PART 2: What Do Mitt Romney's Tax Returns Have To Do With Anything?

This is getting old. Yes, I wrote a "Part 1" about this: http://loudmouthelephant.blogspot.com/2012/01/what-do-mitt-romneys-tax-returns-have.html. There is a specific reason I'm writing about this again, and this should be clear:

In spite of what Warren Buffet (my boss) says, in spite of what the mainstream media tells people, this notion that "the wealthy pay far lower rates than the average American worker" (I heard that exact phrase on the radio this morning) is simply NOT true. Hopefully, it can be summed up here. Hopefully, this disgusting myth can be dispelled, and we can finally get to some truth. I hope this gets passed on repeatedly,

First, I point to yet another article on CNN Money that discusses this myth (call this article 1):

          http://money.cnn.com/2012/01/24/news/economy/Romney_tax_return/index.htm?hpt=hp_t1
   
This article even cites a previously written article written by the same author on CNN Money. (call this article 2):

          http://money.cnn.com/2012/01/18/news/economy/Romney_effective_tax_rate/index.htm?iid=EL

I have written about this before. Both articles say the same thing: Mitt Romney, even at a 13.77% effective tax rate, pays a greater rate than the American worker. Article 2 says:

"But assuming he's correct, here's why his effective rate is probably higher than most people's: The effective tax rate is always going to be lower than one's top income tax rate. And the top rate for roughly four-fifths of Americans is 15% or less, said Roberton Williams, a senior fellow at the Tax Policy Center."

It continues:

"In other words, 80% of Americans have an effective rate below 15%. 'If you consider income tax liability alone, the average effective federal tax rate for people with incomes between $40,000 and $50,000, for instance, is just 3.2%, according to Tax Policy Center estimates.' (In measuring income, the center uses gross income and adds to it other forms of compensation, such as the money your employer contributes to your retirement savings.)" 

3.2%!!!

Keep in mind, this is an effective tax rate. It should be looked at as the "bottom-line" rate. It's kind of simple, really. At the end of the year, accounting for all of the tax brackets and marginal rates, deductions, "loop holes," write-offs, etc., this is simply the amount you have paid in taxes (in total) divided by the amount you earned (in total). For example, if after all the tax-liability reducing mechanisms named above you paid $100,000 in tax and you earned $750,000 from salary and $250,000 from capital gains, you paid an effective rate of 10% ($100,000 in tax on $1,000,000 in income). 

To join the fracas, I am releasing my tax information. I will use a quick estimation to give my income and effective tax rates. I have to estimate this because 2011 was the first full year of employment for me, and I do not have any 2010 tax returns (I was a student for most of 2010). I will try to keep it simple, and I will be using the tax return/refund calculator found here: http://www.hrblock.com/free-tax-tips-calculators/index.html

The results have been put into this simple spreadsheet: 

There it is. As a 29 year old, single-tax status employee, my effective tax rate is 13.5%. This was calculated using the simple refund calculator above. Additionally, keep in mind this is as a single filer with no children. 

I would say this is pretty "standard" for most people earning approximately $50,000 per year. Granted, one filer's tax rate does not make the case that everyones' tax rate is like this, but it shows an example, for me personally, that my middle-income tax rate does not exceed Mitt Romney's. Again, I'm tired of hearing this junk in the media that middle-class Americans pay rates that greatly exceed the rates of millionaires. It's not the truth. CNN Money's two articles highlight this well. 

Nominally, Mitt pays a LOT in taxes. He averaged $3.1 MILLION in taxes paid over the last 2 years... $6.2 MILLION total. Hmmm... he pays $3.1 MILLION while I pay $6,916. Sadly, he has the same military protections, the same roads, infrastructure, government structure and protections as I do, yet he paid 448 times more than me! 

Finally, the number 448 is pretty significant. Why? Because it would take me 448 years of working to pay in taxes what Mitt paid in just one. Even while paying $3.1 MILLION per year in taxes (and while giving $4 MILLION to charity, which is $4 MILLION more than I gave), I'm sure the democrats will jump on this and claim, somehow, that he isn't paying enough. I've said it before, and I will say it again: Thank you, Mitt, for paying so much so that I don't have to. Instead of vilifying the rich, I think us middle-classers should be very, very thankful. At the end of the day, he paid what was required of him. I said it in "part 1" of our analysis of Mitt Romney's tax returns: if you don't like it, it wasn't Romney's doing... don't hate the player, hate the game.