2012.09.23 05:19
What You Need to Know
It was quite the disclosure day for the Romney campaign. Aside from releasing the broad outlines of how much he paid between 1990 and 2009, the Romney campaign also sent out his 2011 tax return. It was 379 pages of disclosures that mostly disclosed what we already knew from his 2010 tax return: Romney makes a lot of money, he gets a lot of money from offshore investment accounts, and he gives away a lot of money. Oh, and he pays a very low effective federal tax rate -- lower than what many middle-class households pay. Here's what you need to know. (1) Romney paid a 14.1 percent effective federal tax rate in 2011 -- and it could have been lower. Romney had an adjusted gross income of $13,696,951 in 2011 and paid $1.95 million in taxes, for a cool 14.1 percent. Romney manages such a low rate because most of his income comes from capital gains -- which is taxed at 15 percent, instead of the 35 percent Romney would otherwise pay. But Romney could have paid even less this year. He didn't take the full deduction he could have on his charitable giving. After all, he's running for office, for Pete's sake -- and he pledged to have never paid less than a 13 percent rate. Noam Scheiber of The New Republic calculates that Romney could have saved $262,500 -- for a 12.2 percent effective rate -- if he had taken the full deduction he was entitled to. (2) Romney's income mostly comes from investment funds located offshore. The tax returns of the rich are different from yours and mine. They mostly detail offshore investment holdings. As Zach Carter of the Huffington Post points out, 266 of the 379 pages of Romney's 2011 taxes are about foreign corporations and partnerships. Read that again. These funds are not set up overseas so that people like Mitt Romney can avoid taxes. These funds are set up overseas so that institutions like university endowments can avoid taxes. Tax-exempt entities face a special tax called the unrelated business income tax (UBIT). When they own a part of a business, they have to pay UBIT on whatever income they get from it -- otherwise these businesses would have the competitive advantage of not having to pay taxes. That actually happened when some alums donated the Mueller Macaroni Company to NYU Law School back in 1948. What does this have to do with investment funds? Well, most funds -- including for private equity shops like Bain Capital -- are set up as distinct corporate entities. Big investors like university endowments would face the 35 percent UBIT on top of 15 percent capital gains taxes if these funds were set up in the United States. So they don't. They set them up in the Cayman Islands instead. (3) Romney still benefits from the so-called carried interest loophole. Imagine if you could have your wages taxed as capital gains instead of as wages. That would be a pretty sweet deal if your marginal tax rate is greater than the 15 percent capital gains tax rate. That sweet deal is what private equity managers, hedge funders and venture capitalists call "carried interest". These financiers get to classify the fees they earn on profits as capital gains, even when it's not their capital at risk. Among the people who thinks this makes no sense are Romney economic adviser Greg Mankiw. Romney still gets carried interest, because he still gets a share of Bain Capital's profits as a part of his retirement package. What's not clear is just how much carried interest he gets. Romney estimated it would be $5.5 million for 2011 -- but that was back when he thought he would make $20.9 million for the year, rather than the $13.7 million he actually did. In either case, it saved him a nice pile of cash. (4) Romney donated a lot to charity. Romney gave away nearly $4 million of his $13.7 million in income to charity in 2011. But, as previously mentioned, he only deducted $2.25 million of this giving. It's almost as if we should have an election about this. (End of O'Brien's quote)
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2012.09.23 05:37
2012.09.23 13:08
Dear Web Master,
You have been most consistent in your remarks and analysis in regard to
why we Korean Americans should support Obama.
I believe you have convinced many of us in that regard.
Without a doubt in my mind, I believe Obama understands Koreans better
and as a matter of fact, I believe he likes Koreans for many reasons, some of which
I can imagine by reading his biography, whose story rings true in our hearts
and sounds familiar to most of us.
However, I don't believe I should pass any kind of judgement against Romney
in regard to his morality, honesty, being born with a silver spoon in his mouth and
being super wealthy, etc, etc. That, I believe, should be left to himself and God he believes in.
I said this chiefly because all human beings are imperfect (we are all sinners in christian terms).
That includes, of course, Romney and Obama.
2012.09.23 15:12
Doc, thank you for your comment.
This article may not be worthwhile very much if there's no counter opinion, either for or against.
The conclusion is my personal product.
But I based my conclusion on the actual facts known to me through the reliable sources.
There are actual numbers and calculations here and they are the data belonging to the public domain.
I don't think there are lies in the numbers.
It is very true that "all human beings are imperfect",
but this can not be a part of some excuses, especially in the politial campaign for the presidency.
If we conduct our behavior under the pretense of "all human beings are imperfect",
then, we don't even need any social conscience or criminal laws.
Good or bad, Romney is fully responsible for his action. He shouldn't blame his accountants.
He shouldn't find his excuses in the Bible either.
The concept of "Everyone is sinner" shall belong to churches.
Here's my disclosure:
Your web manager is for Obama, not because Obama is a better polititian or person than Romney,
but because he is simply from one of the colored minorities, to which we Koreans belong.
The longer the black man stays as the president, the better our position in American society becomes.
It's not just in America. Obama's U. S. presidency raises the recognition of colored minorities all over the world.
Let Obama stay there another 4 more years for the future of our children and grand children !!
I was a poor immigrant, as you well know and just like you, who came over the Pacific with only $50 in my pocket.
I worked my ass off day and night to accumulate a meager amount of money to retire.
I am living on a fixed income out of the retirement fund that is hundreds or thousands times less than what Romny has.
Romney grew up as a rich kid, never worked day and night, and accumulated thousands times more than I did.
And, today, believe or not, I paid 14.98% tax in 2011 out of my small drawings,
while Romney paid less than me in 2011 and all the years before, out of his huge income.
How would you like this? This is the Republican math. I do not love it.
Most of you guys out there are not any better off than I am.
At least I am retired but some of you are actually still working to make the ends meet.
With no doubt, the same Republican math applies to you.