The unfairness of the tax code is kinda my issue here. And while there are bigger issues out there, to me how Americans tax the ultra-rich, especially those in private equity is nearly criminal.

That said, how relevant are Romney’s tax forms? I believe they are only relevant in the way Warren Buffet announced his tax rate: they would be awesome to demonstrate the gross unfairness of our tax system to the wider public. But are they relevant to his qualifications to be president? To use DF’s expression, “Meh.”

Romney’s tax forms would show that Romney made an enormous amount of money, paid very little taxes, somehow got a 9 figure IRA (!) though arcane, but legal magic, and gave serious sums to charity. They will be obscenely complicated, and will demonstrate how people like Romney benefit at the expense of other professionals. But they should have no bearing on his qualifications because we should already know what’s in them: He’s rich and our tax code loves the rich, especially people in private equity.

Yes, they could provide more background on the Swiss bank account (which is a red flag), and show how it is, indeed, possible to accumulate a nine figure IRA. They might prove that he did indeed pay everything he owed, but even that, probably not. The interest in the tax forms is largely of a prurient, or perhaps more accurately, of a political nature. I can completely understand why Romney won’t release them, and he will never release them: Politically, it would read: the system is unfair, Romney personally benefitted from an unfair system, so Romney must be unfair. Actually, it should read: Romney played by the rules: he made a lot of money and got to keep larger percentage of that money than virtually all other professional people because that's what the rules allow.

In short, people who are whining about the tax returns are either partisans looking for a soft spot to attack or people who are playing a game where they don’t understand the rules.

Well, perhaps. Why is it a soft spot though ? Surely that's because ordinary voters, on the rare occasions they get exposed to the unfairness of the system, get angry about it, and by extension angry with those who exploit it at their expense. Clearly Romney has something embarrassing that he wants to hide, and it must be something he feels would look very bad because he's willing to put up with constant insinuations and 'no smoke without fire' assumptions between now and the end of the election rather than simply publish his tax returns and put an end to it.

I really want Romney to release more tax stuff, but I think you may have misinterpreted the stuff that was released. If I understand it correctly, just about ALL the income he reported in the years he's shown us was CAPITAL GAINS, not wages like you and I (?) earn. Capital gains are not taxed like wages, where tax rates go up the more you make. Capital gains are taxed at a rate of 15% - period. I believe the theory behind this is the desire to encourage investment. Investment income = capital gains. The more investment the better for everyone in the nation. Romney ended up paying about 14.X% taxes - just a tiny fraction below the full cap. gains rate; the difference presumably due to his charities and whatnot - nothing illegal or even very weird. In fact, I've seen commentary regarding the surprising absence of tax-avoidance.

This is a separate issue than the use of offshore banks. I can't defend him on that and don't know a lot about it. But on the tax return itself, he paid all the taxes properly due on the TYPE of income he reported. You can argue that capital gains should be taxed at the same rate as ordinary income, but that would be a radical change to the tax code and a HUGE tax increase overall. Citizens a lot less rich than Romney would get hit.

That said, I dare say that if the following new rule were applied the overall level of investment would not suffer very much: cap. gains up to $10 million a year to be taxed at 15% (as currently) - from $10 million to $50, 20% - over $50 million 25%. Just an idea. I have no idea how much tax revenue would be raised.

Purple, you missed a couple of our earlier discussions on carried interest, which is a form of income that is paid to hedge fund managers which is taxed at a capital gains rate, and is actually income from long-term capital gains, but is quite different from the capital gains you or I would earn.

A hedge fund manager gets investors with the deal that they get to keep 20% of any profit they earn + 2% of gross per year. They go in, buy a company fix it up, and then sell it again to the public. Could take 3-5 years, even longer. So they get paid 20% of the capital gain of that deal, even though none of their capital was at risk. That's a big part of the reason for the low rate on capital gains, your capital is at real risk. But not for hedge fund guys. They get their bonus and it's taxed at 15%, even though they may not have any risk. And these deals are (probably) part of the reason Mitt's still getting huge checks from Bain. Read more here: http://en.wikipedia.org/wiki/Carried_interest

Now, while I understand the reason for the lower rate on capital gains, I would argue that it makes no sense to tax passively earned income at a lower rate than work. Work is to be encouraged and, in fact, we've developed a system where the very rich are discouraged from working for earnings because their earnings are taxed at a very high rate, regardless of how much they earn because their capital gains are taxed at 15%. It's perverse, and it's also another story.

I guess you're saying that Romney benefited because some (most?) of his income came in a way that's taxed as capital gains but, as you see it, doesn't deserve to be taxed that way. That could very well be. I said above that "You can argue that capital gains should be taxed at the same rate as ordinary income..." meaning that I wasn't saying Romney shouldn't, in a better tax system, pay more. All I was and am saying is that Romney apparently paid all the taxes he was supposed to pay. That's no more than you said when you wrote, "Romney played by the rules."

We agree on everything except you know a lot more about taxes and finance than I do.

PS: what do you think about my idea for progressivity in capital gains rates?

Progressive capital gains is a no-brainer. There is a huge difference between some guy managing his stock portfolio, and an owner selling his business, or a hedge fund manager getting is payout, yet they're all taxed at the same rate.

I'm not proud to say it, but I would really like to see his tax returns too.

