Skip to comments.Is Romney's effective tax rate lower than yours? (80% of ALL Americans pay less than 15%)
Posted on 01/24/2012 9:24:01 AM PST by tobyhill
So Mitt Romney thinks his effective tax rate is about 15%.
That prompts many people to express disbelief: "What?! Most people pay a higher rate than that, don't they?"
But assuming he's correct, here's why his effective rate is probably higher than most people's: The effective tax rate is always going to be lower than one's top income tax rate. And the top rate for roughly four-fifths of Americans is 15% or less, said Roberton Williams, a senior fellow at the Tax Policy Center.
In other words, 80% of Americans have an effective rate below 15%.
(Excerpt) Read more at money.cnn.com ...
Flat Tax and be done with it. No loop holes, we all pay the same, and the country is better for it.
Hey CNN, the Obama administration runs guns to Mexico resulting in the death of Americans, and the big question you have is: How much does Mitt Romney pay in taxes?
Personally, I don’t give a s**t what Mitt Romney, or anyone else, pays in taxes.
It’s nice to see someone in the MSM considering the facts for a change. You can be sure that the Donk talking points will be fact free.
Agreed. I’m tired of the tax code being used as an instrument of social engineering.
“Effective tax rate” my butt! This refers only to federal INCOME taxes and does not include the FICA/Social Security swindle, excise taxes, sales taxes, state and local taxes, death taxes and the myriad other death-by-a-thousand-taxes that makes up life in America under the existing kakistocracy.
I’m one of the “lucky” 20%.
Talk about 99%’ers. I think the 20%’ers are the ones with a legitimate gripe in this country!
I made $100 K last year. I have a wife, three kids, and a mortgage. My effective federal income tax rate without any contortions was 7.9%. I think I pay more in Social Security and Medicare taxes.
80% of Americans pay more in FICA taxes than income taxes. 47% pay no income taxes. 26 million actually receive EITC, which means they get money back from the federal government.
I’m out 35% !
Obviously it's failed. Through FICA (an income tax BTW) it taxes 100% of wage earners. Through the personal income tax it double taxes yet another 53% of wage earners.
Obviously it has failed.
Tinkering with it does not solve the fundamental problem ~ best that we just get rid of it and move on to some other way to pay for government.
Arguments to the contrary are (1) venal, (2) suggestive of having a personality disorder, (3) immoral.
That is what pi**s me off. They should tax everyone the same and they can have as many kids as they can afford on whats left.
case in point:
Canada doesnt have a Fannie or Freddie nor a tax write off for mortgages, yet people still own homes there and they didnt have a national mortgage meltdown.
Churn that class resentment, CNN!
Jump on the anti- capitalist bandwagon!
Feed the fires of envy.
Push the moocher/social justice mentality.
Get Obama re-elected!
Obama is going to bamboozle the actual Middle-Class to think that he is actually working for them but in reality they are the only ones he can take from to pay for his Social Experiment.
What they fail to tell you is that his income, when originally earned, was presumably taxed at a much higher rate. Now it is long term capital gains. The media did the same when they found out that most of H. Ross Perot’s fortune was in tax-free municipal bonds and he paid very little federal income tax.
Since most americans don’t make sufficient income to avoid the payroll taxes on their total income, then yes, since the payroll tax is about 6.2% or so, they automatically have only to be in the 9% range to pay as much or more than Romney. And it’s worse for self-employed and small business, because they have to pay all 13% or so of their own payroll taxes.
In their case, the need pay only 2% income tax to be in Romney’s range.
I'm sure Newt would love a 15%.
The US has one of the highest corporate tax rates in the world (35%). The EU rate is 25%. This is why the capital gains rate is so low in the US (15%). Throw in state and local taxes and the actual effective tax rate is close to 50%.
If the 15% cap gains is ‘unfair’ then drop the corp tax rate to compensate. It would make the US way more competitive abroad and end the practice of companies keeping profits offshore to avoid the huge tax hit. Companies would bring the money back to the US for growth and investment here instead of the perverse tax incentive to make it cheaper to reinvest abroad.
Employee Social Security 2011 FICA Rate: 4.2% (in 2011 the employee rate does not match the employer one)
Employer Social Security 2011 FICA Rate: 6.2%
Employee Medicare 2011 FICA Rate: 1.45%
Employer Medicare 2011 FICA Rate: 1.45%
Total FICA 2011: 13.3% (normally 15.3%)
Romney paid 15.4% of his adjusted gross income in combined FICA and income taxes (line 61 / line 38).
