Financial Review
PUBLISHED: 25 Aug 2012
What’s keeping the Republican Party up at night? Surprisingly, it’s
not the fear of losing the next presidential election. In fact, it’s
Mitt Romney’s tax returns.
Romney has drawn a line in the sand, refusing to release his tax details before 2010. He has been mighty vague about his reasons.
For decades the convention has been for presidential candidates to release their tax returns as a test of their integrity. Democrats were quick to remind Romney of his own father’s decision to release more than 12 years of tax returns when he ran for president in the 1960s.
The issue just won’t go away, and Republicans are beginning to hate it. Coverage of this keeps a harsh spotlight on something very dear to the party – the surprisingly low tax rates for the already wealthy. The issue has been hidden in plain sight for a while. For the better part of a century “capital preservation” lay at the core of the Republican coalition. Social issues such as racial integration, abortion and gay marriage can come and go, but low taxes on accumulated wealth have been a consistent Republican aim.
The contretemps about Romney’s tax returns comes at a time when pressure has mounted to raise taxes on the wealthy to help control America’s enormous budget deficit. Just last month the French government touched a nerve by proposing 75 per cent tax rates on higher incomes. In the US that was front page news.
So if Romney won’t disclose his taxes, what can he be hiding?
So far, Romney has revealed that in 2010 he paid an effective tax rate of 13.9 per cent on income of $27 million. That tax rate matches households earning about $80,000 a year rather than millions. But it ignores something crucial. While America’s income taxes are moderately progressive, its wage taxes, which are also income taxes but apply only to wage earners, are harshly regressive. An $80,000 household would have borne the burden of an additional 16 per cent in wage taxes over and above the 13.9 per cent income tax that Romney paid. Romney probably didn’t pay any of that.
An undisclosed portion of Romney’s wealth is kept in offshore tax shelters. The information he has released provides little clarity about precisely how much money he holds overseas and where. It has revealed that millions of dollars sit in a Swiss bank account and in the Cayman Islands. But Romney also apparently has investments in Germany, Luxembourg, Australia and Ireland, which were not detailed in his 2010 tax release.
Democrats plan to make much of Romney’s low effective tax rate and refusal to detail more about his finances. Earlier this month, the highest ranking Democrat in the Senate, Harry Reid, made an explosive allegation. According to information Reid says came from a Bain investor, Romney hadn’t paid any taxes over 10 years.
Romney denied the claim and confirmed that he wouldn’t release any more financial information. But when asked if he ever paid an effective tax rate less than 13.9 per cent, he said he couldn’t remember.
Senator John McCain could have come to Romney’s rescue. When McCain was running for president in 2008 and considering running mates he vetted Romney for the vice-president role. McCain examined 23 years of Romney’s tax returns up to 2008. It would have been easy to say Romney paid taxes every year but that wasn’t the message from McCain.
He sidestepped when asked whether Romney might not have paid any taxes in the last 10 years. “I can personally vouch for the fact that there was nothing in his tax returns that would in any way be disqualifying for him to be a candidate,” McCain said. That doesn’t rule out the possibility that Romney paid zero or near zero taxes in one or more years.
The problem for Republicans is the more Romney refuses to release details on his finances, the more he looks like he’s got something to hide. At the same time, if Romney does release more information and it shows he paid zero taxes in a year when wage earners paid plenty, it will amplify the huge inequities in the US tax system. That’s an issue Republicans just want to go away.
Capital gains and dividends in the US are taxed at a maximum rate of 15 per cent. The maximum rate on earned income is 35 per cent.
The American public may be waking up to the many glaring inequalities in the tax code. If Romney becomes the poster child for raising taxes on the rich, the Republicans could lose everything they have worked so long to gain. In that case, perhaps Republicans would rather have Barack Obama win and let the tax issue die, along with Romney’s presidential chances.
PUBLISHED: 25 Aug 2012
Anna Bernasek
Romney has drawn a line in the sand, refusing to release his tax details before 2010. He has been mighty vague about his reasons.
For decades the convention has been for presidential candidates to release their tax returns as a test of their integrity. Democrats were quick to remind Romney of his own father’s decision to release more than 12 years of tax returns when he ran for president in the 1960s.
