My Last Chance To Show Mitt Romney is a Liar Before He Loses The 2012 Presidential Election [175]

ONE LAST CHANCE

COMING TO WORK THIS SUNDAY MORNING in order to make money to pay all those onerous taxes Romney is preaching about, I heard him say that he spoke to a father-son owned electronic company with four employees who were dying under the strain of a 50% taxation rate. He broke it out this way, 35% in "personal" taxes and the rest in payroll taxes and state income taxes. He then went on to say that Canada and Europe had lowered their "tax" rate to 15% in order to bring in more business, etc, etc.

From this, I knew immediately Mitt Romney was lying his ass off. Either that, or he is very stupid, and I know he isn't stupid; stupid doesn't earn you a few billion dollars. How is Romney lying? First by mixing the 15% European "corporate" tax rate with the 35% American "personal" tax rate. Granted, the American corporate tax rate is something like 34% but the effective rate, the rate which corporations really pay is more like 17%. But anyway, Romney specified "personal". In fact, the Canadian and European "personal" tax rate is much higher than the American counterpart.

Romney's second lie is by not telling the audience that if the company worked in a state like WY or FL or any other state which doesn't have a state income tax, that 50% would be much lower!

Romney's third lie is by not telling the audience that if the father or the son was earning the $250,000 AGI or higher as a salary, which he is presupposing they are, (he conveniently didn't specify of course), rather than as net profit from a business, in a state which did have income tax, they would be paying the same 50% rate; 35% federal top marginal (he forgets the effective rate is MUCH less, another lie), say 7% for the state income tax, and around 7% for your payroll taxes. (Actually to make his math come close to being right, given the effective rates, father and son would each have to net about a million each with their four-person business, not likely when you figure a nice net income is 5 - 12%, after they pay themselves a salary, to drive their effective rates closer to 35%,)

There are several more lies contained in that simple statement of Romney's, but you get my drift, I hope.

OK, now back to work for my 33 person company where I don't earn near as much as Mitt's example and, of course, don't pay 50% in taxes either.

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Comments 28 comments

SassySue1963 3 years ago

Small businesses are not corporations. This is why he specified personal tax rate. If you truly own a business that is not a corporation, then you understand that not all overhead and costs wind up being a tax deduction. When my ex-husband had his business, our profit and loss statement had our net income at $72,000. What we actually took into our household was $35,000. A very big difference. The math depends on the nature of your business, it's size, and how it is categorized.


Genna East profile image

Genna East 3 years ago from Massachusetts, USA

Any business that is a S-type, C –type or LLC has a plethora of tax deductions. Owner/operators are not allowed to draw a salary from LLC’s. Nevertheless, many tax deductions are granted for any type of business. The tax rates may be the same, but after the deductions, that 35% is far less when comparing numbers to numbers, or the effective rate. The employer-paid taxes are tax deductible from the bottom line or taxable net income. When I opened my business, in effect, I pay far less income taxes than I did prior to owing my own business.


Genna East profile image

Genna East 3 years ago from Massachusetts, USA

I forgot to add: LLC’s can get around the no payroll rule by opening a second company or management S-type Company. The management company charges management fees to the LLC. Owners draw a salary from the S, thereby paying federal and state payroll taxes during the year. The LLC also takes the management fee as a tax deductible expense.


SassySue1963 3 years ago

Yes there are all sorts of tax deductions for businesses. Some depend on the type of business. However, you cannot say "I own a business and this is not how my taxes work" and decide a statement is a lie based on that. It is disingenuous at best and an intentional misrepresentation at worst. Romney is speaking about the situation for a specific business. This Hub is claiming it a lie, knowing absolutely nothing about that specific business, based on their situation with their business.


My Esoteric profile image

My Esoteric 3 years ago from Keystone Heights, FL Author

Yes, I agree, mine is an LLC, which we choose to tax as an S Corp so we can pay ourselves a "salary" like the rest of the employees rather than another method which requires us to file quarterly. It all works out the same, but is easier for us "weak willed" types.

