Over the last two weeks, Mitt Romney has faced bipartisan criticism for his creative tax accounting (including accounts in the Cayman Islands and Bermuda), his mysterious tenure at Bain Capital, and his refusal to release further documentation of either (fueling speculation that Romney may have paid little or no taxes in previous years).
These attacks, while personal, are neither unfair nor trivial. Massively regressive tax breaks and deregulation—the same policies that have enriched Romney and exacerbated income inequality in the United States—are the very crux of his platform. Under his own tax plan, Romney would pay just 13.1 percent of his $23 million income in taxes, according to Citizens for Tax Justice. That’s about $4.8 million less than he would pay under President Obama’s plan, which CTJ estimates would cost Romney 34.3 percent of his income in 2013.
Without policies to broaden the tax base, the Tax Policy Center estimates Romney’s tax plan would add more than $3 trillion to the national debt over the next decade. Romney has rejected this figure, claiming he will raise revenues by closing loopholes in the tax code. We do not know which, because he has not specified any. But we do know that he has ruled out any changes that would affect wealthy taxpayers like himself. Capital gains and dividends are off limits, as is the “carried interest” deduction that allows hedge fund managers and private equity owners like Romney to pay 15 percent of their salary in taxes rather than the top rate of 35 percent. (We can only speculate as to whether Romney favors closing the tax loophole that allowed him to shelter as much as $100 million tax-free in his IRA.)
These kinds of accounting gimmicks, so familiar to wealthy elites like Mitt Romney, are not illegal. But they illuminate a world that is utterly alien to most Americans: an alternate universe where anything is possible—”heads-I-win, tails-you-lose” investments, leveraged buyouts, shell corporations in the Cayman Islands and $100 million IRAs—if you can afford the right legal team.
Mitt Romney is a convenient personification of that world and the inequality it sustains. Amidst all the political backbiting, let’s not forget that the policies he is proposing would actually exacerbate it.
Must… read… this.