Posted on 01/17/2012 12:37:34 PM PST by Cincinatus' Wife
After weeks of stalling, Mitt Romney did an about-face on Tuesday and said he will release his tax returns in April and that they will show he pays close to 15 percent of his income in taxes.
Romney, a multimillionaire, has been under pressure from his rivals for the Republican presidential nomination and others to release the information. He'd previously said he wouldn't release it. He suggested Tuesday that he would make public only one year's worth of information, for 2011.
Speaking to reporters after a campaign stop in South Carolina, Romney said most of his income comes from investments, not regular wages and salary. The tax rate on investment income is 15 percent, much lower than the 35 percent rate applied to wages for those in the highest tax bracket.
"What's the effective rate I've been paying? It's probably closer to the 15 percent rate than anything," Romney said. "Because my last 10 years, I've ... my income comes overwhelmingly from investments made in the past, rather than ordinary income or rather than earned annual. I got a little bit of income from my book, but I gave that all away. And then I get speaker's fees from time to time, but not very much."
(Excerpt) Read more at abcnews.go.com ...
............”One lucrative deal for Bain involved KB Toys, a company based in Pittsfield, Mass., which one of the firm’s partnerships bought in 2000. Three years later, when Mr. Romney was the governor of Massachusetts, the company began closing stores and laying off thousands of employees. More recently, Bain helped lead the private equity purchase of Clear Channel Communications, the nation’s largest radio station operator, which resulted in the loss of 2,500 jobs.
Much information about Mr. Romney’s wealth is not known publicly. Federal law does not obligate him to disclose the precise details of his investments. He has declined to release his tax returns, and his campaign last week refused to say what tax rate he paid on his Bain earnings.
But since Mr. Romney’s payouts from Bain have come partly from the firm’s share of profits on its customers’ investments, that income probably qualifies for the 15 percent tax rate reserved for capital gains, rather than the 35 percent that wealthy taxpayers pay on ordinary income. The Internal Revenue Service allows investment managers to pay the lower rate on the share of profits, known in the industry as “carried interest,” that they receive for running funds for investors.
“These are options that are not available to the ordinary taxpayer,” said Victor Fleischer, a law professor at the University of Colorado who studies financial firms. “You continue to take your carried interest — a return on labor, not capital invested — and you’re paying 15 percent on it instead of high marginal income rates.”....................
Amen! And lets shrink the size of Government to meet the revenue, rather than match revenue to the size of Government while we’re at it.
I don’t begrudge Romney for only paying 15%. He invested well.
I am 100% against the income tax. It needs to be abolished.
I didn’t do research before I posted, so maybe cap gains should not be there (I get nailed on cap gains every year too), maybe “dividends” is a better term.
If everyone who told me that I need to pay more in taxes, paid taxes at the same rate I’m paying, there would be no need to tell me that I need to pay more in taxes.
They didn’t ask him how much he paid his tax attorneys.
THE "CARRY"
Carlyle Group, Bain Capital, And The Tax Treatment Of 'The Carry' ......."That story is much more complicated than Romney’s opponents suggest. Nonetheless, it has lots of people thinking about what private equity does.
Also this week, Carlyle disclosed its executive compensation in some detail, providing a rare glimpse into how investment firm managers are paid. Combined with the Bain flap, it will surely reopen the five-year old debate over the special tax treatment these partnerships receive through a mechanism known as carried interest or, in short, “the carry.”
The carry allows general partners in investment deals to receive compensation in the form of tax-advantaged capital gains, which are taxed at 15 percent, rather than as salary, which would be taxed as ordinary income with a top rate of 35 percent. This happens because the managers are paid with a fee (up to 2 percent) plus 20 percent or more of their investor’s profits. Those profits are taxed as capital gains even though the general partners may have little or no money of their own at risk in the deal.".......
There are many reasons the two can be very different, you may have tons of kids, or an unusually large mortgage or other unusual itemized deductions. You may derive most of your income from investments which are taxed differently than earned income or maybe you earn far more than the point at which you stop having deductions for social security and medicare.