So the real question should be...
Did you pay more than 2.1% in income taxes?
because 80% of ALL Americans paid 13.3% in FICA taxes alone!
Did you notice that when you point out obvious tax disparities between people who earn their living by the sweat of their own brow and those who earn their living off the sweat of other people’s brows that you get accused of playing the politics of envy?
Yes. It's a mathematics question, and they can't do the numbers. They want to argue about why the train left the station at 5 pm and averaged 60 mph.
So, no matter how you slice it, the tax code favors guys like Romney over guys like you and me. That is a fact. There may be reasons for this disparate treatment, but that doesn't stop it from being disparate.
Where did you get the notion that the "effective" rate of 15.4% that Romney paid is combined FICA and income taxes? Of course this is not to mention the fact that FICA is not applied to adjusted gross income as your calculation appears to imply but rather to WAGE INCOME up to about $108,000 of wages.
Or perhaps you are assuming that Romney's entire adjusted gross income was wage income with no income from dividends, interest, capital gains, or other investment income. Otherwise, your calculations based on the difference between the payroll tax rates for FICA and the "effective" tax rate is just a bunch of meaningless democrat party class warfare bs.
The tax rate of 15% on capital gains is a constant, so far as I know. I’ve heard no one say that an investor must pay payroll tax on what is assumed to be after tax income from income.
In the case of those who are given their pay in the form of capital gains, there truly is a MATHEMATICAL disparity with those who do not.
I repeat that in my humble opinion a household should be considered a business and that all expenses to run that household should be taken out of consideration. Every employee should be considered a contractor selling his services for this purpose.
Deduct the house, the utilities, the transportation, the commo, clothing,...you name it.
If you are comparing his effective tax rate as a percentage of his wage income then it is probably several thousand percent rather than 2%.
As for your assertion that his effective tax rate is only about 2%, based on your errant calculation of taking the difference between the FICA rates on wages and his estimated 15% effective tax rate, are you being deliberately misleading or just ignorantly misleading?
What you know about taxes could be smoked in a crackpipe in 2 minutes.
Otherwise, if capital gains are invested in capital then they are simply not going to be taxed.
That would turn all capital gains into the functional equivalent of a 401(k).
You could also eliminate 401(k) and equivalent plans and leave the savings function up to the individual wage earners or dividend earners.
That way the several million bucks guys like Mitt Romney and Warren Buffett pull out of their investments to finance their multiple homes, multiple cars, personal physicians, travel and food, shelter and clothing would be taxed just like the ordinary wage earner's income that goes for food, clothing and shelter!
No, I'm not because Mitt Romney does not have a "wage" income. Probably never did. I'm comparing the income from all sources from Romney and the income from all sources for Joe Six Pack.
Joe Six pack making $20 an hour has a minimum effective income tax of 15% just by his FICA contributions and probably another 15% tax on his earned income making his overall effective income tax rate somewhere in the neighborhood of 30%. So the headline is clearly misleading.
I make "too much" to get the EITC or tax deductions for my two teenage sons, both of which literally eat me out of house and home.
They are talking about Federal Income taxes paid. It doesn't include any other taxes paid like Social Security or State taxes.
Allow me to suggest that Romney does NOT pay taxes at the same rate as does “Joe Sixpack”.
1. Payroll taxes are on the first 108,000 of income.
2. Joe Sixpack and wife bring in 90,000 between their two jobs. He pays his payroll taxes AND she pays her payroll taxes. Their combined percentage is 28% since the payroll tax is taken out PER worker. Her social security and his social security. Why do I say 28% and not 14%? Because their companies’ portions of their payroll tax reduces their takehome pay. In the same way as a company passes on the cost of taxes in their products, they pass along their costs for employees in what they give to employees as take home pay.
3. Romney pays payroll tax on 108,000 of whatever he makes. Obviously, Joe Sixpack is paying at the rate of 100% for each dollar he makes. Romney, on the other hand, is paying at a miniscule rate, 108000/22000000 = .004 or .4%.
4. So, since we’re talking RATES, Joe Sixpack pays at a higher rate than Romney who is just under 15%, while Joe Sixpack and wife have not added on their income tax rate of between 5-15% depending on kids, mortgage, deductions, etc.
There is NO WAY that Romney pays at a higher rate than does Joe Sixpack. It simply isn’t mathematically feasible.