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edblarney

We wouldn't learn anything salient.

But we would probably learn something like:

a) he's not nearly as rich as he claims

b) he's made maybe $50M this year and paid $0 in taxes due to write-offs in earlier years.

That would not go down well publicly.

Romney paid an effective rate of 14% on his $500K income (I think all capital gains) and that was destructive for his campaign. It just looks pretty out of touch - 99% of Americans earn less than $500K and pay far more than 14% in taxes.

So it would have been a publicity disaster, enough to hurt him badly.

Maybe some other skeletons in there.

But I don't think anything illegal.

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The rate was 14%, the income was a bit higher.

Mitt Romney and his wife, Ann, paid $1.94 million in federal taxes on last year's income of $13.7 million, for an effective tax rate of 14.1 percent, his campaign said Friday.

http://www2.ljworld.com/news/2012/sep/21/romneys-paid-194-mi...

He also gave $4 million to charities.

> He also gave $4 million to charities.

Somehow everybody always forgets this part - when you donate to charity, this is deduced from the taxable income, usually, but is not accounted for in tax rate calculation. Which means, if I earned tons of money and donated it all to charity - I'd pay 0% taxes, so people would say "why this fatcat doesn't pay any taxes even though we are paying a lot, he must be doing some shady things!".

Help me figure this out. Romney earned $13.7 million and paid $1.94 million in taxes. That's 14% (1.94/13.7), but you're saying doesn't account for the charitable donations. So then the formula would be 1.94/(13.7-4), right? A 20% rate?

That would be the top federal tax rate on long term capital gains, so sounds correct.

The top federal rate on long term capital gains is 15%.

presto: the top cap gains rate is 20% once you hit the 39.6% tax bracket (for income).

That sounds good, yes.

Seems like a failure of his campaign not to point out the tax rate adjusted for that.

Seems like a losing argument to me. It's pretty much a no win question, probably better to just say you are under audit.

I agree with your point, but as a small note, the IRS limits the tax deduction for charitable donations to half of your adjusted gross income (AGI), or even lower. This is particularly relevant to people like Warren Buffett, who last year gave away 250 times more than his AGI (according to numbers he released earlier this year). He still paid taxes.

It is a bit more complicated to that. If you gift appreciated assets rather than cash, you can avoid the capital gains tax, but still can deduct the full current market value (up to the limit).

Well, OK, it was an imaginary example of course so yes, there are limits, but the point is when comparing tax rates as to how "fair" they are it is completely pointless if one forgets the charity donations. The outcome becomes completely wrong.

"fair" without some specific discussion of a viewpoint is always pointless.

Is it somehow objectively fair that Romney can give an extra ~$1.3 million dollars to some cause other than the US government? Of course not.

(I don't think it is the largest problem with the tax code, but I'm not real certain it is a good thing, the rules for determining whether a charity qualifies to receive deductible contributions effectively add a lot of complexity to the tax code)

You couldn't pay 0% in taxes, at least not solely from charitable deductions. Your charitable deductions allowed in a single tax year can't exceed 50% of adjusted gross income.

>So it would have been a publicity disaster, enough to hurt him badly.

I think he'd just come off as an every-day man-of-the-people who understands the economic fears of rural whites but also a savvy businessman who's too smart to pay taxes like a sucker.

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