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
The discussion on tax reform has become too politically charged, pushing the facts to the background. The wealthy pay high taxes already, it's the super rich that need to pay more.
By Nina Easton, senior editor-at-large
FORTUNE -- In his State of the Union address last night, President Obama reiterated his vision for a tax code in which the wealthy -- "people like me and an awful lot of members of Congress" MOREJan 25, 2012 12:25 PM ET
There's a battle brewing on Capitol Hill over whether or not to lower the corporate tax rate for U.S. companies. History shows that lower taxes do little to help most Americans.
FORTUNE -- In a budget plan called The Path to Prosperity: Restoring America's Promise, Rep. Paul Ryan of Wisconsin earlier this week laid out proposals to slash government spending on everything from health care for the poor to retirement cushions for the MORENin-Hai Tseng, Writer - Apr 8, 2011 10:34 AM ET
For many of the people whom President Obama calls "rich," the Bush tax cuts didn't make much difference. That's largely because of the Alternative Minimum Tax.
Now that the Bush tax cuts have been extended for two more years, let me share a dirty little secret with you. It's this. For many of the people whom President Obama calls "rich," including me, the Bush tax cuts didn't make much difference.
That's because MOREAllan Sloan, senior editor-at-large - Jan 4, 2011 5:00 AM ET
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