12 Responses

  1. marmico says:

    Romney’s top 0.1% peers paid an effective income tax rate of 20.4%. Shouldn’t that be the comparative metric?

    So did Romney in 1995 gift $100 million of “carried interest” at zero cost base to the Mitt and Ann Romney Family Trust thereby avoiding gift tax at a rate of 55% on $99.4 million?

    If so, another sweet deal for the poster child of the Buffett rule.

    • Alex says:

      So, you ask a very damning question, not knowing if it is true or not, then drive the stake in the heart by saying it might have been a sweet deal? Can we assume you are a partisan DEM?

      • marmico says:

        Assume whatever you wish.

        The $100 million Romney Trust for his sons is a fact as of 01/01/2012. It’s in the same category as his alleged $100 million IRA.

        Can we assume that you are a quart shy of a full oil change?

        Imagine all the people; Jimmy P wants to compare Romney’s effective tax rate to your gorgeous 87 year old granny collecting her $1,200 month social security check or your handsome 19 year old grandson making 8 bucks an hour at Sonic Burger during the summer semester. Or even Jimmy P hopping from Reuters to AEI with a gap in pay.

        Compare Romney’s effective tax rate to his “0.1% peers”. Okay.

        Now I don’t know whether it is true or not whether Romney took up the IRS amnesty program for unreported offshore accounts or not. He has/had plenty of same in multiple jurisdictions. Now that would be a damning assumption without a factual basis.

        • juandos says:

          So marmico with nothing but class warfare as his raison d’etre (loser!) offers up rumors instead…

          The real question is IMHO, why is Romney having to pay more in taxes (dollar amount then someone making $15 or $20K per year?

          Progressive taxation = punishment for success

  2. SeattleSam says:

    He had $4MM in charitable deductions. If he had a more sensible level of charitable giving — say the pittances that Joe Biden showed on most of his tax returns — his effective rate would have been higher. What a sneaky tax cheat he is.
    I say anybody who does what Congress incents them to do via the tax law ought to be pilloried.

    • Alex says:

      I get achuckle at the mock outrage of some DEMs who attack Mitt for paying more federal income tax than he had to, and giving too much to charity. This from the same cheap crowd that wants to use your tax dollars to fund the personal causes that they support. LOL!

      • Max Planck says:

        I get a “chuckle” out of the spectale of a candidate who DELIBERATELY didn’t use the tax deductions he was entitled to under the law, FOR APPEARANCE’S SAKE.

        Which as about as an allegory of Mitt’s campaign as we’re likely to get.

        Why are we subsidzing the Mormon church, anyway?

  3. marmico says:

    So marmico with nothing but class warfare as his raison d’etre (loser!) offers up rumors instead…

    You are dense. You don’t even know the simple difference between a poll tax and a flat tax let alone a rumour or a fact, flygirl.

    Alex’s granny paid property tax on the first of the month and his grandson paid sales tax on his I-Phone 5 last week.

    Dependent on the business cycle, federal income (you don’t impress me with html, flygirl) taxes are 20-25% of total taxes.

    The only class warfare is picking hemorrhoids on your left or right cheek. :-)

    • juandos says:

      Well marmico I know you are used to being wrong and your assumption about what I know is of course equally silly…

      Dependent on the business cycle, federal income (you don’t impress me with html, flygirl) taxes are 20-25% of total taxes>/i>”…

      On what planet?

      The fact that you don’t or won’t understand that the so called flat tax is still progressive tells me everything I need to know about your knowledge of both government and economics…

  4. Michael P. Stein says:

    The Brill and Viard example is, to put it mildly, suspect. The amount of time it takes to reach that $200 is a far more important factor in determining behavior than the annual haircut imposed by the tax system. Different people have different consumption time preferences. This is reflected in the market interest rate, and affects both savers and borrowers. At (say) 5% real (i.e., inflation-adjusted, post-tax) interest, Patient may be willing to wait four years to save enough to buy a car for cash, while Impatient may be willing to pay 12% to get that shiny new car right away. Yet even Patient may decide to take out a loan if the real interest rate is only 1%.