I was going to include that as another item Romney failed to make clear about his example. Given his terminology, he implies the company was either a partnership, an LLC, or a S Corp, all taxed at individual rates. (I imagine me trying to explain that in this short hub, lol)

If they are an S Corp or an LLC being taxed as one, they pay themselves a salary and receive a W-@, just like any other employee. Any profits or losses left over are passed on the personal income taxes via a Scheduale K-1 as taxable income or loss and included in the personal AGI calculation. That example of his would be a rare small business indeed if either partner ended up with over $250,000 from a 4-person operation, maybe 1% do, so there goes his 35% out the window in any case.

If they are a partnership, and they are smart, they would "pay themselves a fair salary" so they could determine if they are making or losing money from operations; that is no different than normal wages made from any job. Then, what is left over still goes toward net profit or loss like before to be split up between the partners.

Now, let me ask whoever is reading this a question. What if, in the unlikely event father and son each made an AGI of $300,000 (using some standard factors I know and making a WAG - wild-assed guess - this company of 6 grosses $18 million a year, lol), that means each earns an extra $50K on which they will get taxes an extra 5% on if Obama has his way. How much is that? How about $2,500 or 0.8% of $300K, each.

Tell me y'all, as he swings into his southern accent, exactly how many of those 4 employees is father and son going to fire because of the this terrible tax load. Exactly how much of a disencentive is that when hiring an additional employee might bring in 20% more than the cost of the salary?


My Esoteric profile image

My Esoteric 3 years ago from Keystone Heights, FL Author

Sorry ladies, hopefully you will get from my long-winded reply, it is all simple artithmetic; just the categorization changes. The primary reason to go to an LLC or S-Corp is liability protection. In terms of the accounting, when the dust settles, it comes out just about the same. There are differences on how owners insurances and IRAs, etc are treated, but beyond that, the bottem line is basically the same; all are treated as if they were a partnership.

All non-corporate businesses get basically the same business deductions, although their might be a few special ones for S-Corps; since I am not one, and I don't do their taxes, I might be missing some. But, beyond that, the accounting is the same. You have Sales and you have Cost of Sales, leaving you Gross Sales.

From that you subtract all business overhead including all non-owner payroll). After that you have a modifief form of Net Profit.

In S-Corps and LLCs treated as S-Corps, you also subtract out wages paid to owners leaving Net Profits

In regular LLCs you subtract out something that sounds like a salary in liui of wages, but it really isn't, but still counts toward Net Profit. However, on your K-1, it is reported separately, basically like a draw and is taxable.

In a partnership, you are right, you can't pay yourself an "expensible salary", but, as I said before, you should keep your books as if you drew a salary to see how you are really doing. Nevertheless, your Net Profit for a Partnership does not reflect the owners pay and is reported on the appropriate IRS form,

So, what is the bottom line is your wages were $300,000 in each case?

If you are an S-Corp, you receive a W-2 reporting $300,000 in wages and a K-1 showing any profits and losses

If you are a LLC reporting as S-Corp? You receive a W-2 showing $300,000 of in-liui of wages and a K-1 reporting any other profit and losses.

If you are a regular LLC, you recieve a K-1 showing your $300,000 in-kind wages and any other profit and losses

If you are a Parnership, you get the appropriate IRS form showing your $300,000 in draws plus or minus any other profit of loses.

That, ladies is the bottom line, no real magic to it.


TIMETRAVELER2 profile image

TIMETRAVELER2 3 years ago

As Clinton so eloquently said: "We can sum it all up in one word: Arithmetic". Romney has consistently lied about so many things during this campaign that I cannot understand how anybody could trust him enough to vote for him. People accuse Obama of lying, too...and I have no doubt that he has...but Romney lies on purpose about really important issues and does it all the time. Ryan is right up there with him...the biggest whopper being the consistent hit they make about Obama "stealing" money from Medicare to pay for Obamacare...this is so far from the truth that it's unbelievable. Yet, people believe what they're saying. Disgusting!


My Esoteric profile image

My Esoteric 3 years ago from Keystone Heights, FL Author

You are so right. The problem is it sounds so reasonable, like Romney's thing on taxes; to those who aren't accountants, it makes all of the logical sense in the world because it sounds intuitively right, problem is, it is wrong. Ditto, Medicare. They managed to move the debate away from what happens to the 55 year old and younger crowd by sticking Ryan's mom up there and pointing at her; very effective slight-of-hand indeed.

Fortunately, the liklyhood of them winning is small. If fact, it looks like the Dems might even pick up a seat or two in the Senate as opposed to losing the majority alltogether which seemed a reasonable possiblity a few months ago.


