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The Media’s Wrong: Romney Really Paid 50% In Taxes
Capitalism Institute ^ | Sep 21st, 2012 | Shaun Connell

Posted on 09/24/2012 4:07:57 PM PDT by justlittleoleme

Today has been incredibly disturbing for anyone who understands on a basic level how taxes work. The NY Post, Marketwatch, The NY Times, and even the Wall-Street Journal have posted news stories about how Romney the evil robber baron has only paid “14%” in taxes. This is leading to outrage in the middle class, as people realize that’s a “lower number” than what they pay.

It’s also misleading. Romney’s overall tax rate is over 50%. The lower-sounding number is being used because it makes a great story — even if it only tells part of it. It’s surreal.

Fine. If no one else will respond to this media manipulation, I will. This is not an endorsement of Romney — Capitalism Institute will not endorse any candidate this year. But this absolutely is a defense of the notion that Romney is paying very high and overbearing taxes, just like everyone else. We hate all taxes, and support abolishing all income taxes.

(Excerpt) Read more at capitalisminstitute.org ...


TOPICS: Politics/Elections
KEYWORDS: romney; taxes
I am not a tax guy, or a number cruncher. So I have no idea if this guys numbers are correct.
1 posted on 09/24/2012 4:08:01 PM PDT by justlittleoleme
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To: justlittleoleme

Doesn’t matter to the ‘Progressives’ and their zero sum mentality. It will never be enough and when they kill the goose that laid the golden eggs, they will promise their followers a ‘recovery’.


2 posted on 09/24/2012 4:14:21 PM PDT by griswold3 (Big Government does not tolerate rivals.)
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To: justlittleoleme

Shaun Connell is a brilliant, up and coming leader in the conservative/libertarian movement. His analysis is generally spot-on and he presents his arguments in a clear, well written style. I suspect that his numbers are quite accurate. He is not a huge Romney supporter but he is a strong advocate for people being allowed to keep the fruits of their own labor. More power to him!


3 posted on 09/24/2012 4:17:23 PM PDT by VikingMom (I may not know what the future holds but I know who holds the future!)
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To: justlittleoleme
He makes an assumption that Romney's income comes from dividends on shares ~ even though many companies never declare dividends, and many investors simply make money on increased market value of the shares they bought earlier and have recently sold.

Mitt could have easily invested in buildings or land, sold them and made a profit taxable at the capital gains rate. For all we know he's also an inventory buyer ~ a rather obscure occupation where a small investor buys excess inventory specifically for resale to third parties only he knows about. Good game if you have a nice list.

The problem for the rest of us is simply that Romney didn't provide us with enough detail to understand WHERE and HOW he was making his money!

Without more detail I'd put this story in the category of CAMPAIGN PROPAGANDA

4 posted on 09/24/2012 4:18:47 PM PDT by muawiyah
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To: justlittleoleme
"Double Taxation Ignored. He paid shareholder taxes. His money is in companies, and he’s paying taxes as a shareholder – up to 39%. This is not counted. And it should be counted."

I don't know anything about shareholder taxes? Can a smart Freeper explain this tax to me and to some of the other Freepers?

5 posted on 09/24/2012 4:21:52 PM PDT by avacado
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To: justlittleoleme
This is why we used to teach children about The Goose That Laid The Golden Eggs so they would understand that some restraint is necessary if you wish to prosper.

Apparently, they didn't teach this in Kenya or Indonesia.

6 posted on 09/24/2012 4:32:17 PM PDT by Aevery_Freeman (All Y'all White Peoples is racist!)
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To: avacado

Corporations pay income tax and the corporations are owned by the shareholders, hence the shareholders are being taxed. One problem with this is that unless you are in a high bracket you are being taxed at a greater rate by this method than if the corporate income was not taxed and passed on through to you to be taxed. Remember corporations don’t really pay taxes they just collect them and the shareholders are being taxed.


7 posted on 09/24/2012 4:35:13 PM PDT by Okieshooter
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To: justlittleoleme
I don't know how Romney's income is distributed. But, there's a reason that qualified dividends and long-term capital gains get special treatment.

Dividends come out of profit. They aren't an expense. Simple example: I sell $1,000,000 in widgets, but it costs me $900,000 to build them. Vastly simplified, I made a $100,000 profit, or 10%.

If I declare a dividend and pay $50,000 to the stockholders, I still have to pay corporate income taxes on all $100,000. I can't expense the dividends. So, that $50,000 is taxed at up to 39.5%.

Then, the stockholder has to pay income tax on the dividend income. At Romney's income level, that's 15%. So, those profits were taxed at up to 54.5%.

See the problem?

Long-term capital gains have another problem: If I buy a stock for $100.00 a share in 1992, then sell it for $180.00/share in 2012, I have a gain of $80.00, or 80%. I pay a long-term capital gain tax of 20%, leaving me only $64.00.

But, how much did I really make? I didn't look up the exact change in the CPI during that period, but if inflation was 3%/year, compounded for 20 years, then 80% of that gain is due to inflation alone. If I had sold the stock for $180.00, I really just broke even. Yet, I had to pay taxes on the $80.00 gain.

There are more considerations, but just those two examples demonstrate why investment income deserves special consideration. It's not a tax "loophole". In fact, the government is actually still getting more revenue that it "should".

8 posted on 09/24/2012 4:49:19 PM PDT by justlurking (The only remedy for a bad guy with a gun is a good WOMAN (Sgt. Kimberly Munley) with a gun)
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To: avacado
I don't know anything about shareholder taxes? Can a smart Freeper explain this tax to me and to some of the other Freepers?

He means corporate income taxes. Dividends come out of profit, after income taxes have already been assessed.

