Romney’s rock and hard place.
Click here to listen to the broadcast of You Tell Me on KTBB AM 600, Friday, January 19, 2012.
I’m not in the tank for Mitt Romney. If he winds up getting nominated, I’ll support him. But I’m not a Romney apologist. Romney is the subject of this piece only because he is now being pressured to release his income tax returns. He’s reluctant to do so, not because he has anything to hide that I know of, but because doing so is a no-win proposition for him, as I will explain.
This pressure is not coming from Democrats, from whom we expect the boilerplate drivel about “millionaires and billionaires,” “Wall Street vs. Main Street,” and the need for the rich to pay their “fair share” of income taxes.
No, the pressure on Romney is coming from his fellow Republicans in their increasingly desperate efforts to remain in the hunt for the Republican nomination.
Which puts Romney in bad place.
Romney has already disclosed that his effective tax rate is about 15 percent, well below the rate that most middle class taxpayers pay. On the strength of that disclosure, the demagoguery is on, little of it having any connection to the facts.
Here they are.
Mitt Romney is, for tax purposes, unemployed. He doesn’t work for a company. He’s not a salaried employee. His income does not come from a paycheck. Mitt Romney is a very wealthy man, by far the wealthiest of all the Republican candidates now or ever in the 2012 race. (The fact that he will have to defend the fact that he’s wealthy is the subject of a future article.) As a result of his wealth and of his lack of a salaried job, Romney’s income, the money he uses to pay his bills, comes from the return on his assets, the earnings on the capital that he has invested.
In the United States, we tax investment income at significantly lower rates than we tax wage income. We do that for a good reason. Wage income is without risk. Investment, on the other hand, is all about risk. When you invest money, you do so in the knowledge that you can lose it all.
If the return on risk capital were taxed at the same rates as risk-free wage income, there would be little incentive to bear the risks of investment. Capital markets would dry up and the economy would grind to a halt.
A disturbingly small percentage of Americans understand this. Very few wage-earning Americans understand that their wages derive from the fact that someone, somewhere put money at risk to provide the startup capital, the working capital and the debt capital that is absolutely necessary if businesses are to get started, hire employees, expand and thrive.
That so few Americans understand this makes it possible to make political hay out of it.
Thus Mitt Romney’s predicament.
He alone among the candidates has the kind of tax return that is principally driven by capital gains taxes as opposed to ordinary income taxes.
If he doesn’t release his returns, he’s hiding something. When he does release his tax returns, the howl is going to erupt from the media and from the left that Mitt Romney pays a lower income tax rate than a public school teacher in Canton, Ohio.
Such criticism is sophistry. Assuming that Romney is worth $250 million and earns three percent on the totality of his assets, and that these earnings are taxed at capital gains rates, the million plus he pays in taxes versus the five or six thousand the school teacher pays will never see the light of day in the mainstream media.
Such economic illiteracy threatens the republic. That so few Americans understand how money and capital work constitutes a danger to the very economic system that, for the first time in history, made poverty the exception rather than the rule.
That Republicans would be in any way party to such demagoguery is simply unforgivable.
I am just sick to death of the actions of our “Republican” Candidates. They have rushed to stab each other in the back more often than the President has ever done. They have forgotten that the enemy is Obama, not each other. While they should be focusing on the issues, the problems, their solutions and socialist agenda of the current president, they pay millions to investigators who are digging up crap on each other…we lost Cain because of this, Newts camp is nothing but muck rakers and Romney is far worse.
At a time when we need to present a clear choice, at a time when the country needs strong leadership and steering; we get a bunch of High School B.S. and one up manship.
I, like many of my friends and fellow Conservatives, are disgusted and sickened by this conduct. These men are NO different than Obama and could care less about the problems facing America. For if they did, they would focus on defeating the Idiot in Chief,,,not making his job easier.
I’d like to respond to your editorials. However, you pretty much nail it and say all that needs to be said. With Hollywood & the mainstream media saturating us with their spin constantly, it is great to know others see things for the truth. Keep up the great work. I enjoy listening.
I,too, am sick to death of the way the republican party eats its own. Why can’t they see that stabbing each other in the back isn’t doing anyone any good? I don’t CARE how much money romney has, what I care about is his core values! And that my friends isn’t much! Romney is like a jelly filled donut…soft and squishy inside! The republican candidates are sorely lacking in values and backbone! We do not need them fighting among themselves, we need them fighting FOR AMERICA! That means socking it to obama and his evil empire! obama has never actually “won” any race he has been in. He clears the field just as they have been doing so far so that there is no one left to run against. Doesn’t say much for obama now does it? BUT we have seen this in getting his laws passed and every other thing obama has ever done. The democraps have done this very well without the republicans doing it as well to their own. But this is how the wimpy republican party is. They had rather eat their own than hear bad things about the party from the media. Well, my republican friends, are we better off WITH obama or WITHOUT obama…it is up to you which it will be! The republican nominee can either stand up and start swinging back at the democraps and their sleezy tactics or they can continue like they are and sell America and her people out. That is what this mess is coming to…we saw from mccains dismal failure that being “mr. nice guy” DOES NOT WORK! romney is pulling an obama with his tax records. I say release them and take what is coming to you! Make this a TEACHABLE moment instead of acting as if it is something horrible to make money. Isn’t that what America is all about…the opportunity to meet and exceed your goals, to be all that you can be…to make the sky the limit??? It is time to man up or we will see obama back in the whitehouse even though he doesn’t belong there and never did!
Well said Paul. Keep up the good work.
Romney should use this opportunity to praise the free market system that luckily remains in this country in spite of efforts to demonize it. He should show how capitalism (as he has practiced it in his career) is the fuel for fantastic growth, wealth and job creation that supports a healthy economy. It is a teachable moment that could wreck the Marxist, class warfare, envy agenda that Obama and his legion of followers promote.
Did anyone point out that investment capital for most people has already been taxed as INCOME before it is put at risk for potential capital gains to be taxed AGAIN?
There is no reason to be defensive about the truth of wealth creation. Damn the Marxists and their class envy poison.
I find it ironic that, in an earlier commentary, you supported Rick Perry and advised him to be himself.When Perry does so, and referred to Romney and his business dealing as “vulture capitalism” you take him (though not by name) to task for being “party to such demagoguery.”