Saturday, January 21, 2012

Romney's (And Other Rich People's) Taxes

Dear Madame L,

I've heard that Republican presidential candidate Mitt Romney has reluctantly agreed to release his 2011 tax returns when they're completed but doesn't want to release his tax information from past years.

I'm guessing that's because he doesn't want to have people know how rich he is, how well he has sheltered his wealth from being taxed, and especially how low his taxes are compared to the taxes paid by the 99 percent.

Could you please comment on this?

Sincerely,

More Taxed Than Romney


Dear More Taxed,

Madame L sympathizes with you. Most everyone in this country pays a higher tax rate than Mitt Romney and other wealthy people, and there are reasons for that:

---Rich people have tax lawyers and accountants and lobbyists, and their contributions to politicians ensure that said politicians will grant pretty much any and every favor requested by said reach people ---

---Including ensuring that they have not just loopholes but nooks and crannies and extensive underground caverns in which to hide their money from the IRS.

---Also, rich people mostly don't work for their money, which comes from investments, and so

---Thanks to those same politicians, they don't pay as high a rate for that income.

On the other hand, you and Madame L and everyone we know personally* work for a living, which the rich people believe is not as worthy a way to earn a living. Therefore we give more of our hard-earned money to the government.

(*Full disclosure: Madame L knows several people who know and admire Mitt Romney.  Madame L is confident that Romney the person is indeed a fine and charming and upstanding individual, though that does not make Madame L believe he would make a good president of Madame L's country.)
Does this seem fair to you? No? Why is Madame L not surprised? It doesn't seem fair to anyone you and Madame L know personally. But it seems fair to the politicians, who are expecting a future as wealthy as that of their rich donors, and so it continues.

There IS something you can do about it: Pester and hound your elected representatives, asking them to represent you by lowering your tax rate while raising the taxes of the 1 percent.



For some talking points for your email message, letter, or phone call, you may want to read today's New York Times column by Nobel-Prize-winning economist Paul Krugman. 

Krugman points out that, "Back in 1986, Ronald Reagan — yes, Ronald Reagan — signed a tax reform equalizing top rates on earned income and capital gains at 28 percent. The rate rose further, to more than 29 percent, during Bill Clinton’s first term....

"And today’s ultralow rates — the lowest since the days of Herbert Hoover — date only from 2003, when former President George W. Bush rammed both a tax cut on capital gains and a tax cut on dividends through Congress, something he achieved by exploiting the illusion of triumph in Iraq.

"Correspondingly, the low-tax status of the very rich is also a recent development. During Mr. Clinton’s first term, the top 400 taxpayers paid close to 30 percent of their income in federal taxes, and even after his tax deal they paid substantially more than they have since the 2003 cut."

Surprised? Madame L is not surprised.  Krugman goes on to explain the reasons given for low tax rates for the very rich, but concludes, "At a time when all the self-proclaimed serious people are telling us that the poor and the middle class must suffer in the name of fiscal probity, such low taxes on the very rich are indefensible."

The wealthy 1 percent used to pay taxes on their capital gains at something close to the 30% tax rate most of the rest of us still pay. Let's go back to that! 

This isn't class warfare. It's about fairness.

And that is the point Madame L is making in email messages and phone calls to her Representative and Senators in Washington, D.C., and the point Madame L hopes YOU,  Dear Gentle and Overtaxed Readers, will also make.

Best,

Madame L


1 comment:

Jeff said...

Two things:

1) Krugman is a Nobel Laureate in Economics - so he knows what he is talking about. He is not a self-anointed "expert" like Suze Orman or Karl Rove.

2) Lowering "Capital Gains" taxes is equated by some people as essential to "grow our economy." The inarguable history that Krugman provides shows that leaving more tax money in the hands of the 1% does NOT create jobs. One of the 1%, Warren Buffet, is honest enough to actually pay for newspaper space to tell that to the American people.

Buffet and Krugman agree very closely. Why, then, would you trust a politician who is funded almost exclusively by corporations and the 1% to make laws for them?

~~~~~