Put presidential candidate Mitt Romney’s taxes in perspective. Mr. Romney is wealthy, intelligent, industrious and business savvy. Traits I want in anyone running a business and they are also the traits we need in the White House.
He is smart to take advantage of the IRS Tax Code. Guess what — every federal income tax filer does. Don’t give the inane argument, “He did not pay his fair share.” He paid all he is required by law, and Congress passed all the laws that allow the deductions, allowances and exemptions (a loss of $1.1 trillion tax revenue in 2010). To NOT take tax breaks and ferret out those we are eligible for would be insane.
His reporting that he paid at least 13 percent per year for the past 10 years is a prime example of good fiscal management. If only everyone in the U.S. had paid 13.9 percent, our federal deficit would be much less. The average tax rate for the bottom 50 percent in 2009 was 1.85 percent.
Per discloser Mr. Romney, had 2010 income of over $21 million and paid 13.9 percent taxes. Folks, that exceeds $290,000 from ONE person. No one in their right mind could argue that he received federal government services equal or greater to what he paid. Yet, according to CNN Money, 59 million filers (out of 138 million filers with positive AGI) in 2010 had earned income but paid zero taxes or got an “Earned Income and Child Credits” check! Mr. Romney paid over a quarter million dollars in taxes in 2010. That is greater than the combined amount paid by the bottom 59 million tax filers! It would take a CPA to calculate the dollar value of the government services they consumed versus taxes paid.
As for his investments, again, he is merely taking actions that give him the biggest bang for his bucks! We all do — from CDs, to Muni Bonds, to IRAs, 401Ks, offshore investments, etc. I have Municipal tax certificates that have given me as high as 20 percent return. I used the “no tax on gain on sale of personal residence” several times — resulting in over $250,000 in gains where I did not pay income or capital gains tax.
This whole fracas merely points out the miserable condition of our tax laws. What is a “fair tax”? Is it the amount one person pays, the “rate” that “everyone” pays or a rate that reimburses the taxing entity for the services consumed by the taxpayer (novel idea)? Is it “fair” to force Mr. Romney to support the government more than the combined amount of 45 percent of all tax payers?
Mr. Romney’s situation merely points out the fallacy of our federal income tax laws. We need a system whereby everyone pays federal income taxes at the same rate with NO exemptions, deductions, allowances or adjustments. If you earn a buck you pay X percent taxes. Boy could we do personal financial planning if we knew exactly where we would be come tax time!!
Jim Brown is retired from the U.S. Air Force and as a stockbroker, educator, financial administrator and real estate investor.