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Mitt Romney's Lose-Lose Tax Problem - Spectator Blogs

22 September 2012

11:04 AM

22 September 2012

11:04 AM

How rich is Mitt Romney? Wealthy enough to voluntarily pay $250,000 more tax than he needed to last year. That’s the most notable thing about the Romneys’ 2011 tax return released yesterday evening.

Mitt and Ann reported income of $13.7 million last year, most of it from investments. They gave $4 million to charity (most of it through the Mormon church) but “only” deducted $2.25 million of that sum from their taxable income. The reason for doing so is obvious: this ensured that Romney’s “effective” tax rate was around 14% of the couple’s income and not, as it might otherwise have been, a politically-embarrassingly low percentage.

This is, of course, all very noble. Or, if you prefer, cynical. But one can’t help but think that far from earning Mitt a slap on the back it actually draws attention to just how wealthy Romney is. When you can can give the federal government $250,000 more dollars than you really need to because doing so has a basically negligible impact on your wealth you’re pretty much in the hyper-rich class.

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And that’s fine! We all knew Romney is massively rich anyway and it seems churlish to hammer him for paying more than he needed to simply because doing so proved politically convenient this year.

Of course Romney was in a can’t-win situation. Manage his affairs in the most tax-efficient fashion and he’d be hammered for paying a lower effective tax rate than millions of ordinary, hard-working, members of the 53%. But manipulating his tax return to ensure he cleared a largely-meaningless, politics-inspired minimum threshold also only demonstrates how far he lives from Main Street.

Again, none of this is reprehensible and it’s hard to condemn a man who gives 30% of his income to charity (even in an election year). Moreover Romney’s record of charitable giving is longer and better than is generally appreciated. Often, as it should be, his philanthropy has been a private matter.

The mystery, really, is why Romney has not released this information before now. The optimal moment to do so, surely, was just after he had clinched the Republican nomination? Flushing all this out then would have avoided a summer of innuendo – much of it fuelled in characteristically shabby fashion by Senator Harry Reid – whispering that Romney paid no federal taxes at all.

As it is, Romney’s real problem is not the level of taxation he paid last year (or in the past) but the stubborn truth that his tax plans for the country benefit millionaires like himself rather more than they do the middle-class.

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  • Paul T

    RE: Mitt Romney’s philanthropy

    It’s not necessarily charity, members of the LDS church (mormon’s) are required to give a percentage of their income to their church (I believe around 10%) – this money is typically just used to either, improve the church’s estate or goes towards ‘missions’ (converting people).

  • wufnik

    Keep in mind that Romney, as does any US citizen, has up to three years to file an amended tax return. So he can always go back and change the charitable deduction amount. Any bets on what he’ll do?

  • Beefeater

    It is not Romney’s charitable donations that interests the hypocritical compassioneers of the left. They want to see off-shore accounts and tax-shelters. That is the reason Romney will not disclose decades’ worth of full tax returns. He is right not to feed the stupidity. The shabby little Reid may continue to cast aspersions.
    You too seem to assume that it is wrong – or unpatriotic – to be rich. Any tax plans which reduce tax rates will benefit tax-payers in the first place and, in a progressive income tax system (as in America), will benefit the richer tax-payers more than the less rich, because they pay proportionally more taxes the richer they get. So what? The rich pay capital gains and income tax. What does it matter that the average effective rate is less than a secretary’s? They are still paying their “fair” share. Even if they donated 100% of their wealth to government – what the left now regards as the most worthy charitable institution – it would not pay for government’s spending (on both compassion and interest on debt ) for one year.
    Romney’s “real” problem is that at least half the civilized world has no mathematical or economic clue and has come to believe that government is a benevolent magus.

    • http://www.facebook.com/richard.stanfordbrown Richard Stanford Brown

      An ignorant population is not a problem for the likes of Romney, rather it is the salvation of (most) politicians.

      • Beefeater

        A recent article in a leftist newspaper states as fact that the far right is less-well educated than the mainstream of political opinion. We have had articles based on academic studies which purport to show that the right is less intelligent than the left. The constant message from academia and the leftist media is that Republicans are fundamentally selfish and mean.
        So, an educated population believes that conservatives are extreme, ignorant, less intelligent and immoral.
        The problem for Romney – and capitalism and liberty – is a population which considers itself educated. A little learning, as they say …

        • http://www.facebook.com/richard.stanfordbrown Richard Stanford Brown

          I don’t associate Romney with Capitalism and Liberty, except as political slogans. He really stands for a continuation of crony-capitalism and the erosion of liberty. I doubt that the outcome of this election will have much bearing on the policies that follow it.

  • Augustus

    As has already been proven here, releasing these 2011 returns simply gives lefties something to report on other than obama’s failure in the ME or at home. I think Romney and co. did themselves no favours by not disclosing all this during the primary, as fellow GOP candidates suggested. Yet another error in a badly run campaign.

  • Augustus

    As has already been proven here, releasing these 2011 returns simply gives lefties something to report on other than obama’s failure in the ME or at home. I think Romney and co. did themselves no favours by not disclosing all this during the primary, as fellow GOP candidates suggested. Yet another error in a badly run campaign.

  • Daniel Maris

    I don’t like sectarian charities. Whose to say he and his family don’t get all sorts of benefits in kind back from the Mormon Church? For instance, do they subsidise the education of Mormon children?

    Part of America’s problem is it doesn’t tax rich people enough – as Warren Buffet (one of the richest) has said.

    • http://www.facebook.com/richard.stanfordbrown Richard Stanford Brown

      A much bigger “part of America’s problem” is that through inflation they tax the middle and lower classes too much.

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