Newt Gingrich's 'Romney tax' not a bad idea
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Bill Bonner Guest blogger
Dow up 96 yesterday. Gold up $4. Oil above $100. Nothing special to report, in other words.
Mitt Romney has revealed his effective tax rate. 鈥淎bout 15%,鈥� he says.
That seems like more than enough to us. But it鈥檚 not enough to satisfy the zombies. Romney has made a lot of money. They want more of it.
It turns out that 15% is lower than average. The AP reports:
At 15 percent, Romney鈥檚 federal income tax rate would still be higher than the rate paid by many Americans.
On average, households making between $50,000 and $75,000 will pay a federal income tax rate of 5.7 percent this year, according to projections by the Tax Policy Center, a Washington think tank.
However, when Social Security and other taxes are included, that same household would pay an average federal tax rate of 16.6 percent.
Overall, the average American household will pay 9.3 percent in federal income taxes 鈥� and 19.7 percent in all federal taxes.
Romney鈥檚 wealth 鈥� he is worth between $190 million and $250 million 鈥� puts him among the richest Americans. But if most of his income is from investments, it could help him to significantly lower his federal tax bill compared to people who make money in other ways.
While the top federal tax rate for investment income 鈥� qualified dividends and long-term capital gains 鈥� is 15 percent, the top tax rate for wages is 35 percent on taxable income above $388,350. Wages are also subject to Social Security and Medicare payroll taxes, while investment earnings are not.
Newt听Gingrich has suggested a flat tax rate of 15%, which he now proposes to call the 鈥淩omney Tax.鈥�
But the zombies not only want a higher rate (so they can squeeze the producers a bit harder) they also don鈥檛 want a flat tax. They prefer a confusing, complex, and ever-changing tax code, with 10,000 rules and 20,000 exceptions. Why? Three reasons:
First, complexity provides rich cover in which to hide special favors and privileges.
Second, the more special favors available, the more campaign contributions, donations, job offers and speaking fees Congress can count on.
Third, and don鈥檛 forget the lawyers and accountants 鈥� the corrupt insiders 鈥� who make money by helping lay the mines鈥nd then helping taxpayers get through the minefields without blowing up. Sure, you could replace the government鈥檚 revenue with a much simpler tax system鈥ut you鈥檇 inconvenience the zombies.
In short, the tax system is completely corrupt. It is a drag on the whole economy鈥ut it serves the zombies well.
Regards,
Bill Bonner,
听for The Daily Reckoning
