FORTUNE -- We've been hearing endless yammering lately about two seemingly unrelated things: that 47% of U.S. households don't pay income tax, and that Mitt Romney paid a lower effective tax rate on his $13.7 million of 2011 income than most American workers pay for just Social Security and Medicare.
But you know what? Romney and the 47% are joined at the hip, as well as at the checkbook. How so? They're both taking what the tax code gives them, and the result isn't very pretty.
Ironically, the reason so many U.S. households don't pay income tax, one of the conservatives' current laments, is largely attributable to policies pushed by two Presidents beloved by low-tax types: Ronald Reagan and George W. Bush. Reagan expanded the Earned Income Tax Credit, and Bush doubled the child care credit. Romney either didn't know this when he made his denigrating remarks about "the 47%," or else chose not to mention it. Putting things in perspective doesn't make for good applause lines.
Now, to Romney's taxes. He has the cluelessness -- or maybe it's gall -- to boast about not deducting some of his charitable contributions, in order to boost his effective tax rate to 14%. Give me a break. People earning less than $110,100 pay an effective rate of 15.3% in just Social Security and Medicare tax on every penny of salary they make (including the employer's portion, which analysts say comes out of workers' pockets). Plus in many cases, they pay income tax, too. So forgive me for not being impressed with Romney's 14% effective rate. The fact that he could have paid only 10%, perfectly legally, is pretty appalling.
But we need some honesty and consistency in this discussion. If you're fine with the 47% taking full advantage of current tax law, you lose your standing to rag on Romney for doing the same thing. If you say that it's perfectly fine for Romney and other supposed job creators to pay less than what average workers pay just for Social Security and Medicare, you don't have standing to complain about the 47%. More
Our tax system helped get us into our economic mess. Now it can help get us out.
By Sheila Bair, contributor
FORTUNE -- As we undertake the annual mind-numbing rite of filling out our tax returns, let us pause to reflect on the role our tax code played in the financial crisis.
What brought us the crisis? Overly leveraged financial institutions made high-yield mortgages to overly leveraged consumers. Financial institutions then concocted trillions of MOREMar 5, 2012 5:00 AM ET
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