Why Mitt Romney’s Taxes Matter
August 9, 2012

 
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Who's Paying for that Deficit?A few weeks ago, I wrote: “Possible Reasons Romney Is Suppressing His Tax Returns”, listing a number of things we could possibly learn should he ever decide to release them. But I didn’t discuss if any of those reasons were important when it came to choosing a president. Consider this “Part-II” of that review. I had an interesting conversation the other day. An old friend with Right-Wing tendencies was wondering, “What’s the big deal over Mitt Romney’s taxes? I hate the IRS, and if I could cheat on my taxes, I would do it in a second!” Illegality aside, why does it matter how much/little the GOP nominee for president paid in taxes… if he paid anything at all? Isn’t that what we all aspire to? Paying as little in taxes as possible? Well, there are a number of very important reasons why Governor Romney’s taxes are important… more so in this election than any other. With an exploding National Debt and Trillion dollar deficit, crumbling American infrastructure, and a nation stuck in a costly decade-long war in Afghanistan, not to mention a growing concentration of wealth that hasn’t been seen since The Great Depression, the fact we DON’T know if the GOP’s nominee for President is “paying his fair share”, or worse… engaged in illegal activity to drop his tax rate… Romney’s tax returns matter a great deal at a time struggling Americans are being told the answer to their problems is to elect a man that would give even larger tax breaks to the extremely wealthy. FACT: America’s 10 Largest Corporations Paid 9 Percent Average Tax Rate Last Year (2011).

 

The new Patriotism

Over the past week, Senate Majority Leader Harry Reid has been claiming that a source he trusts told him that there was a ten year period where Romney paid “NO [Federal Income] taxes!” And while the Romney campaign has indignantly denied it, the one thing they could quickly & easily do to discredit Reid and prove him “dead wrong”… release the governor’s taxes… they have steadfastly refused to do. Why? The one person that HAS seen Romney’s taxes, John McCain, who is now a Romney campaign surrogate and whom Romney turned over 23 years worth of taxes to be considered for the VP spot in 2008, rather than confirm or deny Reid’s accusation, instead accused Reid of going “over the line” for publicly accusing Romney “without proof”, and criticized him for not “revealing his sources”. He did NOT call Reid a “liar”, but instead accused Reid WITHOUT PROOF of making an accusation “without proof”:
 

During his 2004 reelection campaign, President Bush criticized John Kerry’s call to end the budget-busting tax cuts for the Rich. Bush ridiculed the idea of raising taxes on “the Rich” by pointing out that “the Rich have lawyers and accountants” to get out of paying taxes, so if you raise taxes on them, you’d actually be raising taxes on yourselves. Yes, President Bush admitted that the Rich were ALREADY not paying their taxes. So why then did they need a “tax cut”? And when THEY don’t pay their taxes, who does the burden fall upon? One would think we would WANT the wealthy to pay their fair share in taxes to relieve the burden on the Middle Class. “But we’re not going to let him!”, proclaimed the President, and the crowd cheered:
 

“You’re paying the Rich’s taxes for them.” Yeaaaaaaaa!
Bush in 2004 at campaign stops in Baltimore & Reno
(Audio only. Composite. 26 seconds)

Oliver Wendell Holmes (Chief Justice of the Supreme Court from 1902-1932) famously said, “Taxes are the price we pay for a civilized society.” Your taxes go to pay for all those government services you depend upon that private corporations just can’t do. Roads & bridges, police, national defense, FEMA, education, and the whole alphabet-soup of government agencies: SEC/FAA/FBI/CIA/etc. These all cost money, and when you cut taxes for one group of people, the burden falls upon everyone else. President Obama pointed out recently that an independent analysis of Governor Romney’s plan to cut taxes across the board by 20% and pay for it by “eliminating tax loopholes” would actually INCREASE taxes on the average American family by $2,000 a year. Why? Because the bulk of those “tax loopholes” are claimed by the Middle Class, not the Rich (home mortgage deductions, et al). So while the wealthy get their tax cut, you pay for it with the loss of your tax deductions.

Republicans think the “solution” to cutting taxes is to Privatize most of these services. While that might reduce your tax burden, the cost of all those now privatized necessary services would skyrocket (not to get into a debate over “Privatization”, I’ll simply say, “If you think four years of college is expensive, try 12 years of private schooling.) I’ve had my share of debates with furious Right-Wingers complaining about how THEY are supporting all the “lazy freeloaders on Welfare”. It “chaps their hide” to think of all “those people” (ie: “poor blacks” & “illegal immigrants”) that refuse to work that “they’re supporting” (Note: “illegal” aliens are not eligible for Food Stamps or Public Assistance.) Actually, the biggest “Welfare” recipients in this nation are the Rich. Welfare for the Poor doesn’t come close to “Corporate Welfare”. For everything the poor receive, the Rich receive 100x more. “Food stamps”? “Farm subsidies”. “Home heating oil assistance”? “$2-Billion/year in Oil subsidies”. In addition, The Rich use FAR more government services than The Poor. Our schools educate their workforce. Our public roads bring customers/employees to their business (I often say, “I’ve never seen a Wal*Mart at the end of a dirt road.”), and U.S. Highways transport their goods. They use our courts like crazy fighting over “patent infringement”, “trade deals”, defending themselves from “product liability” lawsuits and prosecuting the people that rob their stores. You could prosecute 10,000 petty thieves for the cost of prosecuting Bernie Maddoff, Enron or Martha Stewart. It takes more cops to protect their huge homes filed with expensive furnishings/jewelry/art and expensive cars that lure thieves, and more firefighters when their homes catch fire. Police patrol their businesses at night to protect them from thieves, and if they pay little to nothing in taxes, they’re getting all those services for free (or nearly free). Meanwhile, millions of home-owners went bankrupt after a deregulated Wall Street gambled with their mortgages and lost Trillions when the economy tanked. Who got bailed out? Hint, it wasn’t you.