    Returning to the Brill and Viard example, at a 6% after-tax real interest rate, Patient needs 12 years to reach $200 in constant dollars. At 3%, Patient needs twice as long. At 1% (higher than most savings accounts pay nowadays), Patient needs 72 years to reach that $200. A 30-year-old Patient is unlikely to live long enough to reach the $200 goal in the last case, and may well decide to spend the money now _if_ the current net real rate of return is the only thing that determines whether Patient will save or invest – a rather dubious proposition, as I shall explain later.

    An income tax shifts savings vs. consumption preferences only to the extent that it reduces the real net rate of return – something that is dependent in part on the tax rate, but far more on the market rate of return. Because people are not immortal, the correct way to compute the tax differential is on the average annual rate of return, not on an infinite time horizon. For simplicity’s sake, let’s assume a 1% nominal interest rate with zero inflation. At the end of year two, with a 20% tax rate, Impatient has enjoyed $80 of consumption, while Patient has the option to consume $80.64. In the world with a 20% consumption tax rather than a 20% income tax, Patient accumulates $101, and can consume $80.80. The sixteen cent differential is only 0.2%. At an interest rate of 5%, the differential is $83.60 vs. $84.00, or 0.5% per year. At an interest rate of 100% per annum, the differential is indeed 28% – but I don’t believe that Mafia loan sharks pay taxes, so their investment behavior isn’t affected anyway.

    Note also that to the extent that interest paid is tax-deductible to the borrower (i.e., the mortgage market), the increase in loan demand due to the lower post-tax interest rate paid by the borrower will tend to offset any shift in the supply curve caused by the lowering of the effective interest rate received by the lender.

    But does a low, zero, or even negative real rate of return really cause significantly more money to be spent now? Historical experience gives reason to question how strong the shift in behavior is. People kept money in savings accounts even during the Carter years, when high inflation meant that interest rates were negative after taxes. When investment managers think the stock market is going to fall, they shift money into lower-yielding but less risky investments, such as Treasury bonds. Yet the wealthy don’t seem to pull their money out and go on a spending spree when they see their returns have fallen due to market forces.

    Much of this, of course, is due to the fact that they expect the situation to be temporary – that returns will improve in the future. But there are other reasons people refrain from consumption besides a rate-of-return-based preference. People saving for retirement may actually increase their savings when returns are low. Wealthy people don’t all seem to go on spending sprees in their old age. For one thing, they want to provide for their families. But even rich people without heirs don’t all liquidate their investments and go out in an orgy of consumption. Many seem to wish to leave some sort of lasting legacy after their death, and leave bequests to colleges and cultural organizations, or create a charitable foundation.

    If I were able to enact a policy change to stop penalizing savings, I would index returns for inflation and taxing the real return rather than the nominal. Inflation currently multiplies the effect of taxes. E.g., a 33% tax rate on a 3% gain at no inflation is a 2% net real gain, while a 33% tax rate on a 9% gain at 6% inflation is, in constant-dollar terms, equivalent to stuffing the money in the mattress.

  5. jacktin says:

    So he’s one of the top 0.1% of americans paying top 20% rate… sounds very fair. he pays as much as someone earning 120k. good for him.

  6. Newsericks says:

    Mitt did NOT pay a tax rate of 14.1% in 2011 as reported, since that calculated effective rate included a deliberate overpayment that he could have (and probably did) file an amended return to get back the day after the election. Subtracting that overpayment changes his rate to somewhere in the 9-11% range. Or, the deliberate overpayment could’ve been a placeholder to avoid penalties if he’s deliberately under-reporting his income. (Read http://newsericks.com/Double-Donation-Deduction-Dodge/ and http://newsericks.com/The-Real-Romneys-Taxes/ for more.)

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