Matt Yglesias reminds us that Mitt Romney pays a relatively low effective federal tax rate because most of his income comes from his investments. And that’s as it should be, Yglesias argues. Almost all economists believe that capital investment earnings should have tax preference over income earned from labor. James Pethokoukis shows that Romney paid a higher rate than the average American taxpayer – 14.1% versus 9.1%.
It would be funny if Romney was so hesitant to release details of his taxes (he still hasn’t released the actual filings for 1990-2009) because he “under-tithed” the Mormon Church. Of course, I don’t believe this. It would just be funny to me.
Romney was slammed for making a distinction between makers and takers. But so did liberal-progressives a la OWS and the 1% distinction and the rhetoric of them “not paying their fair share”. But I find it hard to believe that a private citizen (pretend Romney was a private citizen rather than a public figure) would receive $1.9 million in services and benefits from the nation. Romney’s investments benefit greatly from a strong national defense. His “responsibility” for defense spending should be higher than a poor person in the middle of the country. A strong defense, in structural terms, bolsters capital markets and the value of the U.S. dollar. So a Romney would have to pay a higher use fee for defense. But besides that, what else do people like Romney use more than regular people? I’m sure someone has conducted an analysis like this.
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George Lakoff presents arguments that the wealthy benefit from the infrastructure and labor of others and they should give back via taxes….
…and infrastructure is more than just highways….
http://georgelakoff.com/2012/09/16/the-public-obamas-and-romneys-opposed-visions-for-a-free-america/#more-1892
also…
http://finance.yahoo.com/news/fear-loathing-one-percent-165400847.html
and….
http://www.faireconomy.org/research/TrickleDown.html
with leftists like that, who needs the right?
Doesn’t anybody think it’s strange how far the debate has moved?
The left used to say that the well-to-do wouldn’t pay enough under a flat-tax.
The Buffett Rule would require no more than a 30% peak tax rate – hardly a progressive tax rate.
Now the right (and our dear Li’l Piggy) seem to think that even a flat tax is too much for the rich to pay because it’s “hard to believe that a private citizen … would receive $1.9 million in services and benefits from the nation.” I understand this point and can’t argue the fairness of this perspective. Under this rationale a poll or capita tax would fairly represent the “equality” before law of all citizens.
No matter where one stands on this, it’s astounding how much this has shifted. Perhaps the time is ripe for the right to solidify their gains and end the “income tax” once and for all and to enact some kind of a flat consumption tax that ALL citizens pay based on how much they spend. Or would the right view it unfair to be paying more tax on nutrition for lobster and caviar than on beans and rice that a flat consumption tax would require?
Sadly neither side seems willing to move an inch in what has become a frozen trench warfare in Washington.
I don’t really see how Romney benefits more than the rest of us from a “strong national defense”, unless you mean that he is heavily invested in companies that make money on the war machine.
Chuck, you’ll appreciate this. I’m at a bar with some friends right now, and a band is playing. Band members are older dudes, except the lead singer / lead guitarist. He is the gingerest of red gingers alive. He has a giant poofy red hair explosion on his head. Mid twenties in age by my guess. Skinny and goofy looking.
One of the guys in our group is a redhead and upon seeing this ginger freak show, he shook his head and muttered “goddam this skinny redheaded fuck making the rest of us look goofy.” This occurred about an hour ago.
Then, this young ginger fuck picked up the guitar. And stepped up to the mic. And the band started playing.
It’s mostly original material according to the lanky red wonder.
Sounds a bit like Stevie Ray Vaughn. Amazing show.
The poofy-headed red fuck gets mucho respect from everyone here. Everyone is on their feet. He’s good.
This is exactly the analysis you are looking for. The biggest takeaway is the fact that the middle class is now a net recipient of government largess
http://gregmankiw.blogspot.pt/2012/07/progressivity-of-taxes-and-transfers.html?m=1
For many years, I was in favor of replacing the federal income tax with a consumption tax – something like http://www.fairtax.org. This would also eliminate the need for 401(k), SEP, SIMPLE, Roth, etc.
Lately, I’ve been thinking that almost half the people in the country are too stupid to plan for their own future. Maybe the government has to tax income, and provide tax-deferral mechanisms (with penalties for early withdrawal) to force people to save for their own retirement.
The rich don’t necessarily “receive more benefits” from the government. We levy higher taxes on high incomes because that is where the money is.
“Lately, I’ve been thinking that almost half the people in the country are too stupid to plan for their own future. Maybe the government has to tax income, and provide tax-deferral mechanisms (with penalties for early withdrawal) to force people to save for their own retirement. ”
http://abcnews.go.com/blogs/politics/2012/04/social-security-and-medicare-could-run-out-sooner-than-expected/
yeah, the government’s about as trustworthy with your money as a drunk sailor at a strip club…
ATrain,
Thanks. I thought I remembered Mankiw doing work on this topic.
Millionaires are clogging up the soup kitchens and emergency rooms. Their fifteen-year-old cars are belching out pollution. Just the other day in the public library, some smelly unbathed billionaire was snoring a few feet from where I was doing research for a postgrad school report — while he probably bailed out of a full scholarship at a state school in his sophomore year. Their children overflow our public schools and eat subsidized or free meals before going home where Mom and Dad use food stamps. Well, mostly just Mom, as millionaire Dads tend to father multiple children with millionaire Baby Mamas and not take responsibility for them as WIC and subsidized day care allow the millionaire Moms with their average of something like two kids per Baby Daddy can go to work as VPs on Wall Street.
Sarcasm off. The rich do not use more public goods in general, and in just about any specific cases not in anything like the share of taxes they already pay or would under a flat tax system. And remember that before paying taxes on dividends, the company is taxed at 35% by the Feds, with most states taking a cut. To earn $20m in Dividends, Romney’s ownership share of a company would have to have earned at least $30.77m and paid $10.77m in federal income taxes, at a minimum. Whether he gives half away and only adds another $1.5m to federal “revenue” or he is Biden-level generous (read: gives about zip to charity) and thus pays another $3m, the difference is only a real tax rate of between 39.87% and 44.75%, before state and other taxes.