Being rich is awesome! – or- Maybe Harry Reid is on to something after all…
Our current tax code is a complicated affair, and our desires to make to more “fair” are even more so. What is “fair,” after all? Is it the rate you pay, or the total dollar amount? The only thing I can really say for certain is that whenever a tiny piece of reality makes itself known it never seems to fit into the neat and tidy narratives I’m told about the state of our economy.
One of the conversations we’re not having anymore thanks to the early Paul Ryan nod is “what do Mitt Romney’s tax returns really show that his people really don’t want us to see, anyway?” Harry Reid had suggested that we’d find that Mitt hadn’t paid any taxes at all, which – I must say – I had thought was ludicrous. My assumption was (and still is, in fact) that the “no-taxes” schtick was simply a ploy to bait Mitt into either releasing them, or paying a higher political price for not doing so. Low tax rates? Sure. No taxes due to no income declared? Of course. But no taxes at all even with ginormous income? That just seems a bit much to swallow.
Except according to data released by the IRS it turns out that such a thing is not only possible, it does in fact happen.
According to the New York Times, the IRS has just released the tax returns of the 400 highest income earners in 2009 – not the wealthiest or the ones whose wealth grew the most, just the ones with the highest actual declared income. The IRS has never, ever done anything like this before. To no one’s surprise, the tax rate that you and I pay is more than every single one of the 400. What is surprising, however, is how low a rate so many of them actually pay. Only 82 paid at least 30%. 89 paid between 10 and 15%. 27 paid more than zero but less than 10%, and – yes – six did not pay one dime in income taxes.
The average income of these top income-earners was $202 million.
I want to be very clear that from what the NYT article shows, none of the low levels of taxation paid by these folks reflect anything illegal or unethical. To a certain extent, the tax breaks they were able to take were a result of a bad economy that (presumably) made their incomes less than they might have been had the housing market never crashed. So know that I’m not looking to gather the villagers with torches and pitchforks. But despite the fact that legal and ethical mechanisms were properly used by the Upper Income Super Friends, this information is going to make Romney and Ryan’s message that the rich pay too much in taxes and need relief look really, really bad.
For one thing, it may actually turn out that Romney paid no taxes in at least a few of those years. I doubt this is the actual case, but I have to admit I now suspect that it’s probable that he paid a lot less than the 13% he quickly flashed when we threw him our beads early on in the election cycle. If his taxes are ever released and it turns out he paid nothing, or 2 or 3%, expect voter resentment to flare up to a very high degree.
But even if he doesn’t release those returns, I cannot think of a messaging scheme that will make the news from the Times, along with a promise from Romney that he won’t make the top wage earners pay more in taxes, go down well with voters. It is true, as I said above, that part of the tax mechanisms used to reduce rates were a result of the recession that lowered the 400’s 2009 potential income. But the country is full of people who felt the brunt of the housing market collapse, many of whom lost their homes and jobs. For a realtor or construction worker who was forced to work fast food to put a rental roof over their head, the Romney camp’s assurances that “those making $202 million deserved to be exempt from taxes because, hey, $202 million is so little for them” won’t resonate, especially when voters have been asked to pay the same tax rate with their new sh*t job that they paid with their old great job.
It’s also a good indication that out tax code in need of some serious overhaul.