Wednesday, January 25, 2012

more confusion on Romney and tax percentages paid

How the details of Romney's extensive wealth will play among taxpayers, rival campaigns and the news media started to emerge Tuesday, as more than 500 pages from a 2010 tax return and a 2011 estimate spilled out both significant and minor revelations about Romney's scattered holdings, tax strategies and charitable donations.

--> First problem: why do we have a tax code where *anyone* needs hundreds of pages to file? 
--> Second problem: a tax code with so many loopholes that hundreds of pages are in play? Flat tax, anyone? Anyone?

The returns outline both the dimensions of Romney's finances and the complexity of the tactics used to reduce his effective tax rate to less than the 15% paid by many middle-class Americans...Romney paid about $3 million in federal income taxes in 2010 on an income of $21.7 million, putting him among the wealthiest of American taxpayers. At the same time, Romney gave nearly $3 million to charity -- about half of that amount to the Mormon church -- which helped lower his effective tax rate to a modest 14%...

A big part of his lower rates is taxation on capital gains (lower than labor income, but based on income that's already been taxed once). The other consideration is that many people think marginal tax rates are the same as average tax rates, overestimating what wealthy and middle-class people usually pay in federal income taxes. (Contrary to Braun's assertion, few in the middle class pay anything close to 15%.)


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