So now we know–Mitt Romney had a 13.9% tax rate on his income of $21.6 million dollars in 2010, and he’ll pay about 15% in 2011.
That sure grabs everyone’s attention. But what we don’t know is how much additional income he’s had prior to 2010–or how much in gains he’s just sitting on right now and deferring tax on. One way wealth and profit can stay hidden is by not being sold. That strategy can keep taxable gains off of a tax return for years or even decades.
The fact that Romney has a lower tax rate than most working Americans is another example of how it’s not someone’s illegal or shady manipulation of the tax code that is shocking–it’s the ordinary and totally legitimate stuff done straight-out in the open that sets people’s eyes pinwheeling.
The 13.9% Romney paid in 2010 is about the same rate, as The New York Times pointed out, that you’d typically see for a family earning about $80,000. Two decades of changes to the tax code that overwhelmingly favor people who are rich enough to live off of their money instead of off of their labor have left us with a system that infuriates many working Americans.
Here’s an idea: Let’s treat income from wages and income from capital gains and dividends identically for tax purposes. Sound impossible? Sound hopelessly liberal? Well, the tax code provided for exactly that from 1988 to 1990, after President Ronald Reagan spearheaded the Tax Reform Act of 1986.
Yup. Ronald Reagan, champion of tax fairness and equality. There you go again.