Genna East profile image

Genna East 3 years ago from Massachusetts, USA

Sassy - that's not what I said at all. I was just stating how business deductions work.


Genna East profile image

Genna East 3 years ago from Massachusetts, USA

That’s about right, Esoteric. LLC’s take Member Draws while owners of S-types or C-types take Distributions that are viewed as taxable income; if the distributions are viewed as substantial, they may be viewed as dividends. A single owner LLC is viewed exactly the same as a sole proprietorship, but the business deductions are the same. Tax deductions can include Section 179, which gives you a 100% deduction on assets you acquire, with the exception of leasehold improvements, but then you have to be careful of book versus tax in depreciation in future years. There is also amortization on intangibles, plus a host of other deductions you may take for tax, including vehicle mileage or the full vehicle deduction that includes gas and insurance, plus too many others to mention here. If one runs a business from their home, then they can take the ratio percentage of their office space to the home, and expense that same percentage on totals paid for heat, water, utilities, phone, etc.


My Esoteric profile image

My Esoteric 3 years ago from Keystone Heights, FL Author

True to all of that, but the bottom line is still whatever the owner ends up with in his or her pocket at the end of the year, is, in essence, a wage and is taxed as such (except for a C corp).

And, in terms of analying company finacials, should be treated as such. Whether you are a sole proprietorship or an S corp partnership, your books should always reflect a fair "wage" that you are paid so that you can make appropriate business decisions and understand your true profit and loss picture. If, especially as a sole proprietorship or partnership, you don't do this and let your net profits include your "wages" for analysis anyway, things get very muddled and generally lead to bad decision making.


Genna East profile image

Genna East 3 years ago from Massachusetts, USA

I can’t say Romney was lying, but his comment was misleading. The 35% rate of income is not what is paid as a one size fits all. Anyone who says that they took in $500,000 in income revenues from a business, and ended up paying 35% of $500,000 of that in federal taxes plus another percentage in state taxes isn’t telling the truth. Deductions and loopholes are used to manipulate the tax codes in this country, which other countries with lower tax rates don’t have.


SassySue1963 3 years ago

Which was pretty much my point Genna. Read this Hub. The title calls him a liar, within the Hub is the statement "lying his ass off". All politicians are misleading about facts. I could make a list a mile long of misleading statements by Obama. The Hub author has no information regarding the specific situation of this particular example that Romney is speaking about, yet decides they know exactly the details and Romney is lying.


SommerDalton profile image

SommerDalton 3 years ago

I loved this article and totally agree, no magic:). Voted up plus 2!


Genna East profile image

Genna East 3 years ago from Massachusetts, USA

I won’t call either the President or the Governor a liar. Nevertheless, Romney’s statement takes things out of context; the ending result is that it misleads. He was my governor, and I voted for him. Has he made other statements concerning his record in Massachusetts that were misleading? Yes, he has.


My Esoteric profile image

My Esoteric 3 years ago from Keystone Heights, FL Author

What would you call me if I said Hitler or Stalin was a good guy? Misleading or a liar? I personally would call myself a liar because I know for a fact that the evidence is overwhelming that these men, beyond a few anecdotal cases, were not, by any stretch of the imagination, "good" guys.

Likewise, Mitt Romney, a very educated businessman, knew exactly what he was saying when he uttered those words. He knew exactly what the impact would be on an uneducated audience. The words were chosen specifically to mislead, to make the listener believe something that is not true, and in my book, that makes those utterences a lie ... and that is my story and I am sticking to it :-).


My Esoteric profile image

My Esoteric 3 years ago from Keystone Heights, FL Author

Now, having said that about Romney, can I go back and find similar things from Obama? Of course I can, but, except for maybe one or two, none so blatant as this and a dozen or so others that the Romney/Ryan ticket have put out.

Most of Obama's have been closer to Gore's exageration of his importance in the development of the Internet; which Gore less than what he said but more but a lot more than what his opponents what you to believe.

One where Obama may be close to my definition of lying is his tax plan apparently; at least based on the last I heard from CNN. The one I remember fit within the budget because it was the budget, but I am guessing he made some changes that no longer add up.

Romney's on the other hand, is a mathematical impossibility.


