Latest Entry: American Pravda and New York's Sixth Crime Family     Latest Comments: Talk Back Here

« Video: Familiar Obama Rhetoric, Failed Obama Record | Main | Alarming Thoughts On The SOTU from Clark Judge »

January 25, 2012

Why Romney's Tax Rate Is Unfair, To Romney

Topics: Political News and commentaries

Daniel J. Mitchell of the Cato Institute has an interesting piece out today in which he explains that the brouhaha last week over Romney's 15% tax rate (he actually paid 13.9% in 2010 and is estimated to pay 15.4% in 2011) when pundits exclaimed that's unfair because the top marginal rate for wage income is more than 30% - is completely misguided (as was Romney when in Monday's debate he responded to Newt's tax plan for a 0% capital gains tax by saying that under it he would have paid no taxes in the last two years). Instead, it's the tax rate on investors like Romney (and Warren Buffett, as well) that is unfair because our tax code layers taxation of dividends and capital gains on top of a top corporate tax rate of 35% -- which even President Obama acknowledges is one of the highest in the world.

In other words, truth be known, it's the tax rate that investors like Mitt Romney (and Warren Buffett) pay that's unfair ... not the tax rate of income earners like Warren Buffett's secretary - but don't expect Barack Obama and the rest of the Democrat wealth-redistributionists to ever talk these facts - they're too wrapped up in class-warfare and appealing to their radical left base.

Mitchell explains:

""This double taxation brings the effective tax rate on investment income to as much as 44.75%. In other words, after the combined top tax rates hit $100 of corporate income, $55.25 remains for the investor. And this figure doesn't even include various state and local taxes, or the death tax. Moreover, like the rest of us, Mr. Romney paid income taxes before investing ... Mr. Romney and other presidential candidates should use the opportunity of releasing their tax returns to make an important policy statement. They should include not only their individual returns, but information about the taxes their corporations pay. ... In this way the candidates can help explode the myth of the U.S. as a low-tax nation. As Cato Institute tax experts Chris Edwards and Daniel J. Mitchell write in their book, "Global Tax Revolution," while the U.S.'s "overall tax burden ... is lower than in many other nations," the country "imposes more punishing taxes on savings and investment than many advanced economies." The most popular tax reforms -- from the "9-9-9 plan" of former candidate Herman Cain to flat tax proposals -- all have in common the reduction or elimination of double taxation on investment. ... If the traditional disclosure of tax returns is elevated into a "teachable moment" about the burdens of double taxation, all Americans could be winners.""
Take the time to read the whole thing here.

Mitchell makes these points, and more, in his video on capital gains taxation. Either Barack Obama and his fellow Democrats are completely ignorant of these facts, or they've been and continue to be lying to the American public.

The correct capital gains tax rate is zero because there should be no double taxation of income that is saved and invested. This is why all pro-growth tax reform plans, such as the flat tax and national sales tax, eliminate the capital gains tax. Unfortunately, the President wants to boost the official capital gains tax rate to 20 percent, and that is in addition to the higher tax rate on capital gains included in the government-run healthcare legislation.
Related: In this must-watch related video, Peter Schiff, author and financial commentator, CEO and chief global strategist of Euro Pacific Capital Inc., explains why Warren Buffet's secretary does NOT pay a lower tax rate than Warren Buffet (and BOTH Warren Buffett and Barack Obama are lying). In fact, Buffett - the majority shareholder of Berkshire Hathaway, pays 35% corporate tax in addition to the 17.4% Buffett payed in his individual tax return in 2010. If Buffet didn't have to pay that 35% corporate tax, he could keep the money for himself.

[...] Company A pays $35 in taxes on the $100 it earned and is left with $65 in after-tax income. It pays that out in the form of a dividend, taxed at the preferential rate of 15 percent. The owner of the company thus earns net income of $55.25, and his company is still worth $1,000. The owner would only report taxes of $9.75, or 15 percent of his taxable income of $65. Yet, the effective tax rate is clearly 44.75 percent, not the 15 percent rate Buffett is focusing on... Our tax system creates what we might call a framing problem, causing Buffett to make the claim that his tax rate is lower than it really is.

While I can't know for sure (since Buffett is obviously a very smart man), my own view is that he certainly knows the math, but he has a political agenda that is motivating his statements.

Related reading: Warren Buffett's Math Lesson (And Barack Obama's, as well)

Posted by Hyscience at January 25, 2012 6:40 AM



Articles Related to Political News and commentaries: