Political Irony

Under the tax plan promoted by Paul Ryan — Mitt Romney’s Vice Presidential running mate — Romney would pay almost nothing in federal taxes. How do we know this? Because Romney himself told us!

In Ryan’s plan, he wants to eliminate income taxes on capital gains, interest, and dividends entirely. That means that the vast majority of Romney’s earnings would not be taxed at all.

If we look at Romney’s earnings in 2010 (the only year for which we have a full tax return for Romney), he earned more than $21 million. But almost all of that was capital gains and interest. Romney did earn $593,996 in author and speaking fees that year, and since he actually worked to earn that income, it would still be taxed under Ryan’s plan. But Ryan also would reduce the top marginal tax rate from 35% to 25% and would eliminate the Alternative Minimum Tax.

Bottom line? Romney’s tax rate for 2010 would have been 0.82 percent. And Romney’s earnings wouldn’t pay any corporate taxes either. And no inheritance taxes.

If Romney stopped earning speaking fees, he could easily drive his tax rate to zero. Not only that, but lots of super-rich people would also end up paying nothing in federal taxes, as long as they don’t actually work for any of their income.

The loss of revenue would essentially destroy our government, since there would be no money for anything other than Social Security and defense. Nothing. No FBI. No highway funds. No FAA. No Veteran’s benefits. No NASA. No unemployment insurance. No weather service. Nothing to protect our borders at all. No Medicare or Medicaid. No federal education funds. And just to pay for Social Security and defense, Ryan’s plan would raise taxes on the poorest Americans.

© Keith Tucker

By selecting Paul Ryan as his running mate, is Romney giving in to the most strident conservatives and giving up on moderates and independent voters?

UPDATE: This person definitely thinks so:

After a blasting in the polls and a haranguing by right-wing pundits, Mitt Romney decided that he should use the biggest statement of his primary campaign to try to win over a group of voters that never wanted him: right-wing Republicans. It’s exactly what John McCain tried to do. And I’m trying to remember: How did that work out for him?

UPDATE 2: Ezra Klein has an excellent article on what picking Paul Ryan means:

Ryan has told the Congressional Budget Office that his budget will bring all federal spending outside Medicare, Medicaid and Social Security to 3.75 percent of GDP by 2050. That means defense, infrastructure, education, food safety, basic research, and food stamps — to name just a few — will be less than four percent of GDP in 2050. To get a sense for how unrealistic that is, Congress has never permitted defense spending to fall below three percent of GDP, and Romney has pledged that he’ll never let defense spending fall beneath four percent of GDP. It will be interesting to hear him explain away the difference.

But Klein’s most interesting point is that Romney seems to have picked the VP that Obama was steering him toward:

This election increasingly resembles the Obama campaign’s strategy rather than the Romney campaign’s strategy. … While Republicans were trying to keep Ryan quiet, the Obama administration was trying to make him famous. They saw his plans as the clearest distillation of the GOP’s governing philosophy — and they thought it would drive voters towards the Democrats. We’ll know in November whether that was a genius strategy or an epic miscalculation.

So, why is it that Romney is so adamant about not releasing his tax returns? He doesn’t seem like the kind of guy who is embarrassed about being rich. So it seems safe to assume that he is deliberately hiding something.

One theory concerns the fact that back in 2009, the IRS did a massive crackdown on the use of overseas bank accounts as tax havens and offered amnesty to anyone who disclosed those accounts. This happened when Switzerland’s largest bank was forced to reveal the names of its US account holders. The theory is that Romney took advantage of that amnesty, which means that if he revealed his tax returns, they would reveal that Romney was — at the time — illegally avoiding taxes. Even though the IRS granted amnesty, the US taxpaying voters might not be so kind.

Indeed, even though Romney claims to have released his 2010 tax returns, even then he didn’t include all of his tax forms. Specifically, he didn’t include the forms documenting his Swiss bank account (and his financial activities in Bermuda and the Cayman Islands).

So we really have no idea why Romney had a Swiss bank account. Was it to avoid paying taxes? Was it to avoid disclosing investments that would embarrass him? Unless he shows us this form, we may never know.

For their part, the Romney campaign has explicitly said that the Swiss account that we do know about was not part of the IRS amnesty program, but that doesn’t mean much, since there could have been other Swiss accounts that we don’t yet know about.

For a good summary, The Atlantic has a fun article that goes through the various theories as to why Romney will not release his tax returns, offering evidence both for and against each theory. Not surprisingly, all of them are good reasons for Romney to want to avoid releasing further tax information.

I’m surprised that nobody has speculated that the Romney campaign is deliberately laying a trap. Get the Democrats to focus on Romney’s tax returns until speculation goes completely overboard. For example, by having someone tell Harry Reid that Romney paid no taxes for 10 years. Then, when Romney is finally “forced” to reveal his returns, there is nothing in them that is even half as damaging as what Democrats claimed, and the whole thing blows over. Maybe some of the stuff in the tax returns is damaging, but a good way to mitigate that damage would be to entice the Democrats to overplay their hand.

© Clay Bennett

UPDATE: More clues as to what might be in Romney’s Returns.