by Jon Melegrito | January 19, 2012
Mitt Romney (photo by Gage Skidmore)
Why aren’t we surprised?
Businessman and GOP Presidential candidate Mitt Romney just confirmed what we’ve known all along. The gap between the rich and the rest of the country is widening dramatically because of mega-millionaires, like the man from Bain Capital, who pay lower overall tax rates than middle-class Americans.
Bowing to growing pressure to release his tax returns, Romney said Tuesday that his effective tax rate was “probably closer to the 15 percent rate than anything.” This is far below the country’s top marginal tax rate of 35 percent paid by millions of struggling Americans.
His admission that his fortune, estimated at $250 million, comes from mostly investment income – which is taxable at lower rates than ordinary income – also validates what the 99% in this country have been saying all along: The economic system is rigged to favor the top 1 percent of U.S. earners by giving them tax advantages that allow them to reap huge benefits. See the recent report by the nonpartisan Congressional Research Service, which shows that investment income was the biggest contributor to an increase in income inequality between 1996 and 2006. In fact, Romney takes advantage of a tiny loophole that likely allows all of his income – including compensation for work – to be taxed as capital gains.
So, how does this all square with Romney’s vaunted claims that he is “concerned about the poor in this country,” that he wants to “make sure the safety net is strong and able to help those who can’t help themselves?” On the campaign trail, Romney has touted a tax plan that would continue the Bush tax cuts for the wealthiest Americans and provide extra tax breaks that would primarily help the rich. At the same time, he’s all for cutting Medicaid spending, reducing food stamps and doing away with safety net programs that would help low-income families. As Washington Post columnist Ruth Marcus points out, “Romney would spend hundreds of billions for a tax cut whose benefits flow overwhelmingly to the wealthiest of Americans, even as he would cut even more from programs that help the most vulnerable.”
Interestingly, Romney characterized as “not very much” the $374,327 he reported earning in speaking fees last year, which alone would put Romney in the top 1 percent of income earners nationwide. He may not admit it, but we think his 15 percent tax rate is not very much either.