Mitt Romney Offers Three Distortions About His Taxes All Rolled Up Into One Big Lie
Mittens' tax returns show that the 'unemployed' candidate made over $40 million in 2010 and 2011, and paid 13.9% in taxes on those sums. A paltry figure, and Romney is responding to the criticism he's received with two age-old and wholly dishonest conservative talking-points, and an additional sleight-of-hand, all rolled into one juicy bundle of mendacity.
Via Think Progress, this is what he told Univision's Jorge Ramos in an interview this week:
Romney: One of the reasons why we have a lower tax rate on capital gains is because capital gains are also being taxed at the corporate level. So as businesses earn profits, that’s taxed at 35 percent, then as they distribute those profits as dividends, that’s taxed at 15 percent more. So, all total, the tax rate is really closer to 45 or 50 percent.
RAMOS: But is it fair what you pay, 13 percent, while most pay much more than that?
ROMNEY: Well, again, I go back to the point that the, that the funds are being taxed twice at two different levels.
Mendacious talking point, the first: “double-taxation.” We don't tax “funds” in this country, we tax transactions. If a company turns a profit on its transactions, it pays taxes on that profit. When it pays money out to investors as dividends, or when investors sell stock at a profit, those transactions are also taxed. No transaction is taxed twice.
Mendacious talking point, the second: that 35 percent tax rate. As I've written before, that's the top corporate tax rate on the books, but because businesses take advantage of all manner of loopholes, the effective rate – what they actually pay -- is actually far lower. It's a classic conservative talking-point that we have the highest corporate tax rate in the world, but the reality is that we collect less in corporate taxes than most developed countries. Studies of some of the biggest companies have shown their effective tax rates to be, on average, less than half of what's on the books.
And the sleight-of-hand: Bain Capital is a Limited Liability Company. This is what's known as a “pass-through” structure, meaning that the company pays zero in corporate income taxes – the partners' shares are taxed as income or losses on their personal returns, and, in this case, most of the gains are investment income taxed at 15 percent.
In other words, even if we bought the “double-taxation” nonsense and the 35 percent rate, his talking-point still wouldn't be true.