Let me say this about that:
Now that that’s out of the way: This morning on NPR, talking heads were speculating on why a usually astute politician like Romney would not release his income tax returns. One fellow guessed that Romney may have taken a beating on some of his holdings during the downturn, and might have paid no income tax, which, it went without saying, would look bad to us little people.
Just to be clear: the idea is that every year, each American who made any money in the previous year is supposed to fill out a bunch of forms to see if they owe the federal government any income taxes. If, after following the rules and doing the math, you made any “taxable income” you have to pay some tax. Boo hoo. 😦 However – now, follow this closely – if you discover you have not made any taxable income, you don’t have to pay any tax for that year. Sometimes, due to some complicated rules in the tax code, you might even get some of the money you paid in previous years back! Woo Hoo! 😉
So, here it is: Romney, it is suspected, lost a bunch of money when assets he owned decreased in value due to the late economic unpleasantness. It might turn out that he lost more money in one place than he made in total everywhere else (such as salary). Overall, therefore, he lost money that year – technically, he had no taxable income. He then would pay no taxes for that year, and might even have gotten some money back.
(Usual disclaimer: not an apologist for Romney – he’s a cipher on a good day. Both our major parties are despicable.)
Here’s the catch: we, the voters, are assumed (alas! correctly assumed) to be too dense to understand this. We are assumed (again, correctly in most cases) to believe that Romney is cheating, is a rich dude who didn’t pay any taxes, and that’s so unfair!
Now, it may be true that rich people don’t pull their weight in supporting our federal government – I tend to think that’s roughly true. But, as I’ve explained at length elsewhere on this blog, income taxes are not a material concern for the truly wealthy. They own assets that produce more wealth, and would only pay income taxes on that wealth if they sold it – and even then, with prudent planning, you can minimize income taxes.
Keep in mind, there are people like you and me, who have to work for a living, to whom income taxes are a real material issue – we see our paychecks reduced by withholding, or have to write checks to the government regularly – and, it’s not always what we’d prefer to do with our money. But there are also people like the members of the Walton family, for whom work is strictly optional – their assets – largely ownership of billions of dollars worth of WalMart stock – are making them wealthy whether they work like a dog or lie around drunk all day. They don’t care very much about income – wages and salaries, and the taxes on wages and salaries, are for the little people.
Romney may be a bad man for all I know – but it’s not because he may have not paid income taxes one year. If you really think that’s unfair, then you’ll have to come up with some way to tax his assets, because some years he may just not make any taxable income.
Good luck with that.