The issue just won’t go away, and Republicans are beginning to hate it. Coverage of this keeps a harsh spotlight on something very dear to the party – the surprisingly low tax rates for the already wealthy. The issue has been hidden in plain sight for a while. For the better part of a century “capital preservation” lay at the core of the Republican coalition. Social issues such as racial integration, abortion and gay marriage can come and go, but low taxes on accumulated wealth have been a consistent Republican aim.
The contretemps about Romney’s tax returns comes at a time when pressure has mounted to raise taxes on the wealthy to help control America’s enormous budget deficit. Just last month the French government touched a nerve by proposing 75 per cent tax rates on higher incomes. In the US that was front page news.
So if Romney won’t disclose his taxes, what can he be hiding?
So far, Romney has revealed that in 2010 he paid an effective tax rate of 13.9 per cent on income of $27 million. That tax rate matches households earning about $80,000 a year rather than millions. But it ignores something crucial. While America’s income taxes are moderately progressive, its wage taxes, which are also income taxes but apply only to wage earners, are harshly regressive. An $80,000 household would have borne the burden of an additional 16 per cent in wage taxes over and above the 13.9 per cent income tax that Romney paid. Romney probably didn’t pay any of that.
An undisclosed portion of Romney’s wealth is kept in offshore tax shelters. The information he has released provides little clarity about precisely how much money he holds overseas and where. It has revealed that millions of dollars sit in a Swiss bank account and in the Cayman Islands. But Romney also apparently has investments in Germany, Luxembourg, Australia and Ireland, which were not detailed in his 2010 tax release.
Democrats plan to make much of Romney’s low effective tax rate and refusal to detail more about his finances. Earlier this month, the highest ranking Democrat in the Senate, Harry Reid, made an explosive allegation. According to information Reid says came from a Bain investor, Romney hadn’t paid any taxes over 10 years.
Romney denied the claim and confirmed that he wouldn’t release any more financial information. But when asked if he ever paid an effective tax rate less than 13.9 per cent, he said he couldn’t remember.
Senator John McCain could have come to Romney’s rescue. When McCain was running for president in 2008 and considering running mates he vetted Romney for the vice-president role. McCain examined 23 years of Romney’s tax returns up to 2008. It would have been easy to say Romney paid taxes every year but that wasn’t the message from McCain.
He sidestepped when asked whether Romney might not have paid any taxes in the last 10 years. “I can personally vouch for the fact that there was nothing in his tax returns that would in any way be disqualifying for him to be a candidate,” McCain said. That doesn’t rule out the possibility that Romney paid zero or near zero taxes in one or more years.
The problem for Republicans is the more Romney refuses to release details on his finances, the more he looks like he’s got something to hide. At the same time, if Romney does release more information and it shows he paid zero taxes in a year when wage earners paid plenty, it will amplify the huge inequities in the US tax system. That’s an issue Republicans just want to go away.
Capital gains and dividends in the US are taxed at a maximum rate of 15 per cent. The maximum rate on earned income is 35 per cent.
The American public may be waking up to the many glaring inequalities in the tax code. If Romney becomes the poster child for raising taxes on the rich, the Republicans could lose everything they have worked so long to gain. In that case, perhaps Republicans would rather have Barack Obama win and let the tax issue die, along with Romney’s presidential chances.
It is really great about taxe returns. Obama birth certificate. What does this have to do with the issues. Look back at the colonial times when the canditates really talked about the issues. Hey I know let`s add a drug test for them to. There are issues and problems in the country. Instead of facing them head on we through up curtains in hopes they disppear. They are not going anywhere. I figure the run for office is like the game. Once you get there you win. Forget about the promises of the election because there is no way you alone without congress approval will get done. The office of the congress was not a full time job. They were farmers, writers, lawyers and such. they wrere not even paid. How did politics get to be a job. When does the president and congress get held accountable for there promises. In the real world I get evaluation. If I do not do well I get fired. Why can we not do this with the president and congress. Tax papers and birth certificates does not really matter. We the people already know they hardly pay any taxes and want to protect the status quote.The only president that really had the guts to do what he said he would with or without the congresses approval was Jackson. Since then very few presidents will stand up to congress. I watch the election only to see which one will be screwig me for four yearsor eight years. I by my own dinner and drinks first.
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