Why release an average figure way back to 1990? Because CG tax was 29% till 1997

[muriel_volestrangler]

Top capital gains tax rates (and earned and unearned income tax, but Romney used the 'carried interest' loophole of hedge fund managers to get his Bain Capital income taxed at capital gains rates) here: http://www.ctj.org/pdf/regcg.pdf

Romney has released this average over 20 years to say "look, I've paid plenty - an average of over 20%!". But with the top capital gains tax rate at about 29% from 1990 through 1996, 21% 1997 through 2002, and then dropping to about 16%, you can see that, even if the "never below 13.66%" claim is correct, he'll have paid about 14% ever since the top rate dropped in 2003, and his average tax rate only gets up to 20% when you take into account the 1990s - the era of the tax rates that we'd like to see the top rates going back to. But he had to go back to 1990 to get the "I paid 20%" claim in. Get that leading "2" in, and the rate doesn't look quite so obscene for an income measured in multiple millions.

[enough]

1. Great point. (nt)

[renate]

2. oh my gosh, good thinking!

[jorno67]

3. so can you apply this info to the numbers he released to get what % he paid from 2002 to 2009?

My brain is not wired that way....

[muriel_volestrangler]

4. Not with any more accuracy than "perhaps 14%"

We know the vast majority of his income has been capital gains, or 'carried interest' that, although really remuneration for a job (past or present) gets taxed at the lower capital gain rate because of a loophole that Bain Capital and others lobbied for. He called income from speeches of $374,000 'not very much'. I'm also not sure if the accountant has totalled the entire gross income over 20 years, the entire tax paid over 20 years, and used those 2 figures to worked out the 'average tax', or if he's taken the tax rate paid for each year, and averaged all of those. If his income varied a lot over 20 years (which I expect it would, what with 2 recessions in that time, which will effect capital gains in a big way), the 2 ways of calculating an 'average tax rate' might produce different results.

On edit: that last point was picked up by CNN, and they've found out it was by averaging the rates from each year, but Romney won't give how the other method would work out:

Even the 20.2% average federal tax bill in the letter is likely overstated by at least a few percentage points, Williams said.

That's because the accountants averaged the effective tax rates for each of the 20 years, rather than compare total taxes paid to total adjusted gross income. This method gives too much weight to the years Romney had a higher effective rate, Williams said.

When asked Friday, the campaign would not provide any comparison of taxes paid to total income for the 20 years covered by the statement from the accountants. It also would not disclose what percentage of total adjusted gross income over the 20 years was paid in federal income taxes

http://money.cnn.com/2012/09/21/news/economy/romney-tax-history/index.html

[JDPriestly]

16. I did an exercise just for fun. It surely would not have much to do with his actual

tax returns.

But, if you take the tax rates applicable to Romney's earnings from 1992-2011, you have a total of 20 years. And if you assume a tax rate of 29% for the years from 1992-1997 and add 29% for six years, assume 21% for the years from 1998-2003 and add 21% for those six years, then assume 16% for the years from 2004-2011 and add 16% for those eight years, then divide the total you get (6x29 + 6x21 + 8x16), you get about 21.4%. That would be the minimum tax rate for a guy generally in his tax bracket. And Romney paid almost that much.

It is quite likely that Romney earned enough, even in the bad years, to have to pay the maximum tax rate for most of his income, so it is, in my view, quite likely that he always paid the minimum tax rate on most of his income.

Knowing is tax rate without knowing his annual income is pretty meaningless. What his statement about his tax rate does not show is how much his income was for each year, how much of his income is shielded from taxes in accounts in tax havens and whether there were years in which he declared no taxable income and therefore paid no taxes. In fact, considering he claims to have paid only 20.2% average in taxes, it is possible that there was a year in which he paid less than the maximum in taxes. That is because, had he paid the top rate for every year, he might have paid 21.4%.

The information Romney released is utterly useless.

[WCGreen]

5. If he was paid in Long Term Capital Gains, he would be paying at the most

15%. Deductions phase out starting at one level of income which I can't remember. It changes every year for inflation. So if Romney made $ 20m in one year after 2002, he would only pay $3million at the most.

Again, the income for any given year was probably arrived at by selling and then recognizing assets for a loss. And there were probably a lot of non taxed income that derived via purchasing certain municipal bonds. A lot of people in the upper level of taxation purchase non-taxable muni-bonds.

I've been doing taxes since 1986, none of my clients even approach Romney's level, but I do prepare taxes for people way in the upper brackets. I always tell them to take advantage of what you can. These favorable tax rates for Muni Bonds keep the interest that schools and cities payout because it is not taxed.

[central scrutinizer]

6. define average

you can't average "rates" since they are applied to different bases. Only a weighted average will be close to representative.

[Skinner]

7. This needs a kick.

Nicely done.

[SnowCritter]

8. Show me the raw data and I'll analyze it myself

Averages by themselves don't mean squat.

[magical thyme]

9. We also don't get to see exactly what he paid in 2009

The year of amnesty for illegal Swiss accounts. To get amnesty, he would have had to pay all back taxes, plus interest and penalties in 2009.

We know he had an account with UBS, but his federal filing forms don't indicate whether it was in Switzerland (illegal) or with the US branch (legal).

[Honeycombe8]

10. They went back to 1992, I think. 20 years. The fed inc tax rate was almost 40% in 1994.

I think that's why they had to go back so far. The top rate of 40% coupled with the higher capital gains tax rate (which dropped to 15% in 2003).

I'm also interested in knowing WHEN he started moving substantial assets overseas, which no doubt decreased his taxes.

[DallasNE]

11. That Is What I Said Earlier

Although I didn't have the specific rates you supply here.

http://www.democraticunderground.com/?com=view_post&forum=1014&pid=239915

[beac]

12. The first twenty years of my life, I weighed an average of 65 pounds.

I was neither a ginormous baby nor an itty-bitty teenager. That average is about as indicative of my size during those years as Rmoney's tax average is of his financial position over a similar period.



Show us "average" people the actual returns, Mittens you coward!

[deurbano]

14. LOL

[Zambero]

13. Figures will lie, and liars will figure

Case in point.

[groundloop]

15. And it's becoming apparent that Rmoney isn't even a good liar

I really expected better from him. We all knew he'd eventually come out with some bits and pieces to attempt to quench the flames regarding his taxes, but this is pathetic, I just didn't think he was as stupid as this.