Put another way: If Acme Manufacturing pays an employee $50,000 in wages/salary/benefits, that's an expense. It is subtracted from revenue, to calculate profit.

However, if Acme Manufacturing declares a $50,000 dividend, that is not an expense. It comes out of profit, and was taxed at the corporate income rate -- up to 39.6%.

9 posted on 09/24/2012 4:52:49 PM PDT by justlurking (The only remedy for a bad guy with a gun is a good WOMAN (Sgt. Kimberly Munley) with a gun)
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To: avacado
It comes out of profit, and was taxed at the corporate income rate -- up to 39.6%.

I forgot to add: and then the dividend distribution is taxed at up to a 15% rate on the individual shareholder's return.

10 posted on 09/24/2012 4:54:17 PM PDT by justlurking (The only remedy for a bad guy with a gun is a good WOMAN (Sgt. Kimberly Munley) with a gun)
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To: avacado

Regular corporations are taxed on their profits as I explained above and then any dividends that they pay (usually based on profits) are taxed again on the shareholders tax return.

There is a special type of corporation called a S- corp that the profits are not taxed and are all passed through and taxed on the shareholders return. These are usually small family owned businesses.


11 posted on 09/24/2012 4:54:33 PM PDT by Okieshooter
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To: avacado

Regular corporations are taxed on their profits as I explained above and then any dividends that they pay (usually based on profits) are taxed again on the shareholders tax return.

There is a special type of corporation called a S- corp that the profits are not taxed and are all passed through and taxed on the shareholders return. These are usually small family owned businesses.


12 posted on 09/24/2012 4:54:37 PM PDT by Okieshooter
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To: justlurking

Or to put it another way — Saying Romney paid 14% in taxes, would be like taking your “after-tax” income and asking how much of THAT do you pay in taxes. Which would be zero for most of us.

Also, most people don’t pay 14% in income taxes. The media and the democrats keep comparing Romney’s total percentage, and comparing it to the marginal rate for the average person.

If I look at my gross income, I pay about 9% in tax, once I get to take all my deductions.

Lastly, it is absurd to include in someone’s “income” the money they gave away to charity. That’s why we let people deduct charity.

You might as well ask why people don’t pay taxes on the time they volunteer. As an analogy. Two people. The first goes to a soup kitchen, and works 40 hours for free, at a job that fair market value might put at $10 an hour; they don’t pay tax on that $400.

Another person works at a normal job, and then donates $400 to the soup kitchen so they can pay someone to cook. They essentially donated the labor that earned that $400. Why should they pay tax on it?

If you eliminate the money Romney gave away from his “earnings”, his tax rate is much higher.

Some even claim you should add his charity to his taxes, but I wouldn’t go that far.


13 posted on 09/24/2012 4:56:46 PM PDT by CharlesWayneCT
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To: Aevery_Freeman

>>>Apparently, they didn’t teach this in Kenya or Indonesia.<<<

Hell, they haven’t taught it in America in years, not in public schools anyway, up to and including the universities.


14 posted on 09/24/2012 5:05:51 PM PDT by Fightin Whitey
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To: griswold3

They aren’t zero summers. They own the printing presses and are have them working overtime.


15 posted on 09/24/2012 5:17:42 PM PDT by Blood of Tyrants (Never believe anything in politics until it has been officially denied.)
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To: muawiyah
Important to note that most land and structures are taxed yearly.

The total percentage each year will be small, but if you hold property for ten years, then sell it for a profit, you must compound the yearly tax payments out ten years, also.

Also important to note that purchasing stock shares in a corporation means you have purchased a “share” of future profits, and nothing else.

If the price of a stock moves up, that means investors believe the profit of that company will move up.

Since corporate profits are clearly taxed, at the state, local, and federal level, that means capital gains on your stock have been taxed BEFORE they get to your bank, and will be taxed AGAIN after they get to your bank.

16 posted on 09/24/2012 5:43:36 PM PDT by zeestephen
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To: justlurking

Lurk,

Long term cap gains on stocks are DIRECTLY related to profits.

A “share” of stock is not a share of ownership in a company.

It is a contract to “share” in the profits of that company.

Since corporate profits are clearly taxed, capital gains are clearly taxed BEFORE they get to the person who sold the stock.


17 posted on 09/24/2012 5:58:42 PM PDT by zeestephen
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To: zeestephen

Yes, I know that capital gains are also taxed at the corporate level. But, that’s a more abstract concept to explain.

I use the two examples I posted, because most people with at least a high school application can grasp it. It’s not difficult to understand what profit is, and relate that to dividends. And almost everyone understands how inflation reduces the value of a dollar over time.


18 posted on 09/24/2012 6:06:59 PM PDT by justlurking (The only remedy for a bad guy with a gun is a good WOMAN (Sgt. Kimberly Munley) with a gun)
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To: zeestephen

Remember, though, that when you buy that stock you bought it in expectation of making some money somehow. Not one dime of those future earnings will affect your future taxes at time of sale.


19 posted on 09/24/2012 6:16:14 PM PDT by muawiyah
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To: CharlesWayneCT

Wayne, just tax me on my profits and that will be OK


20 posted on 09/24/2012 6:18:47 PM PDT by muawiyah
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To: aflaak

Ping


21 posted on 09/24/2012 8:55:40 PM PDT by r-q-tek86 ("It doesn't matter how smart you are if you don't stop and think" - Dr. Sowell)
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To: justlurking

Yes, you make a good point.

The link between cap gains and profits, in my experience, is not something that is widely understood.

When presented with an opportunity, I can never stop myself from delivering a little lecture on it.


22 posted on 09/24/2012 10:28:28 PM PDT by zeestephen
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