From the Tax Foundation. Which forced me to edit my Indy post, Tax Returns Confirm Mitt Romney Is America’s Richest Unemployed Person, to hedge on the number of people who pay lower rates than Romney. Could also have been stronger in making the point that Mitt’s proposed policy of further tax cuts for people like him matters much more than how much money he personally has stashed away in the Caymans.
Yo, this is totally a good thing to know, but it seems to be using that old sleight of hand where “taxes” and “federal income taxes” are supposed to be the same thing. I’m going to assume an understandable desire for simplicity from the Tax Foundation, about which I know little, though it describes itself as nonpartisan. The post Ilya links to is generally pretty good about clarifying that it’s talking about income tax, but it gets sloppy in the conclusion:
Which gets us back to Mitt Romney’s effective tax rate of 14 percent, after deductions. As the chart shows, this rate is still higher than the average rate paid by taxpayers earning up to $200,000. There are about 136 million taxpayers who have adjusted gross incomes less than $200,000, or 97 percent of all taxpayers. So even with an average tax rate of 14 percent, Romney paid a higher average rate than 97 percent of his fellow Americans.
I assume they meant “average rate” to be a shorthand for “average federal income tax rate.” But let’s not forget that as well as getting a sweet deal because his income arrives in the form of capital gains, Romney also sees a lower proportion of his earnings disappear in sales taxes and payroll tax.
And also, it’s worth discussing whether Romney’s capital gains earnings should be taxed at a lower rate than those rare wage earners who have done well enough for themselves to get paid $200 000 or more a year. The idea is that Romney is an investor, and the lower tax rate encourages him to keep up this economically valuable activity. There’s another school of thought that this rationale doesn’t amount to much.
