January 20, 2012
How Much the Rich Pay
Mitt Romney, the 1% and taxes.
wsj.com
Mitt Romney's disclosure this week that his effective federal tax rate is "probably closer to the 15% rate than anything" has created the predictable political uproar. The White House and its media allies figure they've now got their stereotype of the Monopoly man, albeit without his cane and top hat, who they can crush in their planned class-warfare campaign.
We're not sure if facts will matter in this cacophony, but someone should at least try to introduce a little reality into the debate, especially since Mr. Romney seems so unprepared to make the case.
Start with the fact that, like Warren Buffett, Mr. Romney said he makes most of his money from investments, not wages or salary. Thus his income is really taxed twice: once at the corporate tax rate of 35%, then again at a 15% tax rate when it is passed through to him as dividends or via capital gains from the sale of stock.
All income from businesses is eventually passed through to the owners, so to ignore business taxes creates a statistical illusion that makes it appear that the rich pay less than they really do. By this logic, if the corporate tax rate were raised to, say, 60% from today's 35% and the dividend and capital gains tax were cut to zero, it would appear that business owners were getting away with paying no federal tax at all.
More: http://online.wsj.com/article/SB10001424052970204555904577168683705018156.html
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