their electability?
No.
So what is the big deal? Well, the point Gingrich seems to be hinting at is that Romney’s income level, based primarily on investments, prevents him from understanding the plight of the working man. How can someone worth over $200 million understand what it is like to worry about bills at the end of the month? How can someone who theoretically never has to work a day in his life to earn a dime connect with the overwhelming number of Americans who are now below the poverty line?
I think Gingrich has a point. Romney can’t. Now, please don’t get me wrong. I am not saying that because of Romney’s financial situation he would not be a good leader. I am saying that Gingrich is correct. Romney can’t understand. Romney himself, in an effort to make light of his own income level, shoved his own foot into his mouth by saying his speaking fee income for last year wasn’t very much. It was $374,327.62.
You know what is even funnier about Romney’s not very large speech related income? In 2009, it only took $343,927 to be in the 1%. I think this is where Gingrich hits the nail on the head. Romney is so used to a lavish life, so used to money always being there, that an income that qualifies him for the 1% is regarded as “not very much.”
So, does Gingrich prove anything about being a better Presidential candidate by exposing Romney as wealthy? Not necessarily. Gingrich, while being taxed at twice the level as Romney, was still taxed at 31%, which also happens to be the tax rate for the top 1% of income earners in the US. So both Gingrich and Romney are in the 1%. The only difference is that Gingrich was taxed on earned income versus investment income, leaving him subject to a higher tax rate.
Gingrich has since said that his goal in getting Romney to reveal his tax level is not to lambast the man, but to point out that everyone should be taxed at that rate, not just the super wealthy. I don’t think he minded scoring political points with lower income groups though by seemingly bloodying Romney’s nose.
Gingrich himself is worth somewhere between $10-$20 million. While only a paltry 10% of Romney’s worth, his net worth is still at the very least 100 times the net worth of the average American citizen. While Gingrich still has to work for his money, he is still a far cry from the ability to connect to ordinary, everyday Americans.
I am sure many of you think I am trying to play the angle that the Republicans are out of touch with the common American experience. You are right, I am. But, I am playing this angle as well - so are the Democrats.
The point I am trying to make is that it doesn’t matter what the finances of the President are like. Presidents over the years have been very wealthy men. Some were not wealthy until they left office, but most recent presidents already had accumulated wealth prior to entering office. If Romney were elected President, he would be the 4th wealthiest man to hold the office (accounting for inflation). Gingrich would be the 21st wealthiest. Even the esteemed George Washington was worth over half a billion dollars.
What matters is their character, their leadership traits. Bullying someone into releasing their tax records accomplishes nothing because it proves nothing. The only result is that it demonstrates that the current tax code benefits those with a lot more money than you or I. We all know these men have more money than we do - does it matter how much more?
Instead of losing ourselves in the drama, pay attention to how the candidates act. Review their record, not what they say. Sure, the rhetoric can be entertaining, but half of what any politician says seems to false and the other half confusing. Choose your candidate based on what you see in their soul. You can just about count on them being rich.
Frank Chambers
Also, I wish the media would clarify the deal with the tax difference. The issue is presented "so-and-so earns a lot of money and only pays 15% whereas the regular guy has to pay up to 31%"
ReplyDeleteThe media is being misleading on purpose and since it is the media itself that is doing this there simply is no other voice loud enough to yell the truth: The 15% being paid on capital gains is being paid on money that was earned as income and previously taxed at the income rate of up to 31%. In other words ... the 15% money is actually being taxed TWICE.
I, and others like me, are sick sick SICK of the media's blatant misrepresentation.
Don't you agree, Mr. Chambers?
I think you might be a tad confused. While the initial money *invested* may have been taxed at that 31% (also open for debate) the capital *gains* on that investment are only taxed *once*--at 15%. This is the issude. Income earned from realizing capital gains is still *income*, and should be taxed at the same rate as the rest of income. Unless you think the system *should* be tilted in favor of the wealthy.
DeleteHistorically, this country has had the highest standard of living at all income levels and the lowest national debt when taxes on the wealthy were at their highest. Fact is hard to ignore.
The original money was earned and taxed at up to 31%. The capital gains were achieved after that money, which was already taxed, was invested in the economy. Investments which, by the way, are the lifeblood of our economy. Without these investments companies cannot grow, jobs cannot be created, the economy cannot survive. So, investors should be essentially punished with the same tax rate that their original income faced. This does not make sense to me. The money in essence is not only taxed, if not twice, then at least one-and-a-half times, and you advocate that investors face penalizing higher interests for helping companies grow through their investments. Raise the investment taxes ... watch fewer investments being made.
DeleteThe current tax system, btw, is the reason so many investors are wary of investing to begin with. It is overreaching, overcomplicated, overpenalizing, and unpredictable. This is the primary reason investors won't let their money go to work for the economy.
