January 17, 2012; Source: New York Times | In Monday night’s Republican presidential debate, former Massachusetts Gov. Mitt Romney fumbled and bumbled around Texas Gov. Rick Perry’s challenge to release his tax returns to the public. After a few humina-humina moments, Romney finally described himself as “not opposed to doing that,” said he’ll “keep that open,” and was most likely “going to get asked to do that” around April of 2012. Maybe he was concerned that the public would figure out what they already know; Romney is plenty wealthy, worth between $190 and $250 million, and seems to have relatively little in common with America’s middle class despite his stated fear of getting pink-slipped on the job at the Boston Consulting Group and Bain Capital.
Despite his multimillionaire status, Romney has now revealed that his effective tax rate is approximately 15 percent. Romney explains that he really doesn’t do much in the way of income-generating work, other than giving paid speeches (at an average of $41,592 per speech from February 2010 to February 2011) and receiving royalties on his book (which he donated to charity). Most of his income comes from dividends on current investments, capital gains on mutual funds, and some post-retirement shares of the investment income of Bain Capital.
Romney’s trickle of revelations regarding his taxes provides a great service to all of the nonprofits that have been advocating for tax justice. Let’s see. . . .
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- He’s worth perhaps a quarter of a billion dollars but pays taxes at a lower rate than most NPQ Newswire readers. It’s a good argument for a much fairer tax structure that involves higher rates for the wealthy.
- He gets to pay a 15 percent effective tax rate because his income is mostly investment income and capital gains from mutual funds. That’s a good argument for establishing some greater equity between people who have to work for a living and those whose income comes from passive investments.
- He contorts himself to avoid revealing his income tax returns despite unrelenting pressure from Perry and former House Speaker Newt Gingrich, who thinks it is silly for presidential candidates to hide their tax returns. He is helping make the argument for more transparency in our political system.
So—what is your tax rate?
Perhaps Mitt Romney’s candidacy is inadvertently making the case for big-time changes in federal tax policy.—Rick Cohen