As I noted Monday, Republican strategist Ed Rollins bemoaned the fact that “20% of the country pays 94% of the taxes”:
 


 

Maybe this is why:
 

20percent of American owns 80percent of the wealth

The core question then: “Did the Republican nominee for President actually engage in illegal activity to get his tax rate so low (or pay nothing at all)?” As we all know by now, Romney (supposedly) left “Bain Capital” in 1999 to run the 2002 Winter Olympics in Utah, then returned to Massachusetts in 2002 to run for governor. Problem is, Massachusetts law requires that any candidate for governor must have lived in the state for the last seven years. To qualify, Romney insisted that while he was away, he “paid BOTH Utah AND Massachusetts state taxes” and was therefore an uninterrupted resident of Massachusetts. But it turns out, that was a lie, and Romney was forced to “retroactively” pay his 1999 & 2000 MA state taxes as well as refund the Utah state tax credits he claimed on his Utah home, before he could become governor. So Romney has a history of lying about paying taxes. And while it may be cute for you or me to joke about “cheating the IRS”, do we REALLY want someone who might be guilty of “criminal tax evasion” as president?

My life is (not) an open book

In the column I wrote a few weeks ago, I was able to list ten things that Romney would find “uncomfortable” to try and explain in the lead-up to Election Day. The question then is just how much would voters care? I guess that depends on just what we learn.

Governor Romney… with an unimpressive record as governor of Massachusetts… is running instead on his business record as the CEO of “Bain Capital”, but is quick to disassociate himself with some of the company’s worst practices of dissolving companies, selling off the assets, raiding pension funds and dumping the liability off on American taxpayers, then putting hundreds/thousands out of work. Romney’s tax returns could reveal not only that the governor was still running Bain at the time, but actually profited off many (all?) of those business activities he has claimed he had no connection to.

Another potential problem I noted in my earlier article, the Governor might have contributed to some charities that he might find difficult or “uncomfortable” to explain. We know that… while he now claims to be a committed “Pro-Lifer” that wants to “end Planned Parenthood” (97% of what the woman’s health clinic provides are publicly funded STD/Cancer screenings and other women’s health services vs privately funded abortions)… Romney was once “Pro-Choice” (a position fostered by his mother and the loss of a relative… his brother-in-law’s 21-year old sister… to a botched back-alley abortion) and a long-time supporter of “Planned Parenthood” (attending a PPA fundraiser with his wife in 1994.) As I noted last week, Romney has been avoiding releasing his taxes since he first ran for Senator in 1994. As recently as 2002, Romney was still defending “a woman’s right to choose [abortion].” Might he have still been contributing to PPA as recently as ten years ago (or less)?

To date, Governor Romney has released only ONE tax return (2010) and an estimate for 2011 (after filing an extension that extends past Election Day.) I’ve noted repeatedly that Romney released his taxes just for the year he KNEW he’d be running for president and was able to tweak it for maximum appearances. Yet, just from the one return he was willing to show us, we already learned he paid less than even the 15% minimum tax rate placed on “Capital Gains”, has tax shelters in a half-dozen foreign countries, and anywhere from $20.7 to $101.6 million dollars in a tax-free IRA. How? Contributions to your IRA are capped at $2,000 a year, and Romney is not 5,175 years old (assuming matching corporate contributions). The Romney Campaigns’ defense is that he has a “SEP-IRA” with larger maximum annual contribution of $30,000. Assuming matching corporate donations, it should have taken him 345 years to amass that minimum estimated $20.7-Million dollars. So how did he pump so much money into his IRA is such a brief period of time? The Romney campaign isn’t saying. And even if it was done completely legally, by law he must start withdrawing that money by age 70-1/2, at which point that becomes income, taxed at the full 35% (actually, this may depend on more details than I’m prepared to go into here). Governor Romney is currently 65 years old. Tax cuts he might pass as president could directly benefit him, possibly saving him tens of millions of dollars. Just how much, no one can say without seeing his returns.
 

The concentration of wealth relative to the price of milk.
(click to enlarge)

So, in summary:

  1. Conservatives, outraged last year by the news “nearly half the country paid nothing in [Federal Income] taxes”, and suggested The Rich are supporting The Poor, will have to find a new excuse should we learn their uber-wealthy presidential nominee is one of those “freeloaders” that paid nothing in Federal Income taxes.
  2. Romney may have donated to a charity or organization that he would have trouble explaining to his supporters/Media/critics.
  3. Romney has a tax-free IRA containing tens of millions of dollars. How he achieved this the campaign won’t say. Explaining how it was done legally (IF it were done “legally”) would invite a LOT of uncomfortable questions and a far deeper probe of his finances than the Governor might want.
  4. The intense secrecy around Romney’s tax records, in and of itself, raises great concern as to just what the GOP nominee is hiding. If he’s this secretive now, what are we to expect should he become president?
  5. ADDENDUM: With the selection of Paul Ryan as Romney’s VP pick, we find that under “The Ryan Budget”, Romney’s tax rate would plummet (or “rise” depending on whether or not you believe Harry Reid) to just 0.82% (that’s not a typo), so it is important to know how Gov. Romney’s tax policies would affect him personally.
  6. ADDENDUM 2: There is a new theory making the rounds that Romney might have taken advantage of President Obama’s Tax Amnesty program for people with overseas accounts in 2009, in order to avoid prosecution.

 


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August 9, 2012 · Admin Mugsy · No Comments - Add
Posted in: Economy, Election, Infrastructure, Jobs, Money, Politics, Taxes