He Didn't Pay That: Romney Tax Redux

     As explained in our previous piece, Romney really hasn't shut the door on any questions. All we have is a summary that he paid an average of 20.2% since 1992.

    Romney's hazy tax returns http://diaryofarepublicanhater.blogspot.com/2012/09/he-didnt-pay-that-mitts-hazy-tax-returns.html

     However, the more you get into the weeds of this, the less meaningful this talk of a 20% average tax rate-and the 14% tax rate for 2011 really is. The 14% 2011 rate is obviously inflated. He didn't take advantage of charitable deductions he normally would have-and still can after the election-which raises his tax rate to 14%-in itself very low, indeed, lower than most middle class families.

    As for the 22 year summary, it seems a lot more meaningful at first glance-that maybe he's finally being transparent-then it is on a second look. What it amounts to is not much more than what we were getting before-Romney's assurances of what he did.

    On the night of Ann Romney's speech-though Brit Hume tried to tell us it was the most effective political speech by a candidate's spouse of our time-Peggy Noonan pointed out that Romney's problem is that she told us what a great guy Romney is rather than "showed us."

    For this reason, Noonan said, she failed to make it real.

    This has always been her husbands problem as well. He thinks telling us something is enough, that he can win a just trust me campaign. It hasn't worked for him so well.

     Romney for months has tried to tell us that he paid taxes, "lots and lots of taxes" but what he refused to do was show us. So he hoped this "summary" would be enough to mollify us. However, what it amounts to is a note from his friend at PricewaterhouseCoopers. It gives us a little more information or give his claims more breadth. Still in the end, there isn't enough here to get an honest accounting of his finances:

     "According to the letter from PwC avowing the number, it is based on Romney's adjusted gross income. That means that, for instance, if Romney made investment profit of $20 million, but had losses of, say, $19.9 million, his adjusted gross income would only be $100,000. Paying 20.2 percent of $100,000 would cost Romney just over $20,000."

    "If Reid's comment is interpreted strictly -- that Romney paid literally $0 in taxes over 10 years -- then the PwC letter undermines that charge. But if Romney paid only a very small amount -- say, $20,000 on $20 million -- it would be hard to award Reid many pinocchios for calling that nothing."

    "Such a low-payment scenario is considered quite plausible by tax experts, who noted that investors can pick which investments to realize each year to maximize their tax benefit. In a year such as 2008, when the global markets tanked, an investor would likely have more than enough losses to offset gains. Indeed, Romney's 2010 tax returns show a carryover capital loss credit, meaning he had more losses than he could use the year before."

    "In other words, without seeing Romney's actual return -- or at least without knowing what Romney declared as his adjusted gross income -- it's impossible to know if the rate he paid bears any relation to Romney's economic reality."

     http://www.huffingtonpost.com/2012/09/21/mitt-romney-pwc-letter-reid_n_1904543.html?utm_hp_ref=elections-2012

     So that's the question: 20.2% of what? Another issue is Romney's magic IRA-that has somehow amassed $100 million dollars-all protected from taxation:

     "Romney's claimed rate is misleading in another way. Boston College tax law professor Brian Galle noted that Romney's IRA has grown since 1999 at a rate of roughly $9 million to $10 million per year. Yet he pays no taxes on those gains. Adding $10 million to his 2011 income of $13.8 million, for instance, nearly doubles it, meaning his tax rate is roughly half of what his real gain was."

     "Mitt Romney was paid an immense amount for services rendered and is not putting it in his income. ...To say he has a 14 percent rate doesn't capture the economic reality of what's happening," Galle said. "It's more like Romney has a salary of $10 million and he's paying 14 percent on $1 million and the rest just isn't included."

   So if you factor this in his 14% tax rate in 2011 would be halved-aside from the charitable deductions he will probably take after the election.

  Then Greg Sargent points out that the way he comes to the 20.2%  22 year rate is also misleading as he gets this by simply adding the rate he paid each year and dividing by the number of years.

   "The Washington Post's Greg Sargent identifies a third reason the average of 20.2 percent is meaningless. As the campaign told Sargent, it's an average of rates, rather than the simpler and more accurate calculation, which would divide his total earnings by his total taxes paid."
  "If Romney paid his lowest rates in a number of the higher income years, the overall 20 percent figure would overstate the rate he actually paid over the whole period. Williams provided the following purely hypothetical example:

“Let’s say you have 10 years in which you paid 13 percent in taxes, and 10 years in which you paid 27 percent,” Williams told me. “If you average those rates, you’ll get an overall rate of 20 percent. But if the 13 percent years were high income years, and the 27 percent years were low income years, then his total taxes paid as a share of total income over the 20 years would be less, perhaps significantly less, than 20 percent.”
Yet in that scenario, the Romney campaign would be claiming, by its chosen metric, to have paid 20 percent.

     Then I'd be interested in comparing his tax rates prior to the Bush tax cuts and post Bush tax cuts that cut the capital gains rate and top income rate-though Romney had little earned income after that time-during the 90s he may have had to pay the higher rates on at least his Bain salary.

      So as you can see, Romney far from answered the main questions. What he doesn't get is that we, the American people, are his prospective employer. He's up against a guy who's already done the job and yet, just 50 days before the election he still hasn't given us a proper resume. The cliff notes version won't cut it.

      Time is running out Governor!