COMMENTARY | Much has been made at the past few Republican debates about the tax rates paid by each of the candidates. It was shown that Mitt Romney made $42.7 million and paid $6.2 million in taxes over the past two years combined. This makes Romney’s effective tax rate 14 percent. There has been much contention over this issue, as a number Romney’s of complaints about the current ruling party, pertain to high taxes.
Romney might sound like a bit of a hypocrite by complaining about high taxes, yet paying relatively low ones, considering his income. One thing that is forgotten in all of the hoopla is that roughly 80 percent of Americans pay at or below that 15 percent threshold that Romney is in. Romney pays a lower tax rate because most of his income per year comes from capital gains garnered from his wide investment portfolio. Romney doesn’t make a large yearly salary, which would be taxed at the 35 percent threshold. The money that he makes from his investments is taxed at 15 percent, per national tax law.
Romney also makes significant contributions to charity every year, which increases his potential tax deductions. On his 2010 return, it was stated that 14 percent of Romney’s income, $3 million, went to charity.
What this essentially means is that although Romney doesn’t pay at the CEO level of taxation, he isn’t breaking the law in any way and his general tax complaints are still valid. Despite being a wealthy American, Romney has his right to pay at the appropriate tax level. Since most of his income is derived from his success as a savvy investor, it’s not right to penalize him for being good at making money.
With Romney’s potential tax breaks in place, he would pay lower taxes, but so would the remainder of the Americans. It seems almost hypocritical for Romney’s opposition to a take such a stand, when he is a “man of the people” at least, when it comes to average tax rate.
Taxes are a big issue in this Republican primary, but they shouldn’t be the make or break for any candidate.
Source: Jeanne Sahadi, Romney made $42.7 million in 2 years, CNNMoney.com