Any of these or many other things can lower your effective tax rate. In Romney's case, he is probably getting most of his income from investments, and probably also has a large percentage of his money kept in off shore investments and banks to avoid US taxes.
Not at all, see my subsequent posts. I wasn’t making an argument either, just pointing out that capital gains and salary are taxed at a different rate; that is the reason for the disparity. I do think its unfair and absurd, but I favor a massive slashing of the federal budget, a concomitant reduction in all tax rates and/or a repeal of the income tax altogether - not a rate increase on investment capital, surely not.
Yep, but then they have no concept of investment capital, and have a static view of wealth; they’re fighting for their sliver of the pie, not trying to make the pie larger.
Impossible that you pay a full 35% on your income via federal income taxes (ie not payroll taxes). 35% may be your top marginal but all your income is not subject to the top marginal rate. The margins start at 10%.
“Not at all, see my subsequent posts. I wasn’t making an argument either, just pointing out that capital gains and salary are taxed at a different rate; that is the reason for the disparity. I do think its unfair and absurd, but I favor a massive slashing of the federal budget, a concomitant reduction in all tax rates and/or a repeal of the income tax altogether - not a rate increase on investment capital, surely not.”
In that case, I agree with you on all points.
“one of the problems with the tax code. All us little folks are being taxed at a higer rate because we get paid on income; the rich make their money from dividends and capital gains, so they pay a lower rate”
Not exactly. They pay a lower rate on income, yes, because their income is lower. Not that the general public realizes it, but those dividends and capital gains are double taxed. When you consider our federal VAT tax, known as the corporate tax, “the rich” are taxed at a rate higher than you and I.
The problem with the tax code, in addition to how it manipulates the market, is that it deliberately twists and turns to hide things from people. So that Warren Buffet can pay himself less in nominal income than his secretary, and pretend the tax burden is somehow unbalanced. So that Democrats, progressive Republicans, and idiots everywhere can pretend the rich don’t pay their fair share, when we all know, deep down, they pay the lion’s share.
By the way, nevermind double taxation and tricks of the tax code. Does anyone else think it’s ridiculous that we refer to Buffet’s secretary as if she’s a just your regular, old neighborhood secretary? As if she doesn’t get paid way, way over market rate. I have no doubt she’s a one percenter. The only reason Buffet’s specious argument kinda, sorta, almost makes sense is that he uses her as an example, rather than your average secretary.
Then this very same guy wants people to pay more in taxes while he dodges taxes and pays a lower rate then the middle class.
When conditions are good, a large number of them do use their capital.
I’m not sure how you can paint them the same way with such a broad brush.
“Interest income or capital gains from stocks is taxed at 15%.
@#^#&!! I wish...........!!! I pay cap gains near 40% to the Feds every year!!”
Do not confuse interest income with capital gains.The long term capital gains rate is 15%.Interest income is a totally different category and is taxed at whatever your marginal tax rate is.
“That’s the same as what Mitt Romney is paying. FUMR!”
Don’t be naive. Your income may be taxed at the same rate, but there’s income and then there’s “income.” One is the popular notion of how much money you make, while the other has a very specific legal meaning. Believe me, Mitt’s income in the popular sense is taxed at a rate that would make your head spin.
Which of course is robbery....They risk NOTHING...and I pay them. It's BS.....
Just think about it.....let's say I risked 10 millon bucks. And I made 2 million by trading some stock...and took that profit. And the Government "makes" nearly half of what I make??????
THEY did nothing....I DID everything!!!
You didn’t read my post.....very well.
“So Mitt the “Socialist” fired employees at Bain in order to put more money in his back pocket under the Trojan Horse of trying to save money for the company.
Then this very same guy wants people to pay more in taxes while he dodges taxes and pays a lower rate then the middle class”
Have you ever considered taking a job as a speechwriter for President Obama?
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