Presidential candidate Mitt Romney today released a summary of his 2010 taxes. He paid 14% (technically 13.9%) in taxes that year. The Wall Street Journal reports, the Romney family made $21.6 million, paid $3 million in federal taxes taxes, and also donated $3 million to charities.
Out of his 2010 income, $12.6 million was from capital gains, $3.3 million was from interest and $4.9 million in ordinary dividends.
Most of the media, some Republican candidates, and the especially the Democrats all are focusing on the “low” percentage he paid. I instead, as the entrepreneur and investor, look at it from a different perspective.
Let me first state I am not a direct supporter of Mitt Romney. Though I do hope he becomes the Republican candidate, because he’s the lesser of the evils available.
This might not be obvious to some, but Mitt Romney paid $3 million in federal taxes in one year! Many individuals don’t pay that amount in taxes over their lifetime. So we collectively should be thanking him for huge amount he contributes annually to the federal tax base.
Many propose Mitt’s low tax percentage is a gleaming example of why investment income should be taxed at a higher rate. Lets not forget Mitt at one point had earned income. How did he create his investment portfolio? By building a business, making some intelligent decisions, and investing his money wisely. He’s achieved the American dream. Instead many are painting him in an evil light, like he must of done something wrong to acquire his wealth. Garbage! He was able to reorganize companies or create leveraged buyouts for companies he worked with. Many would not exist today, if it not for investments from Bain Capital. Mitt Romney took many risks with the business he co-founded, and is getting rewarded for those risks.
For the legality aspect of the taxes paid, nothing Mitt has done is illegal. I can assure you, without knowing specifics, he’s on the radar of the IRS to ensure he is paying the correct amount of taxes per year. When you are in the top 4,000 income earners for the USA, you don’t slip under the radar of the IRS.
Everyone logically tries to minimize their taxes and “not pay one dime more”. Even Warren Buffett who declares he should pay more in taxes, doesn’t pay more than he must legally. In fact Buffett is currently in dispute with the IRS about some back taxes he owes. If you have a beef with Mitt’s taxes you should contact your Senator, not blame him for minimizing his taxes.
Ok let’s say for argument sake you think Mitt Romney should pay more in taxes on his investment income. For simplicity sake let’s double the rate to 28%. Well it just so happens Mitt donated the same amount he paid in taxes. So Mitt Romney could easily afford this tax increase, eliminate his donations, and still more or less have the same net annual income (minus tax deductions for donations).
So in effect because of the tax increases, charities are out of a generous donation by the Romney family, and the government has a bigger amount of income. My question to the readers, who do you think is more effective with that “donation”? The government, or private charities?
I realize Romney would probably still donate a large amount of his income to charity. My point is the amount donated would probably get affected, and the remaining taxes paid would get sucked out of the private sector. The tax increase could affect investing, or consumption by the Romney family. A tax increase for all would collectively affect the economy.
From my standpoint, I surely would rather have a individual in the oval office who’s worked in the private sector most of his life, and became very successful at what he did. Rather than someone who’s never worked in the private sector, always lived off the government dole, and constantly makes claims about “evil” business owners, investors, or doctors. Which person do I associate with more, and who would like to become? The answer is obvious.
