Romney’s Tax Returns are Unimportant: How He Earns His Money Is
Capital gains, Romney’s bread and butter, are taxed less than labor (capital gains are taxes at about 15%, workers pay at about 30-35%). Tax laws are why laborers, teachers, dish washers, clerks and other workers pay a higher tax rate than Mitt Romney. The same is true for Congressional Democrats who make money chiefly from capital gains.
Congress writes the tax codes that set up the rules on taxes for capital gains, and Democrats are disingenuous to point the finger at Romney. They could just as well be pointing at themselves for paying lower taxes than most workers. The salient question that both Republicans and Democrats in D.C. ignore is why labor, which is more physically taxing and risky to one’s health than making money off of capital, is taxed at a higher rate than capital gains.
The investment class (those that make money primarily through capital, like Romney) has the money and power to lobby Congress to keep taxes on their capital gains low.Labor does not have the same influence on Congress. Moreover, many members of Congress will save money by keeping capital gains taxes low since most members of Congress are millionaires and many make their wealth like Romney does.
The top 1% wealthiest families in 2007 owned 62% of the business equity and 61% of the financial securities while the bottom 90% owned 7% and 2% respectively. Moreover, “only 19% of the income reported by the 13,480 individuals or families making over $10 million came from wages and salaries.” Is it any surprise that the 1% can get a set of tax rules that favor capital over labor?
Like Congressional term limits, campaign finance laws to help non-incumbents, and revolving door laws, Congress has no interest in changing the tax code to equalize the tax on labor and the tax on capital since most of them benefit directly from keeping the capital gains tax low.
So while the Obama campaign produces ads that rightfully challenge Romney’s taxes on capital gains, there will be little self-reflection on the part of Democrats, nor will they take any action to change the tax code they so richly benefit from.