Mitt Romney might need some help defending his considerable wealth or controversial career in private equity. But he doesn’t need the kind of help Bill O’Reilly is offering.
Mitt Romney’s declaration that he pays about a 15 percent tax rate on his income has generated plenty of chatter, in part because it confirms that much of the Republican candidate’s yearly income is taxed at a rate appropriate for capital gains and dividend income–much lower than if Romney were actually working for a living.
But enter into the picture Fox host Bill O’Reilly, who apparently thought he should rescue Romney by making an argument that even the candidate himself isn’t making–that Romney is being taxed twice. On a segment last night (1/18/12) with two progressive guests (an exceedingly rare sight on Fox), O’Reilly explained things to Heather McGhee of the think tank Demos:
O’REILLY: Do you know what the 15 percent rate is all about. Do you understand that?
McGHEE: Yes, absolutely it’s about his capital gains.
O’REILLY: OK, so ordinary income in Romney’s tax bracket taxed at 35 percent, right.
McGHEE: Yes.
O’REILLY: OK, so he already got taxed 35 percent on his investment money. It’s already been paid. So then he invests it, all right, and he gets more money from the investment in which he pays another 15 percent on top of the 35 percent of anything that he makes…. So isn’t it misleading to tell the public, as Warren Buffett has done, that Romney’s whole resume is a 15 percent deal? Isn’t that misleading?
This would be slightly more convincing if it were accurate. As Pat Garofalo pointed out at Think Progress (1/17/12):
One of the reasons Romney is able to drive his tax rate down so low is that he is still earning money from his private equity firm, Bain Capital, that is likely subject to a pernicious tax loophole. This loophole lets wealthy money mangers like Romney pay the capital gains tax rate on profits they make investing other people’s money, turning the justification for having a lower capital gains tax rate completely on its head.
The other guest on O’Reilly’s show–Public Citizen’s David Arkush– tried to point this out:
O’REILLY: But Mr. Arkush, do you see my point here about Mitt Romney? He paid his fair share, 35 percent on the money he made when he was in the work force. He got out of the work force and he’s living on his investments and paying another 15 percent on top of the 35. One percent, and I’m in that 1 percent, pay 37 percent of the income, and you’re going to sit there and tell me I’m not paying my fair share? Come on.
ARKUSH: Well, I actually think you’re mistaken about Mitt Romney. One of the things that’s going on here is he’s actually exploiting a tax loophole in paying only 15 percent. He didn’t pay 35 percent on his original income. He got to treat ordinary income, which most people would pay a regular tax rate on, as capital gains.
It was at this point that O’Reilly interrupted:
Did he do anything illegal? Did he do anything illegal, Mr. Arkush?
Of course, that’s entirely missing the point, which is that a perfectly legal tax loophole allows Romney to earn millions of dollars and pay little in income taxes. If Romney were really being taxed twice, as O’Reilly seems to think is the case, you’d think he might make that argument himself.
O’Reilly closed the segment by telling his guests, “We’re going to continue the discussion; I think you’re both good guests.” Let’s hope it corrects his misinformation.
Even if O’Reilly weren’t wrong about Mitt Romney having paid 35 percent tax on his ordinary income, he’s still making a strange claim when he says Romney is being taxed twice.
If Romney had turned his paychecks into cash and put it in a big vault like Scrooge McDuck, and then he had to pay taxes on his pile of money, then his income *would* be taxed twice–which might not be a bad idea, depending on how you feel about a wealth tax. But that isn’t the case in the United States: If you get money and sit on it, you don’t have to pay any taxes on it.
Romney, though, isn’t sitting on his money: He’s loaning it out to people who then pay him back with interest. That’s an economic activity that gets taxed–at a lower rate, as it happens, than working at a job, but it still gets taxed. To suggest, as O’Reilly does, that Romney is being taxed for doing nothing, suggests that capitalists really aren’t doing anything when they invest their wealth–and I don’t think O’Reilly wants to go there.
As I recall, back in 2004 a group of corporations were allowed a “tax repatriation holiday.”
This allows corporations to bring money they’ve stashed overseas back into the U.S. at a much lower tax rate. ( I’m not sure what that tax rate was). The money–which is supposed to be taxed at 35%– remains untaxed until it comes back into the U.S.
From what I’ve read (and perhaps someone could verify this) is that Mitt Romney is pushing this policy of a “tax repatriation holiday.”
I’d also be curious to know if Romney has a financial interest in any of the corporations which have stashed money overseas–more money now than in 2004– in anticipation of another “holiday.”
Let’s add this, too: Did Romney benefit from the 2004 tax repatriation holiday?
The “crime” is not what is illegal here… it is what is legal.
I agree tishado. It’s all legal but how will this sit with Americans whose back is up against the wall as more details emerge?
The GOP has gotten as far as it has because republican voters don’t check things out for themselves. The only thing that will convince them is when they are affected personally. What kind of a moron would vote for a candidate who vows to cut programs that enhance their standard of living to make more funds available for wealthy cash hoarders who have cost them their jobs, homes, healthcare, pensions and communities, not to mention their dignity and pride because Bill O’Reilly and Rush Limbaugh say it’s a good idea? It is time to move forward without the GOP and demand stricter oversight on the the parastic wealthy who got too comfortable with their government gifts. Then became so complacent the only job creation they did with their tax breaks, bailouts and subsidies were in foreign countries. Now they are totally detached from the American Dream. Romney can’t evan relate to his audience he is so detached. He thinks he is a true patriot and held in high esteem by the people he destroyed, their children and their parents.
