Posted on Mon, Feb. 06, 2012
last updated: January 31, 2012 12:06:00 PM
I will spend much of this weekend taming the beast that is my income tax folder, a multi-pocketed file with such handwritten labels as Office Supplies, 1099 and Charity. I keep detailed documentation in order to take every deduction available. Like Mitt Romney, my husband and I will pay Uncle Sam what we owe him but not a penny more come April.
This is by way of saying that we can rage all we want about Romneys tax rate, how he pays a much smaller percentage of his income than the rest of us working stiffs, but the GOP presidential hopeful has done what most Americans try to do every year: Keep as much of their money as they can.
Mortgage interest? Check.
Donations to church and alma mater? Check.
Medical expenses? Check.
Romney released two years worth of tax returns this week, and the resulting debate has been as exciting as a season-ending installment of Survivor. In 2010, he and wife, Ann, earned $21.7 million and paid $3 million in federal taxes a 13.9 percent tax rate, which is much lower than that of a family scraping by on an annual salary of $50,000.
This is inequitable, unjust and unreasonable, but Romney isnt to blame. The problem is an outdated, labyrinthine tax system that is grossly unfair, a system that makes tax filing an onerous task for those of us with various sources of income, a system that favors the rich under the guise of promoting investment.
Romney benefits from a loophole known as a carried interest provision, which gives a handful of investment executives preferential tax rates. Its perfectly legal although you and I probably dont earn enough or the right kind of income to qualify for that, so we fork over a larger percentage of wages to the federal government.
We shouldnt begrudge Romney his millions. In a way, hes being rewarded for his skills and business acumen as a venture capitalist. Good for him. I expect similar rewards for my talents, as do my friends. Most have studied hard and now work long hours to achieve their monetary success.
But Romney has protected his millions by taking advantage of a tax system that is skewed against the middle class. He is able to multiply his millions through avenues not available to the average American, through loopholes and credits and deductions passed into law by the very people who stand to benefit from them.
Citizens for Tax Justice, a nonprofit advocacy group, has estimated that the tax plan Romney has proposed would allow him to pay less than half of his current rate. And under GOP rival Newt Gingrichs plan, he would pay no taxes at all because Gingrich wants to eliminate taxes on capital gains, dividends and interest income.
Romneys tax return, a veritable magnum opus at 550 pages, inflames the growing debate about income inequality in a country that prides itself on providing equal opportunity. It comes at a time when some leaders are calling for cuts in social programs that would disproportionately affect those with less income but higher tax rates. No wonder Occupy Wall Street has struck a chord with those who find their prospects diminishing and their income stagnating.
Envy is a dangerous emotion, yes. It colors aspirations and damages success. Some leaders, invariably those who stand to gain most politically or monetarily, like to paint the discussion in those terms.
But its not envy or jealousy that fuels the anger over secretaries paying a higher tax rate than the millionaires they work for. Its a sense of fairness, a yearning for a level playing field where everyone is being treated equally.