When talking about fairness in taxes, it is very easy to get lost in the rhetoric. The top 1% pay X% of total income taxes; the bottom 50% pay nothing. Yeah but . . . and the counter argument is more complex, as can be seen from my other posts on this matter. And even I get a headache.
Let’s put the issue of fairness and taxes into a concrete form by comparing the Romney tax return for 2010 with a fairly typical married couple with no kids because the Romney’s have no children as deductions on their tax return.
A summary of both tax returns is below.
The first thing to note is that the Romney’s have no wages or salaries.
The second issue is that of self employment/social security taxes. The amount I used for the typical married couple was both sides— the employee and employer—because without the employment of the couple, the employer would not have made the payment.
It is easy to see that the typical married couple pays more as a percentage of their income.
In this real-life example, the Romney’s made about 281 times the typical married couple. Another way of saying this is that the Romney’s made as much in a little over a day what the other couple made in a year.
As far as taxes go, the Romney’s paid 181 times the amount of tax as the other couple. Had the Romney’s paid tax at the same rate, their total tax bill would have gone from roughly $3 million to about $4.7 million.
If Gingrich had his way, capital gains would be completely tax-free. Romney responded that if this were the case, he would have paid basically no taxes at all and Gingrich was fine with that.
Don’t get me wrong, I do not begrudge the Romney’s their success. The country is, in theory, set up to allow people to be successful. Also, I have worked with Bain Capital types and know the difficulty of their work and know I could not do it for a prolonged period of time.
But it is getting harder and harder to move from one income class to another. About 2/3 of Americans born into poverty never get beyond the lower middle class and about 2/3 of those born rich stay rich their entire lives. IN fact, upward mobility is greater in most European counties now than here, as blasphemous as that may sound to the died-in-the-wool right wing.
Is this the way it should be? I guess that is what the debate is all about. The right wing says this is the most important election in the history of the country. I agree, but then I think each one is more important than the last one.
Try to remember this example when the rhetoric starts. It is concrete and real.