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Tuesday, January 24, 2012

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. 

17 comments:

  1. Mitt Romney, slimier than a Newt.

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    Replies
    1. Slander is your answer?

      You can't find an argument that supports your weak stance on taxes or supports your lie on "The rich don't pay enough" so you slander?

      Delete
    2. JiaerhioahnasdfsdfJanuary 24, 2012 at 8:21 AM

      This might sound slanderous against the original posters but, yes, those are the tactics of the left. No intelligent backing, no offering, no rebuttal... just name calling and slander.

      Delete
    3. I think that goes both ways. Try not to lump everyone from the left into one ball (and similarly, don't think that everyone from the right uses nothing but honest, forthright tactics)... It's the same thing as name calling!

      Delete
    4. Haha - whatsamattausa... simply put: "True dat!"

      Delete
  2. 11.6 here filing jointly for 38k. I'd gladly pay another 10% if it meant a 1000%+ increase in my income.

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    Replies
    1. Zexks - I think I understand you correctly... but just to make sure, are you saying your total effective rate is 11.6%?

      Thank you for your post by the way.

      Delete
    2. Yeah, forgot the % and can't edit here.

      Delete
    3. Oh okay. Thanks! Yah, it's not a perfect system. I wish people could edit their posts.

      Delete
  3. Media myths debunked. the truth hurts, doesn't it (yes to the liberals.)

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  4. Nice calculations . Yes Mitt paid more than 448 times more than you. Nice.. The question that you need to think as a taxpayer is if Mitt Romney was to throw away 99 % of his after tax income he will still be left with $150,000. ( Remember he threw away 99% of his after tax income). Now who is better off, you with $42,000 in after tax money or Mitt Romney with $150,000 of spare change after throwing away 99% of his income in trash ?

    Dude, remember you need certain amount of sustenance. The dough after that is called disposable income. Mitt Romney has about $ 14,850,000 in disposable income and for you may be $ 1000-2000 may be $5000 ??? Now talk about the math !!!!

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    Replies
    1. Thank you for your input. My biggest problem with that argument is that I think handing that kind of power to the government, the power to determine how much sustenance, or money needed for it, is "enough" is a very dangerous power to give away. It is none of my business what Mitt Romney makes or what he feels is right for him and his family. It is not the government's business either.

      My counter to it is that there is no law, regulation or restriction prohibiting everyone from obtaining his wealth. We can all get there if we choose. My income of $51k is a product of the decisions I have made to get there. If I wanted his income, in the free land that we have, why can't I get it? Why should I vilify him and punish him while he does. Are you okay with the notion of the government having that much power, or would you just rather leave it up to the people and their choices to determine their own fate? I think the latter is the better way to do it, and it also works as a great incentive for people to do better. What do you think?

      Thank you for your opinion and I hope to hear back from you.

      Delete
  5. PP Here! Does anyone find this disturbing?

    http://politics.blogs.foxnews.com/2012/01/24/warren-buffetts-secretary-join-first-lady-state-union-address

    Using Buffet's secretary as a pawn? Jesus! Why would Obama bring her into this? The thought of "Buffet pays a lower rate than his secretary" should have a symbolic component of "his secretary."

    Secondly, again, affirming the points already discussed in this blog, the article states, "In reality, millionaires generally don't pay less in taxes, according to the Tax Policy Center. Last fall, the center found that households making more than $1 million will pay an average of 29.1 percent of their income in federal taxes while households making between $50,000 and $75,000 will pay 15 percent of their income in federal taxes. It added that low-income workers do pay Social Security payroll taxes, another target for extended cuts favored by the president and lawmakers. The IRS also found that in 2009, 43 percent of households paid no federal income tax at all while taxpayers making $1 million or more paid on average 24.4 percent of their income in federal income taxes."

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  6. I'm kind of curious... what do democrats say to the Cato Institute's rebuttal of Obama's and Buffet's case about Buffet's secretary's tax rate: http://www.cato-at-liberty.org/warren-buffetts-tax-story-is-bogus/

    Is he lying?

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  7. This fairy tale of Warren Buffet's secretary is just another instance of a lie - told often enough - seeming to become truth. Additionally, some people simply refuse to review and assess the facts. They like the lie - and they're sticking with it.

    The 'pay your fair share' crowd completely dismisses the fact - that after 'loopholes and deductions' for the 'working poor' they pay zero in federal tax and in fact, recieve refunds for moneys NEVER paid in. Those of us who actually PAY taxes, at whatever rate, fund programs that THEY are the MAIN recipients of.

    Obama and his ilk constantly blather about 'skin in the game.' Okay? What skin do these people have in the game for costly programs THEIR representative push through Congress that benefit ONLY THEM? Absolutely NONE! 'Fair' is when everyone pays.

    Note: Investments SHOULD NOT be taxed at the same rate as income... those monies have ALREADY been taxed - when earned as income. Investments are a gamble and come with a built-in risk of loss. (Our 401K's are investments, but due to thier structure are TAX EXEMPT at the time of deposit.)

    I'm no Romney fan, never was, but it's not because he's rich. This is more smoke and mirrors to muddy the waters going forward into the election... while they fight over the 'rich guy's' taxes, the real issues continue and our precious America slips deeper and deeper into the abyss.

    15% of 21 million equates to a pretty big check to Uncle Sam.

    @Anonymous - your ire over Mr. Romney's 'disposable income' sounds a lot like the class envy that Obama and the OWS crowd keep pushing. He doesn't throw that money in the trash, but he DOES gamble - with investments. He could just as easily lose that money. Donald Trump has gone bankrupt from poor investment decisions, more than once... Would you be happy if they ALL went broke? Not me - I've NEVER been offered a j.o.b. by a poor man.

    Me, I envy no one... if I want 'stuff' - I WORK a little HARDER and SAVE for it... p.s. I have one of those minimum wage jobs that ya'll see as 'beneath you'. This America - I can CHOOSE to harder : )

    Since the 2010 elections there's been talk, talk, talk of reforming our monstrous and ineffective tax code... but NO action toward that end. A flat or fair tax would put an end to this nonsense!... And... save a bunch of money by reducing the size of the IRS... a win/win!

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    Replies
    1. Dara - Good morning and thanks for the post!

      I can tell you're passionate about this. We literally put this up 5 minutes ago: http://loudmouthelephant.blogspot.com/2012/01/tax-rants-and-big-question-do.html

      I bet I can predict your thoughts on it :-)

      Thanks again and take care!

      Delete
  8. Much of this is due to the tax rate on Capital Gains which is set at 15%. However that is deceiving because it is not Income tax. However the left uses that fact to deceive the mainstream into believing that the rich pay lower taxes. As an example. Say I buy into a company. (stocks, franchise, or otherwise outright) That company takes off and begins to make money. At the end of the corporation fiscal year the company has 20 million in profit which is to be split among the owners or retained by the business for expansion. Either way it shows as a profit and the greedy left comes in and takes 35% right off the top. Then the corporation can distribute what is left. At that time the greedy government again comes in and take anohter 15%. So effectively the rich are paying 50% of their gains.
    In addition those same tax payers must may the top rate on their income from other sources. (payroll)

    ReplyDelete