Romney's tax rate: Good gossip, great lesson
Romney's 15 percent tax rate underscores the fact that even the preferential rate on capital gains and dividend income, is a big tax expenditure鈥揳 big way we 鈥渟pend鈥� money via the tax code.
Romney's 15 percent tax rate underscores the fact that even the preferential rate on capital gains and dividend income, is a big tax expenditure鈥揳 big way we 鈥渟pend鈥� money via the tax code.
Well, this is going to raise some voters鈥� eyebrows:
(The 鈥渘ot very much鈥� in speaker鈥檚 fees is apparently more than $360,000, by the way.)
Besides being good negative gossip on Romney, though, perhaps it will be a teaching moment for all of us about tax policy more generally.聽 It underscores the fact that even the preferential rate on capital gains and dividend income, even though it seems more an issue about tax rates than tax base, is a big tax expenditure鈥揳 big way we 鈥渟pend鈥� money via the tax code.聽 Relative to a comprehensive income tax base where all forms of income are taxed at the same rate, the lower rates on capital gains and dividends result in well over $100 billion a year in lost revenue.聽 (See Table 17-3 in the revenue section of the analytical perspectives of last year鈥檚 budget and note that just the first three capital gains provisions add up to $135 billion for just fiscal year 2012.)聽 So besides the distributional implications that are already unsavory, there are the budgetary implications that should make us question whether these tax preferences are worth their cost.
So let the gossip and thoughtful conversations begin!