Tuesday, January 24, 2012

Short:Analysis of Romney's 2010 taxes

Not by me (chuckle). Instead, it's by Robert A. Green in the comments section of a Wall Street Journal blog. This is the same comments page where someone says:
"Half of the country... pay no taxes at all to the federal government..."
I hope everyone knows how I feel about that kind of ignorant, biased comment.

Back to the topic. The analyst talks about loopholes Mitt doesn't use, and ones that he might be using. The analysis is short and mostly clear to an aware layman like me, so do read it.

I hope this tax return issue remains on the front burner in the campaign because we need tax reform. But do I want the next Congress doing it? Good question.


Anonymous said...

Tax reform = Another round of paying off lobbyists.

We've seen this movie before and the current call is just another remake of the same thing. The tax code is, BY FAR, a vehicle for interested parties with influence to get favored treatment. Be it in the definition of "income" or "revenue" or "cost", since each of these is the derivation of a hugely complex set of variables within each enterprise, what makes you think that simple, simple, simple will be the result of so-called tax reform?

Sure, we can all get in line to promote our favored loophole-close, or re-defiinition of some credit that would make it simpler (meaning cheaper) for each of us, but who is really going to get the benefit of that?

Mostly, it's just an excuse for people to point to tax reform as a solution to tax revenue issues instead of the simplest change, which would be to increase the rates a little to raise revenue. That's the first thing politicians do when they want to cut taxes, right? They lower the rate.

Hence, I don't take seriously any discussion about tax reform, no matter how well-meaning and credible the proponent (e.g., Simpson-Bowles). To me, it's just another punt on telling people that if they want more services from government -- be it war, protection from fraud, social insurance or whatever -- someone has to pay for it somewhere.

Look, nobody likes to deliver bad news, least of all people who want you to like them and vote for them. I guarantee that if Congress and the president and the American people ever engaged in the tax reform exercise for real, anyone paying less would be for it, and anyone paying more would be against it.

ModeratePoli said...

You have some really strong points, like changing the rates is easily, which is why they're ratcheted down for cuts.

I still think tax simplification is a good idea, but it won't get done quickly. So, yes, work on the rates in the meantime. I'd zero in on the special treatment of capital gains and dividends, and zap those first. Then Warren Buffett and Mitt Romney start paying regular tax rates.

Anonymous said...

The "right" proposal on capital gains and dividends vs. "earned" income is to set up brackets with exactly the same percentages for the two classes of income. That way, a typical wage earner wit, say $50K in earnings and $2000 in cap gains and interest pays one rate for their wages and a lower one for the small amount of income from investments.

But, someone who makes a LOT of money from investments, or can play games by changing the type of income reported (using accountants, loopholes, or whatever), ends up paying just about as much in taxes whether no matter what the class of income they report. In essense, you kill lots of birds (loopholes) with one stone. (Sorry to mix the metaphors there.)

That way, Romney and Buffett pay the top rate on their marginal investment income (the brackets don't have to be identical to the "earned" income brackets), as a top wage earner like an pro athlete or movie star.

But the GOP rammed the notion that income from investments was somehow more worthy of being kept by the people earning it than income from work (or talent). It's a ridiculous notion but when challenged, they fall back on the canard of lowering the rate for earned income to equalize!! It's clever and persuasive, until you realize that such a downward spiral in government funding leads to -- debt. So they call for more spending cuts -- which leads to political defeat because nearly everything in government spending is social safety net and defense (offense, really).

So the politicians talk a good game on spending cuts they have no intention of delivering, and promise tax cuts they have every intention of doing to garner votes. It's a shrewd strategy for the GOP. I grant them that. Just blame the structural debt on your opponents when they are in charge. It's brilliant, really, if you can get away with it.