The Left, led by our Wealth-Redistributor-in-Chief, keeps hammering away at how the rich don’t pay their fair share of taxes. The latest faux example of unfairness they’re trotting out before the gullible (and sadly ignorant) public is Republican candidate Mitt Romney. In what can only be either a deliberate hit piece or shoddy journalism (or, more likely, both), the AP today asks, “ Why is investment income taxed less than wages?”
From the beginning to the end, the article is sprinkled with liberal talking points and misleading inferences.
Why do Mitt Romney and other wealthy investors pay lower taxes on the income they make from investments than they would if they earned their millions from wages? Because Congress, through the tax code, has long treated investment more favorably than labor, seeing it as an engine for economic growth that benefits everyone.
Yes, and the reason Congress has done so is that it’s true. As I pointed out before, when you tax something too much, you get less of it. If you want capital to flee the country for better business environments, raise the capital gains rate.
They throw in the obligatory comment from a conservative economist who points out that capital gains taxes amount to taxing the same income twice. This of course, is immediately rebutted with:
Lots of people are double taxed, says Chuck Marr, director of federal tax policy for the liberal Center on Budget and Policy Priorities. “Check out your last pay stub: There‘s income tax and payroll tax, so you‘re double taxed, too,” Marr said.
The problem with this—and Marr can’t possibly be ignorant of the fact—is that before a shareholder receives a capital gain from a stock investment, that money has already been taxed under both the income and payroll taxes at the corporate level. The shareholder, as an owner of the company in question, has already paid both income and payroll taxes. The capital gains tax is an additional tax on the same money, belonging to the same person. It’s as if the IRS looked at every individual taxpayer on April 16 and said, “Oh, you have money left over? Let’s take another 15% of that.”
No, it’s actually worse than that. If I want to buy shares in a company, I have to first earn the money with which to do so. That income is taxed (income and payroll) at my individual rate. With what the government graciously allows me to keep, I take a risk investing it in a company. As an owner of that company I pay taxes on its earnings (income and payroll). If there’s enough left over for the company to pay me a dividend, I now pay a third tax for capital gains.
But the real gotcha is this beautiful class warfare gem:
Romney, who released his 2010 and 2011 tax returns this week, has been forced to defend the fact that he paid a tax rate of about 15 percent on an annual income of $21 million. His tax rate is comparable to the one paid by most middle-income families. His income, however, is 420 times higher than the typical U.S. household.
It took me all of thirty minutes to research the facts that display how utterly false this statement is. If I can do it on my own time for free, why doesn’t a “journalist” do the same? Consider:
- CNN points out that “roughly 45% of households, or about 69 million, will end up owing nothing in federal income tax.”
- According to the Census Bureau, median income is $49,777 for 117,538,000 households.
- According to the IRS, the total individual tax liability was $865,948,271,000.
So even though almost half of households pay no taxes at all, the average household tax liability is just under $7400. Now 15% of $21 million is $3,150,000. So Romney paid roughly 425 times the taxes of the typical household. It doesn’t take a rocket scientist to see that 425 > 420. So Mitt Romney paid more than his fair share in taxes.
So when the prevaricator who currently occupies the White House tells you,
“Now, you can call this class warfare all you want,” Obama said. “But asking a billionaire to pay at least as much as his secretary in taxes? Most Americans would call that common sense.”
take a look at the facts and use your own common sense. Don’t buy the “fairness” lie.