Dean Baker Destroys Romney Low Tax Claim

Dean BakerI’m been thinking very hard (You know: frown, furrowed brow.) about this question of double taxation. The idea is that capital gains taxes should be lower because the money has already been taxed at the corporate level. I know that Paul Krugman accepts this, but I can’t find the article. I still haven’t figured it out.

But Dean Baker notes something amazing about Mitt Romney’s taxes. On the 60 Minutes interview, Romney did something really deceptive. When asked if it was fair that regular workers pay a higher tax rate than he does on his capital gains, Romney replied, “It is a low rate. And one of the reasons why the capital gains tax rate is lower is because capital has already been taxed once at the corporate level, as high as thirty-five percent.”

That gets us to my question about whether this whole idea of “double taxation” is valid. Dean Baker, however, notes that this question doesn’t even apply to Mitt Romney:

If the question is why does Mitt Romney pay a low tax rate, this answer is wrong. The bulk of his income comes from Bain Capital. Bain Capital is organized as a partnership. This means that income is not taxed at the corporate level. It is only taxed when partners like Mitt Romney receive it. So the story of double taxation simply does not fly in Romney’s own case.

To be fair, Romney never said that his income was taxed on the corporate level. But there is no other way one could reasonably take his statement. Regardless, Romney should be asked the question again. “Given that your income is not taxed at the corporate level, do you think it is fair that regular workers pay a higher tax rate?”

My guess is that this will lead to lots of equivocating about “job creators” and the “free market.” And maybe we’ll be treated to more information about how much he tithes to the church. That counts as a tax, right?

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About Frank Moraes

Frank Moraes is a freelance writer and editor online and in print. He is educated as a scientist with a PhD in Atmospheric Physics. He has worked in climate science, remote sensing, throughout the computer industry, and as a college physics instructor. Find out more at About Frank Moraes.

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