Thread: Romney's tax returns symbolize a broken system

Romney's tax returns symbolize a broken system

Updated 17h 26m ago

After weeks of being prodded by his Republican rivals and the news media, presidential candidate Mitt Romney today is set to release his 2010 tax returns. All indications are that the documents will reveal Romney paid his federal taxes on time, in accordance with the law — and at a rate of 15% on much of his considerable income.

Got a problem with that? Then your problem is with the tax code, not the candidate.

The fact that someone like Romney could amass a fortune in the hundreds of millions of dollars while paying a lower rate than people of lesser means is one symbol among many of how badly the code is broken.

Here are two more: Half of households pay no federal income tax at all, and Americans spend in the range of six to seven billion hours annually figuring out how much they owe, or are owed.

But perhaps the most telling sign of dysfunction is this: Estimates for the past three years have federal tax receipts coming in below 15% of the economy, something that had not happened since Harry Truman was in the White House. Washington is raising only about 60 cents for every dollar it is spending, an unsustainable situation.

Yes, government spends too much — way too much — but the unpleasant truth is that Americans are undertaxed given the level of services, benefits and protection they expect. They are undertaxed by a code that is the very embodiment of a what might be called a Mommy State, one that gives special tax breaks to people for engaging in approved behavior or for buying Congress' favor.

The Mommy State rewards people who run hedge funds or private equity firms with a special low tax rate. It likes people who have lots of mortgage debt, large families, hybrid vehicles and very expensive health insurance policies. The Mommy State believes that it is nobler to inherit $5 million than to earn it.

It's time to end this charade with a much simpler tax code that is part of a balanced plan — say, $3 in spending cuts for every $1 in new revenue — to tackle the burgeoning budget deficit. By closing myriad loopholes, tax revenue could be increased without raising marginal rates much for individuals.

The "carried interest" loophole that allowed Romney to pay a 15% tax on his income when he was amassing his fortune at Bain Capital should be one of the first tax dodges to go. Ending it would restore some sense of fairness. Creating a fairer code and reducing the deficit, however, can't be done merely by hiking taxes on a relatively small number of rich people.

Getting the national debt under control requires a sense of shared sacrifice, a sense that Americans are all in this together. It's unhealthy for society when half of all potential income tax filers don't help defray the cost of most of government, from defense to highways to national parks.

These 50% aren't evaders or freeloaders; like Romney, they are simply doing what the law allows. Most pay Social Security and Medicare taxes (though not enough to cover the programs' rising cost). They pay sales taxes and a variety of fees. They're struggling in a difficult economy. But the principal should be that everyone above the poverty level should have at least a minimal stake in financing the nation's needs.

This means the so-called Bush tax cuts and the cuts passed in the Obama administration should be allowed to expire. A number of popular — but overly generous and economically disruptive — deductions for things such as health insurance and mortgage interest should be scaled back as well.

To be clear, overspending — particularly on health programs — is a bigger long-term problem than is undertaxation. But today's huge deficits are at least as much a product of low tax receipts as high spending. Combined with phased-in cuts in entitlement programs, tax overhaul could point the route to fiscal sanity. In that context, the best way to look at Romney's returns is as a teachable moment.

Editorial: Romney's tax returns show the need to simplify the code

I have no problem with the rich amassing a fortune and even paying less tax if they invest in America via building manufacturing plants, etc, what I do resent is when they invest overseas draw huge sums from those investments and paying less tax.

Capitalism is great but with that there must be values, standards, and loyalty to our country with out that it will fail and yet that is what is happening now but very little conversation about it with our leaders while they try to pit rich against poor they don't talk about root causes in our society. Without regaining love of country, flag waving if you wish to call it, morals,values, capitalism can and will fail as we can see now a younger generation begging for socialism.

I read today that 80% of the nation pays LESS than 15% of their income in taxes. and how many of them get welfare, WIC, food stamps, subsidized healthcare, cheap or free cell phones or cable, school lunches, etc.
So kind of silly to bash Romney.

I agree with you,that you can not blame Romney for being a go getter and earning lots of money. And he paid his taxes according to the tax code since all his money was from investment programs. And I have read the same thing that 47% of the population do not pay any taxes at all and some of them even get a tax credit on top of other entitlememnts. The whole tax system should go to a flat tax. And as far as Social Security,you only have to pay up to a certain amont of income and above that limit no more money is taken for social security.