Posted by AzBlueMeanie:
What the … When John McCain was vetting Mitt Romney for vice president, Romney turned over 23 years of tax returns. This year the American people are vetting Romney for president, and Romney has turned over one full year of his taxes. Ezra Klein writes, If Romney is nominated, 2012 will be about taxes – Wonkblog:
So let’s be clear: Romney hasn’t released his “taxes.” He has released a single tax return from a year in which he was already running for president for a second time. As Gov. George Romney — Mitt Romney’s father— said when he released 12 years of his taxes in 1968, “One year could be a fluke, perhaps done for show.” We don’t know all that much more about the taxes Romney has paid today than we did yesterday.
But even if this one year is a fluke, even if it was done just for show, the outline of the story is clear enough: Romney is a very rich man who pays a very low marginal tax rate. In the past, it’s possible that more agressive tax engineering drove his rate even lower. It’s possible that more use was made of loopholes, and offshore accounts, and tax shelters. But even without all that, we know that Romney paid an effective tax rate of 13.9 percent in 2010.
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His taxes also contextualize what he would do as president. Romney’s tax return shows that the effective rates paid by the richest Americans are often pretty low. Romney’s tax proposals would reduce those rates further. And the cost of those proposals — more than $6 trillion when all is said and done — would be offset through cuts to domestic programs. Romney is saying, in effect, that people like him should pay less to finance the government, and low-income Americans and seniors — the two groups that depend on government programs — should be asked to cut back instead. Many Americans are likely to see that as unfair.
Steve Benen points out that Romney's 2010 tax return raises more questions than it answers. Political Animal – What we’ve learned from Romney’s returns:
Mitt Romney’s campaign, as promised, released the former governor’s 2010 tax returns, as well as an estimate for his 2011 returns, and we’re starting to get a sense of why the Republican candidate wasn’t eager to share these details.
Mitt Romney offered a partial snapshot of his vast personal fortune late Monday, disclosing income of $21.7 million in 2010 and $20.9 million last year — virtually all of it profits, dividends or interest from investments.
None came from wages, the primary source of income for most Americans. Instead, Romney and his wife, Ann, collected millions in capital gains from a profusion of investments, as well as stock dividends and interest payments.
By any fair estimate, over $42 million in income over two years isn’t bad for a guy who jokes about being “unemployed.” Indeed, Romney would be in the top 1% based solely on the income he makes in one week. [He makes in one day what the average wage earner makes in one year.]
Romney said last week that his rate was “closer to 15%,” but as it turns out, despite his vast wealth, he actually only paid a 13.9% rate last year — lower than his political rivals who aren’t nearly as wealthy, and lower than most middle-class American workers.
And what about those overseas investments?
His 2010 return also showed that he had a financial account in Switzerland that was closed in 2010 and that he generated income from overseas investments. He also reported financial accounts in Bermuda and the Cayman Islands.
A Reuters report added that Romney’s Swiss bank account was closed in 2010 “after an investment adviser decided it could be politically embarrassing to Romney.”
I suspect those with far more expertise in this area will subject these materials to considerable scrutiny, but at first blush, the disclosure appears to raise at least as many questions as it answers.
Why [how] did Romney set up $100 million trust funds for his sons without paying any gift taxes? Were his accounts in the Caymans and in Switzerland created to avoid paying taxes? Was the closing of the Swiss account related to this IRS investigation? And given all of the questions surrounding Romney’s Bain-era work, why does the Republican candidate continue to insist he won’t disclose returns from previous years? [As he did for the McCain campaign in 2008.]
What’s more, following up on a point from last week, even if Romney argues that he’s simply playing by the rules — taking advantage of existing tax loopholes to pay lower rates than much of the middle class — this doesn’t explain why Romney is eager to exacerbate issues on tax fairness with his tax plan that makes the problem worse.
In a debate over tax fairness and income inequality, Romney is practically a case study for What’s Gone Wrong… Romney, however, prefers to believe the problem doesn’t exist.
To be fair, it turns out that Newt Gingrich has some questions about his taxes as well. Daily Kos: Newt Gingrich avoided paying tens of thousands in Medicare taxes:
Turns out that Mitt Romney isn't the only Republican presidential candidate to exploit tax loopholes and pay far less than a wealthy patriot should. Seems that Newt Gingrich is a bit of a tax dodger, too.
Newt Gingrich avoided tens of thousands of dollars in Medicare payroll taxes in 2010 by using a technique the Internal Revenue Service has consistently and successfully attacked. Republican Presidential candidate Gingrich and his wife, Callista, treated only $444,327 of what they got from Gingrich Holdings. Inc. and Gingrich Productions as compensation to them, while reporting a whopping $2.4 million of their earnings from these corporations as profits or dividends. Medicare taxes are levied at a rate of 2.9% on an unlimited amount of compensation and self-employment income (say, from a consulting contract, speeches or a book) but not on profits from a business.
“It appears that he is not paying his fair share of Medicare tax,’’ Robert E. McKenzie, a partner in the Chicago law firm of Arnstein & Lehr LLPconcluded, in an email to Forbes, after reviewing Gingrich’s 2010 tax return. McKenzie, a past chairman of the Employment Tax Committee of the American Bar Association Tax Section and a member of the IRS’ Advisory Council, added: “There are a multitude of cases where the IRS has successfully challenged the improper tax strategy of this candidate and his accountants. Service businesses are only allowed to distribute a fair return on investment from an S corp. as profits exempt from Medicare taxes. The remainder of profits must be paid as salary subject to a 2.9% Medicare tax levy.”
Instead of "audit the Fed" we may want to first audit the candidates.