SassySue1963 3 years ago

@My Okay so what do you call a guy who sends his minions out to declare a known terrorist attack where four Americans were killed, a "spontaneous" demonstration just gone wrong over an obscure video? And himself blamed it on a video over 6 times in one speech. For two entire weeks. And only came clean after they were caught? To me, THAT defines a liar. That was not misleading, it was an outright lie.


My Esoteric profile image

My Esoteric 3 years ago from Keystone Heights, FL Author

Well, let's see. 14 hours after the attack, Obama was giving an interview with 60-minutes, aired later, where he was quite clear he thought this was a terrorist attack, I reported his words elsewhere. About 24-hours later I was watching him on TV in the Rose Garden referring to this as terrorism. Seven days later, I think it was a national secutity advisor or somebody testified on the record in Congress that it was a terrorist attack. I also watched Obama's UN speech and not once did he blame the terrorist attack on that video. Yes, he did reference in the broader context of hate speech across the world and how it is not acceptable anywhere by anybody.

Further, I have seen no report that Obama sent anybody, minion or otherwise, to declare anything. If you know of one, please post it.


Gemini Fox profile image

Gemini Fox 3 years ago

I blame the wimpy, spineless, paid for media. They should call both candidates on all their lies.

Just thought . . . remember that movie by Jim Carrey call Liar, Liar where he suddenly couldn't tell a lie anymore? Ok, I'm dreaming. But it sure would be interesting not to mention hilarious.


My Esoteric profile image

My Esoteric 3 years ago from Keystone Heights, FL Author

... add to that emarrassing. Just think how much more silent the world would become; no more politicians talking, no more gossiping around the water cooler or over the backyard fence, husbands and wives staring at each other at the dinner table with nothing to say, oh wait, they do that already, lol.


Genna East profile image

Genna East 3 years ago from Massachusetts, USA

Esoteric; I'm not saying that you shouldn't call Romney a liar...I'm just saying that I won't call either the President or the Governor a liar - but that's me. I just pointed out certain things that Romney has said that were misleading.


My Esoteric profile image

My Esoteric 3 years ago from Keystone Heights, FL Author

Point taken Genna. This just occured to me, thinking about that, however. In criminal justice, one can still go to jail for saying certain misleading things, depending on the harm they cause.

Here is a stupidly extreme example I just concocted. A guy flicks is Bic (a woman would never do this of course) in a crowded theater and yells FIRE. True enough, his lighter is lit. There is a stampede out the door and people are hurt or killed.

No, there was no fire, in the normal since, the theater wan't "on" fire, in the theater, so he was lying in that regard. But he wasn't lying either because he did produce a speck of fire in the theater with his lighter, he was just being misleading because their actually was "fire" in the theater. ---- how do you assess this situation. (remember, I already called it stupid.)

I liken this stupid example to his speech on taxes, given his knowledge about taxes. If, on the other hand, he knew as much about finances as my partner and CEO (I am the CFO) does, then I would retract my statement in a heartbeat, and just figure he didn't know what he was talking about, lol. (for 12 years I have been trying to teach this lady the difference between a balance sheet and an income statement; I am not that bad a teacher ... really! Fortunately, she is really, really good at the part of her job that counts.)


SpeakUpStandOut profile image

SpeakUpStandOut 3 years ago from Southern California

You're awesome!!! This is the kind of stuff people do not get. They take information given at face value instead of investigating to find the truth. Great information given here!!! :)


My Esoteric profile image

My Esoteric 3 years ago from Keystone Heights, FL Author

I appreciate the comment SpeakUp. Where in SoCal do you live? I wandered, or rather my parents did, from downtown LA to Whittier to Fullerton to Hacienda Heights from the 1950s to the 1960s; a little before your time, judging from your picture. LA still had trees and clean air, relatively speaking, then.


SpeakUpStandOut profile image

SpeakUpStandOut 3 years ago from Southern California

I live in Los Angeles. :)


Shyron E Shenko profile image

Shyron E Shenko 2 years ago

I just heard that Romney plans to run again in 2016. Maybe he found a way to white-wash his lies so people don't see them. But most will have forgotten anyway.

The 2016 Presidential race is going to be a five ring circus anyway.


My Esoteric profile image

My Esoteric 2 years ago from Keystone Heights, FL Author

I suspect it will be.

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