How Likely Is It That Romney Paid No Taxes (for a period of ten years)?

[Bill USA]

... it seems odd that given how 'sweet' it would be to Republicans to make Reid look bad, that Romney still refuses to turn over his tax returns for the last 10 years. You have to wonder, is there a year or two ..or three where he paid virtually no taxes (like say $10,000 while making over a million which would be 1%, virtually nothing)? And it might be that what he paid, over the ten years, was not actually zero but something more like virtually zero. Thus, technically Reid would be wrong (or his caller would be wrong) but for all practical purposes he would be right.


This article ends with a tax expert saying that using the "Adjusted Gross Income" on the IRS tax forms as a measure of his actual income is not really a that good of a measure. If you used a more realistic measure like comparing what he paid in taxes to how much his net worth grew, you would get a more realistic figure of what his tax rate in reality is. ... and that rate could be lower than the 14% quoted for one year (2010?).

http://tpmdc.talkingpointsmemo.com/2012/08/how-likely-is-it-that-romney-paid-no-taxes.php?ref=fpb

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For Kleinbard, all of this points to the problem with the standard measure of one’s effective federal tax rate — typically taxes paid divided by adjusted gross income. That measure doesn’t account for wealth accumulation or strategies wealthy people use to effectively reduce their own denominator.

“For people with lots of money, AGI actually understates their economic income,” Kleinbard says.

In other words, if the taxes Romney has paid were weighed against a broader measure of the growth of his fortune, his effective tax rate over the years would be much, much lower.

[The Velveteen Ocelot]

1. Note how Mittens parsed his words when he said

that over the years he has "paid a lot of taxes." What he didn't say is that he paid a lot of federal income taxes. Considering the lavish properties he owns, he certainly paid quite a lot in real estate tax, and possibly state and local taxes, as well as sales and other sorts of taxes. So he was not lying when he said he paid a lot of taxes. But he was slippery as hell -- if he really had paid a lot of federal income tax, which is the whole issue here, why didn't he say so?

[Bill USA]

2. very good point!

He's so good at messaging his message I call him the "Synthetic man". You can never know who the real Rmoney is.


Of course, I think the top 1% (who are running for public office) have worked on these obfuscating responses to questions for a long time - and practiced them!

[Igel]

3. But you don't want to use "net worth" for this.

I mean, it feels good, but it's misguided.

Take 2008. Huge drop in the stock market. My parents' net worth decreased by more than their gross income that year. But they still paid taxes because they didn't take the capital loss.

They'd be shown as having a negative tax rate. Usually that means "getting money back".

The following year, the market largely recovered. Suddenly--with pretty much unchanged income--they'd have a large wealth increase and still pay the same taxes. Their effective tax rate is fairly low.

In year three, market stabilized, stil with stable income, their effective tax rate increases.

Same income. Same standard of living. Negative tax rate, really low tax rate, moderate tax rate. The only thing that changes is how we count paper. The strategy proposed counts paper gains and losses as something real. It may affect attitude, but the gains or losses aren't real until they're cashed out. Then they're income (or deductions against income) and are taxable.

Still, this is better than just looking at net worth in isolation.

[Bill USA]

4. Most investors change holdings over a ten year period so Romney at some point would have

some gains (as well as losses) but my guess is he's been getting more gains than losses.

Of course losses are not ALL bad. You liquidate your losses to balance out Cap Gains so you lower your taxes in that year. Keep doing that over, say, a ten year period and you can have a growing net worth (whenever you take your reading, but generally this is better done over a period of more than one year and then compute an annualized net gain) and yet manage to pay a lower tax rate thanks to strategic timing of cashing out for a loss on your 'turds'.

[cbrer]

5. I don't know, but

Wouldn't it be nice to be dealing with facts, rather than suppositions?

Fact- This man is hiding something

[Recoverin_Republican]

6. you know, Reid would hardly assert something he wasn't very confident in. That would be like

handing the Repubs a club which they could pull out and cheerfully beat him with whenever they wanted to in the future. I just don't think Reid would put himself in that position. He must have felt very confident the person who told him about Romney's taxes knew exactly what he was talking about.