01/19/12 Los Angeles, California – 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. “About 15%,” he says.
That seems like more than enough to us. But it’s 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’s 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 — and 19.7 percent in all federal taxes.
Romney’s wealth — he is worth between $190 million and $250 million — 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 — qualified dividends and long-term capital gains — 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 Gingrich has suggested a flat tax rate of 15%, which he now proposes to call the “Romney Tax.”
But the zombies not only want a higher rate (so they can squeeze the producers a bit harder) they also don’t 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’t forget the lawyers and accountants — the corrupt insiders — who make money by helping lay the mines…and then helping taxpayers get through the minefields without blowing up. Sure, you could replace the government’s revenue with a much simpler tax system…but you’d inconvenience the zombies.
In short, the tax system is completely corrupt. It is a drag on the whole economy…but it serves the zombies well.
Regards,
Bill Bonner,
for The Daily Reckoning
Bill Bonner
Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning. Dice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the newest book from Bill Bonner, is the definitive compendium of Bill’s daily reckonings from more than a decade: 1999-2010.
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To fully appreciate the situation, you need to come visit Kansas City to see the new Henry Block wing of the Nelson-Atkins Museum of Art. An enormous museum addition costing many tens of millions, and serving as a monument to the complexity of the tax code. Don’t get me wrong, its a fabulous building, but the money behind it can’t help but make the casual observer a little queasy.
At some point, we´ll have individualized medical diagnosis based on DNA, age, enviornment, etc. Why not individualized tax diagnosis, too? A jump from 20,000 loopholes to 312,000,004 is nothing complicated for a computer. Tell me how many calories to eat for breakfast tomorrow, while we´re at it….
No one would like to see uncle Sum sending carrier fleet to protect the purported endangered species in open lakes. Sharks, alligators, zombies are not ‘extincting’ and not under pressure.
Uncle Sum needs not worry unnecessarily.
“Dad, come join us here! we’re having fun!”
- I’m almost done, Maria, just a minute. Oh god, I need this whole claptrap system to blow soon so I’ll be able to write about something else than all this feds and their bunch of flimflam.
“Dad, come on!, dear readers are sensible people, you always say that! Tell them that you are spending time with the family in order to understand… I don’t know… something…”
***
Yeah… the world of money is getting boring and I’m getting older.
Anyway, I’d love to hear more personal insights. Bill, I’m starting a family and your words are always enlightened.
A sales tax is a flat tax, applied to everyone equally. Lobbyists need not apply. A flat national tax would alleviate the need for the whole IRS system, lobbyists, favors, etc., etc.
In other words, as you correctly perceive it, the “insiders” will never go for it.
How about tariffs? Everything’s imported now. Only time you’d pay taxes is when you bought something from a country whose workers now do the work you used to do. I think it’s a perfect way to thank our government for caring so much for other nations.
let’s see now, Romney is worth 250 million, Gingrich made 2 million last year. So they come up with a tax rate which is the average that the rich pay, and not the average that the other 99% pay. So lets lower the tax rate so the 1% will be happy and the 99% can live without the essential services they have come to expect. I don’t think so.
That Flat Tax thing. They’ve been dance’in round that tune 4 decades! “Ain’t gonna happen,” as BB stated the “Zombies” will make sure of that! *S* PS its nice 2b back fr Vay-Kay! Any 1 miss me? PPS all u need is Luv,& a Flat Tax. Oh by the way,i lost my Favorite Deck Chair while on Vay-Kay. “Darn-It!”
…i can understand the relevance of a congress and the senate back in the days of the horse and buggy, but with today’s internet “high way”, all bills and laws enacted by congress and senate should now be ratified line by line online directly by registered citizens of the united states of america…it’s a shame to maintain a republic by the hands of so few…probably 1%…?…
..N.B…and ONLY those lines which garner more than 33% interest need ever be considered as ratified..
Romney would probably release his taxes if he paid a 15% tax rate. But since he has been hiding his money in the Cayman Islands for the last several years, my guess is his tax rate is actually closer to 0, not 15%.
The Zombies always want more. What they get for what they do is enough, but hey, when you make the rules you can keep tapping us endlessly. GingRICH off Frannie Maec loves this idea. He hates Romney because Mitt earned more than he did and Ol’ Newtie couldn’t figure out how to get his hands on it.
Taxes are theft.