Romney is very rich. Maybe, at around $22 million a year income, he could be called very, very rich. But what about those people whose incomes are ten times greater? How many very's for that?
And then what would you say when you learn that a few of them paid no taxes at all. None.
On the face of it, Senator Harry Reid’s explosive but flimsily sourced claim that Mitt Romney paid no income tax seems preposterous. Mr. Romney has denied it, and without his returns no one can say for sure. But for someone who makes millions of dollars a year, would it even be possible?
Evidently it is.
It so happens that this summer the Internal Revenue Service released data from the 400 individual income tax returns reporting the highest adjusted gross income. This elite ultrarich group earned on average $202 million in 2009, the latest year available. And buried in the data is the startling disclosure that six of the 400 paid no federal income tax.
The I.R.S. has never before disclosed that last fact.
Not even Mr. Romney, with reported 2010 income of $21.7 million, qualifies for membership in this select group of 400. But the data provides a window into the financial lives and tax rates of the superrich. Since the I.R.S. doesn’t release data for the tiny percentage of Americans at Mr. Romney’s income level, the 400 are the closest proxy. ...NYT
Yikes.
Besides the six who paid no federal income tax, the I.R.S. reported that 27 paid from zero to 10 percent of their adjusted gross incomes and another 89 paid between 10 and 15 percent, which is close to the 13.9 percent rate that Mr. Romney disclosed that he paid in 2010. (At the other end of the spectrum, 82 paid 30 to 35 percent. None paid more than 35 percent.) So more than a quarter of the people earning an average of over $200 million in 2009 paid less than 15 percent of their adjusted gross income in taxes. ...NYT
How the...?
Well, there are ways to "get to zero." There are carry-forwards and foreign tax credits. There are tax shelters. There was Bush's financial crash and recession that accounts for many of the 2009 returns with under 15% paid in taxes. There's hiring someone to outsmart the tax system for you. And in Romney's case, there's the "loss-generating passive investment," which is just another name for that horse.
You got a problem with Romney's scant returns to a nation that invested a lot in him? Get a horse.
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One response to the Times article is pretty interesting. Here's "Mike" in Texas:
Preferential tax rates are well known and not enough to explain Gov. Romney withholding his tax returns.
There is a class of tax avoidance scheme that only works because they don't stand out on a tax return. Some of them require actual confidentiality agreements to assure that no details leak to the IRS.
If Gov. Romney released 10 years of tax returns, they would be scrutinized by experts, some of whom sell these schemes for a living. This might expose the Romney family to embarrassment, assessments for back taxes and penalties, and even lawsuits for violating nondisclosure agreements.
Once the IRS knows the details of a scheme, the can review every return prepared by the same accountant. Many of Gov. Romney's friends and supporters might take a different view of his candidacy.
In addition, the accounting firm can be subject to penalties and sanctions for failing to register a tax shelter.
No job is worth all that.