Romney knows that the moment he releases his tax returns, even though he may not have broken laws the media will distort and bend the truth in an attempt to get their man elected.
I agree that the media tends to misrepresent facts in order to make certain points. But I will also point out that politicians are notorious for this as well. That was the entire point of the blog. No matter what Gingrich says, he is still very wealthy. Just because he was taxed at a different rate makes no difference. Gingrich is applying the same spin to his story as the media.
ReplyDeleteWhen it comes to investment taxation, I am afraid I have to fall on a different side of the issue as Anon1 and Anon3. I disagree that investment income is taxed twice. Let me provide an illustration:
- I go work my job and earn $10,000 extra to invest in the stock market. I put half of my money into Apple and the other half into Google. At the end of the week I sell my stocks. Now during that week, Apple rose 3% and Google dropped by 2%. My net gain was 1%.
- Now it is tax time. In preparing my return, I include both my investment profits and losses. The income I earned from the Apple stock is offset by my losses in Google. I still earned 1% from the investments, which would amount to $100. I pay the Capital Gains taxes on that money at 15%, so out of my $10,000 investment which earned me 1%, I pay $15. I wasn't taxed on the money I invested, just the money I earned.
So, the initial $10,000 is never taxed again. I am only taxed on the money I earned from my investment.
and you think it should be treated the same as the initial income? You think investors should be penalized for investing in the economy? You think it is fair and appropriate for the media to portray the issue as "this guy is rich therefore only pays 15% while not-rich people pay up to 31%" ?? remembering of course that the rich guy in question originally would have paid the full amount on the money he earned?? the media, and you, frankly, are so interested in punishing those who succeed at living the American dream. jealousy and envy; class war ... I have news for you: there are those out there who envy you as well. if it was up to them, your tax check would be much larger ... the definition of "rich", which our current president wants to define as $250,000, will keep changing. $150,000? $80,000? $50,000? I guarantee you that $50,000 seems rich to a LOT of people out there!
ReplyDeleteIndividuals who invest in the economy and therefore help business grow, create jobs, etc. should not be punished for it. I agree with one of the anons: the higher the investment taxes, the less investing will take place! (and more mattresses will be filled with cash)
I am finding it hard to understand why taxation of income is punishment. I don't know that the framers of our tax code sought to punish those who made money. I prefer to think that the tax code's intent is to provide revenue for the operation of government, which provides many necessary services to the people of this country.
DeleteJust to offer a correction - I never said I thought the media portrayal of the 15% and the 31% was fair or appropriate. In fact, I said the opposite in my initial comment - "I agree that the media tends to misrepresent facts in order to make certain points."
I do appreciate your very straight-forward Fox News/Tea Party rhetoric. You do spout the buzz words quite well. Now, please tell me, how is what I said suggesting class warfare? I believe that income, regardless of how it was earned, should be taxed. Romney paid his 15% tax on income. Gingrich paid his 31% tax on income. Neither were punished for pursuing the American dream, they were taxed according to the laws of the United States of America.
What you appear to be promoting is pure Capitalism, which would prove to be just as unsuccessful as Communism. The results would ultimately be the same. The people of this country would be ruled and downtrodden by a class of super-wealthy and super-powerful elite. Is that truly what you want? There has to be a middle ground between the two and while we may not be perfectly in the middle, I think we are a far sight closer to it than what you are suggesting.
Facts, people! When you speak in generalities you can't make a strong argument. For example:
ReplyDelete"Investments which, by the way, are the lifeblood of our economy. Without these investments companies cannot grow, jobs cannot be created, the economy cannot survive." Anon
Sounds so wonderfully simple. Saying that investments are the lifeblood is about as general as saying humans need oxygen, but drawing a broader conclusion without evidence or data is pure speculation. And to imply that investments hinge on the tax rate and that an entire economy will unravel needs some solid data to back that up as well. This is just fear rhetoric.
"if it was up to them, your tax check would be much larger ... the definition of "rich", which our current president wants to define as $250,000, will keep changing. $150,000? $80,000? $50,000?" Anon
Them who?! Again, fear. There is a fear that everyone with perceived wealth will be a target for those without wealth. We must protect that level of income because we hope to be there one day? How about a dialogue that discusses what sort of responsibility EVERY person has to their communities. I agree with Frank and feel that people have to stop looking at their taxes as punishment. If you're concerned with how they spend it then you need to vote your conscious and contact your elected representatives when you feel they're being bone-heads.
Oh and ANYONE who gets their news from only one source and can't separate sound bites and rhetoric from actual journalism and facts is a fool. And that goes for both sides.
Well said! Bravo.
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