Well Geojanes certainly there must be more there in thos tax returns than what he just released in the one year he released. I think his tax returns are relevant to his job. He is going to making decisions on taxes that will have an enormous effect. His plan is to reduce top rates substantialy which will then be balanced by closing some as yet unspecified loopholes. So when Americans decide whether to vote for this man who will have the power to make decisions on their taxes, I think they have a right to see how he handled his taxes. Even if everything is legal at some point reducing your taxes is somewhat unpatriotic--this is his country and should be willing to pay his fair share of taxes, at least if he wants to be president. We already know that he pays less taxes than your typical middle-class family--if he tried to reduce it even further I think that most people would find that to be questionable behavior for a presidential candicate, particularly when he has running for president since 2006 or 2007--he certainly could have adjusted his investments so that they would not be objectionable to most people.

Separately, as you pointed out, by Romney releasing his tax returns we get to have a discussion on tax fairness. Capital gains taxes have not traditionally been this low--this is a recent development initiated by the Republican party at the behest of the wealthy. The average American would not have supported those reductions and by Romney releasing his tax returns we will get a discussion about capital gains taxes.

What I love about this thread is just watching you folks get all twisted up for nothing. There is not even a whiff that Romney ever did anything wrong, unlike, oh, I don't know . . . Obama's real estate deal with Rezko. Of course, that doesn't matter. Neither does his executive privilege claim with Fast and Furious or any of his other secretive moves. What really matters is Romney's tax returns!

Why? Because if you can talk about his deductions for 2 weeks, it will take the spotlight off the President's incompetence.

Should all presidents be held to the same standard? President Obama released 6 years as a candidate. If it is a requirement, then make it so.

As Freeman2 brought back the specter of tax fairness, and said Romney paid less than a middle class family, is he talking total amount, or percentage? If it is percentage that is not fair, why does the tax code show how much to pay? Are you saying Romney os cheating the tax code, Freeman2? What law has he violated Mr Reid?

It's not a question of whether he did anything illegal. I very much doubt anybody's tax returns would show evidence of illegality, or if it did then they'd seriously need to hire a new accountant. The point is that there's obvious something there which he judges to be politically embarrassing, sufficiently so that he's willing to allow all kinds of insinuations to fly around unchallenged for the remainder of the campaign rather than reveal it.

Sassenach wrote:It's not a question of whether he did anything illegal. I very much doubt anybody's tax returns would show evidence of illegality, or if it did then they'd seriously need to hire a new accountant. The point is that there's obvious something there which he judges to be politically embarrassing, sufficiently so that he's willing to allow all kinds of insinuations to fly around unchallenged for the remainder of the campaign rather than reveal it.

Rubbish. That's pure speculation.

Reality: whatever is there would be scrutinized endlessly and will provide plenty of opportunities for Obama and Co to distort. Why would Romney want that?

I do wish he'd released them a year ago. Of course, I also thought he should distance himself from Romneycare.

OK, since there is nothing illegal (assumed by Sass, as well as myself), it must be an issue of fairness. What is fair?

How much do the people of the nation have to pay? Should the percentage be the same or the the amount? Perhaps your beliefs in fairness are not based upon equality. (again, an assumption by me). Since I think you want a higher percentage/amount for the people making more...

What does a person who make $250,000 a year (joint filing) have to give the Federal Government, Sass?

bbauska wrote:Should all presidents be held to the same standard? President Obama released 6 years as a candidate. If it is a requirement, then make it so.

It's not a legal requirement, but it does appear to be becoming a political one.

As Freeman2 brought back the specter of tax fairness, and said Romney paid less than a middle class family, is he talking total amount, or percentage?

It's percentage.

If it is percentage that is not fair, why does the tax code show how much to pay? Are you saying Romney os cheating the tax code, Freeman2? What law has he violated Mr Reid?

No law, but the law is fixed in favour of people 'earning' income on investments, classing them as 'capital gains' instead of income, and taxing at a lower rate. With the use of off-shore accounts in foreign tax havens and countries with high secrecy, and creative tax accounting, not only can you legally reduce the rate you pay based on the 'type' of income, you can also hide some income away altogether.

Is it illegal? Probably not. Is it immoral? In my opinion it is, especially at a time when the country has high debt and deficits and could do with reducing them.

It isn't necessarily a fairness thing. He's already come out and declared that his effective rate is around 14%, which is obviously lower than the average family pays. My guess, which is entirely speculative and based solely on a hunch, is that he's hiding one of two things. The first would be that for at least some of the years in question his effective rate was substantially lower than that thanks to careful manipulation of legal but ethically dubious loopholes and he doesn't want it to be revealed because it would reveal him to be part of an insulated elite and lay him open to the (not entirely unreasonable) charge that he doesn't understand the struggles of ordinary voters. The other thought which crossed my mind is that it's quite possible that Romney, utilising his contacts in both Wall Street and government, managed to make a killing during the financial crash of 2008-09. He certainly wouldn't be the only canny investor who managed to buck the market during this period, but he's the only one running for elected office and it would look very bad to those Americans who lost their homes and jobs during this period. Again, if this is true it wouldn't be illegal, but it wouldn't exactly look good either and I can see how he'd not want it in the public domain.

Steve is quite right to dismiss all this as speculation because that's exactly what it is, but it could easily be cleared up by the simple expedient of releasing the tax returns. I don't think it's unreasonable to infer from Romney's refusal that there's some kind of information in there which he doesn't want exposing.

What does a person who make $250,000 a year (joint filing) have to give the Federal Government, Sass?