It’s incomprehensible to me. Here’s a group of candidates who want to privatize Social Security, end Medicare as we know it (or as anybody knows it), cut funding for social services (pull yourself up from your bootstraps), cut Medicaid, cut school funding, cut higher education funding, reduce the corporate tax rate for our “job creators,” cut the capital gains tax even further, refuse to raise taxes on the ones who have benefited the most from generous tax policies, shutter the E.P.A. (who needs clean air and water), end collective bargaining, end abortions (no matter what the reason because abortions stop beating hearts), but support more war!! War doesn’t stop beating hearts, apparently. And they might win!!
O’Reilly is wrong twice, first on whether Romney paid 35% on the initial stash of money and then whether paying another 35% (or 15%) is being taxed twice.
Let’s say he earned $1 million the old fashioned way, by working for it and he was able to pay his $350,000 taxes from other money. He invests this $1 million and one year later makes a $1 million profit ($2 million now is in his pocket). Romney pays taxes on the profit of $1 million, NOT on the original cost basis of the investment, the first $1 million; that money was already taxed.
Suppose I lend 1 million post-taxed dollars to my brother and a year later he pays me my original $1 million back and another $1 million as interest. I would have to pay (assuming I’m in the top bracket before I get repaid) 35% of the $1 million as tax.
The 1% “received 22 percent of their income from capital gains, compared with 2 percent for everybody else.” (see: http://www.nytimes.com/2012/01/15/business/the-1-percent-paint-a-more-nuanced-portrait-of-the-rich.html?sq=1%&st=cse&scp=7&pagewanted=all). So the super-rich get to pay 15% on slightly over 1/5th of their income, everyone else on average gets this 15% break on 1/50th of their income. This tax rate is 10 times more valuable to the super-rich than everyone else. And the right wonders why Occupy protesters are so angry. As my son Eric says, if you’re not angry, you’re not paying attention (but he wasn’t the first to say this, I’m sure).
I love you FAIR! But you annoy me. Can’t you ever embed video footage of what you are referencing? Why not?
oh course, even if all the original income he used as investment money had come from work rather than from previous investments, [doubtful] willard romney didn’t pay 35% on the first go round….he paid 35% on the amount of the TAXABLE income above $370,000….
John Kerry payed a lower rate than Mitt.Around 12%.He was the wealthiest man to ever run for the office.Anyone care?Bill Clinton and his wife earned around 110 million in 7 years on speaking engagements .Gore hundreds of millions on green energy companies.Mitt earns far lower on speaking. .300K average ,to Bills 12 million.Bill O is correct that Mitt pays 35% on dividends then 15% on capital gains.That is 50%.He gives heavily to charity.His church he also tides 10%.
Obama earned just under 2 million last year and along with Gore ,Clinton, and Obama/Biden give next to nothing to charity.What we see here is Mitt follows all the rules and makes a great coin.Just like Obama and the rest of them.Dont like that…change it.Im always amazed that the liberal mantra seems to be….He did it all right and legal………….THE BASTARD.The tax laws are set up for the governments benefit.Like any casino the house wins.Your just mad they don’t win big enough.Again are you arguing against Mitt or capitalism?
O’Reilly spoke and the people of South Carolina listened! They voted for Newt because they were interested in a man “with character and morals.” Wow.
I guess they didn’t know Newt was the “MAN” for Fannie and Freddie. Maybe when they lose their house they’ll figure it out. Apparently, to much of America, Love of money is the root of all evil, but the wife thing is in line with Solomon’s many ladies, so it’s o.k. In Evangelical voter hell…Hell hath no fury like a scorned woman…who’s talking!
Thanks for that, BJD. And don’t worry about Newt, gloriana. With his huge ego stokrd to the gills, he’s bound to say something really stupid (and entertaining) real soon. One more (fat) clown not ready to get out of the clown car just yet.
Gloriana Newt is winning for one reason and one reason only.He is articulating conservatism without fear or regard.That shoots beyond his many failings.You see conservatism is not a cult of personality like liberalism.It is not there for Newts ego or he for its benefit.Anyone who articulates conservatism is speaking the American language.It is a coming home.And it can’t loose.In Obama you saw a man who disliked this country and tried to remake it.In Newt you see a man who weather he wins or looses -is speaking the truth when he hammers home conservative ideals.Im sure you don’t feel that way.I know Tim does not.But that is what the coming election should be about.Not how he treated his wives,or how happy/unhappy Michelle Obama is.I don’t like Newt as a man.That is my personal assessment.I do like Obama.But what a fantastic day it would be to have their roles reversed.You would see this country explode forward.
I still wouldn’t like him(Newt) as a man after that.But this isn’t personal.That is a lib failing
Come on fair, how about an answer?
Budget.house.gov
Check it out.Great stat by paul ryan today.If………the left got every tax raise they want on the rich and so on.It would pay for but 8% of Obamas proposed spending hikes.What a waste of time.all in the name of promoting class warfare for the sake of re election.