What Mitt Romney Really Represents
By Robert Reich/ robertreich.org/ September 21, 2012
It’s not just his giant income or the low tax rates he pays on it. And it’s not just the videotape of him berating almost half of America, or his endless gaffes, or his regressive budget policies.
It’s something that unites all of this, and connects it to the biggest underlying problem America faces — the unprecedented concentration of wealth and power at the very top that’s undermining our economy and destroying our democracy.
Romney just released his 2011 tax returns, showing he paid $1.9 million in taxes on more than $13 million of income last year — for an effective tax rate of 14.1 percent. (He released his 2010 return in January, showing he paid an effective tax rate of 13.9 percent.)
American has had hugely wealthy presidents before — think of Teddy Roosevelt and his distant cousin, Franklin D. Roosevelt; or John F. Kennedy, beneficiary of father Joe’s fortune.
But here’s the difference. These men were champions of the working class and the poor, and were considered traitors to their own class. Teddy Roosevelt railed against the “malefactors of great wealth,” and he busted up the oil and railroad trusts.
FDR thundered against the “economic royalists,” raised taxes on the wealthy, and gave average working people the right to form unions — along with Social Security, unemployment insurance, a minimum wage, and a 40-hour workweek.
But Mitt Romney is not a traitor to his class. He is a sponsor of his class. He wants to cut their taxes by $3.7 trillion over the next decade, and hasn’t even specified what “loopholes” he’d close to make up for this gigantic giveaway.
And he wants to cut benefits that almost everyone else relies on — Medicare, Medicaid, Social Security, food stamps, unemployment insurance, and housing assistance.
He’s even a warrior for his class, telling his wealthy followers his job isn’t to worry about the “47 percent” of Americans who won’t vote for him, whom he calls “victims” and he berates for not paying federal incomes taxes and taking federal handouts.
(He mangles these facts, of course. Almost all working Americans pay federal taxes — and the federal taxes that have been rising fastest for most people are Social Security payroll taxes, which aren’t collected on a penny of income over $110,100. Moreover, most of the “47 percent” whom he accuses of taking handouts are on Medicare or Social Security — the biggest “entitlement” programs — which, not incidentally, they paid into during their working lives.)
Money means power. Concentrated wealth at the top means extraordinary power at the top. The reason Romney pays a rate of only 14 percent on $13 million of income in 2011 — a lower rate than many in the middle class — is because he exploits a loophole that allows private equity managers to treat their income as capital gains, taxed at only 15 percent.
And that loophole exists solely because private equity and hedge fund managers have so much political clout — as a result of their huge fortunes and the money they’ve donated to political candidates — that neither party will remove it.
In other words, everything America is learning about Mitt Romney — his tax returns, his years at Bain Capital, the video of his speech to high-end donors in which he belittles half of America, his gaffes, the budget policies he promotes — repeat and reenforce the same underlying reality.
So much wealth and power have accumulated at the top of America that our economy and our democracy are seriously threatened. Romney not only represents this problem. He is the living embodiment of it.
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Arlen Grossman, I was not much of a Mitt Romney fan. Having said that, he sank his own ship with his 47% comment.
Arlen Grossman, Mitt Romney seems like a nice enough guy. What really rubbed me the wrong way was relating to his 47% comment. You cannot dismiss a certain segment of the population as being moochers and expect them to vote for you.
Arlen Grossman, the one thing that Mitt Romney said that hurt him politically was his 47% comment. You can’t discard 47% of the population as a bunch of moochers and expect them to vote for you. No politician from either Party can do that and expect any rational person to vote for a candidate from said Party.
Arlen Grossman, even if what he said was true from a technical standpoint, Mitt Romney hurt himself politically with his 47% comment. You cannot claim that a certain percentage pf the population are moochers and expect them to vote for you.
Arlen Grossman, if the top marginal tax rate was 25%, with the Capital Gains tax being 25%, you would only pay taxes on a dollar amount above a specified threshold. The biggest problem in my view is that certain types of income seem to get preferential treatment.
Arlen Grossman, I know what a marginal tax rate is. What I don’t get is why Leftist political types claim that a flat tax is regressive, considering the fact that flat and regressive have to separate meanings.
The flat tax will help the rich more than our current progressive tax does. That is why a flat tax would be regressive.
Arlen Grossman, a flat rate means that the rate is constant. People who attempt to make flat and regressive economically equivalent are economically illiterate, as well as not being able to comprehend the meaning of each word.
Arlen Grossman, I am sure that Mitt Romney is a nice enough guy. My only issue with him is his 47% comment, where he said that people who were in the 47% of the population that pay no income tax would have stood with Barack Obama no matter what. Just saying that because some people do not earn enough money to pay income tax that they will vote for one Party’s candidate over the candidate of another Party is absurd.
I could work with that, but if your proposal only widened the wealth inequality, I would be against it. I would want more progressively on the taxes of the wealthy
Arlen Grossman, in another post, I had mentioned being in favor of a flat tax of 15%, with capital gains being taxed on a sliding scale, between 15% to 25%. Between a flat tax with a sliding scale on capital gains or a consumption tax, which would you prefer?
Sorry, Jeffrey. I have no opinion on that. I haven’t given it any thought, but maybe I should.
Which do you prefer?
Arlen Grossman, I would prefer to tax consumption. However, if a consumption tax is not appealing to a lot of people, I would settle for a flat tax, with a floor, so if you make $50, 000.00 a year or less, you pay nothing, not even payroll taxes. If you earn $58, 000.00 a year or more, you pay 25%. Capital Gains is subject to a sliding scale, between 15% to 25%. The only deductions I would retain are those for business purchases, educational expenses, if you are working at a job to help pay for college tuition, home mortgage interest and charitable contributions. A few more things I would do are as follows: 1: Abolish the Department of Education. 2: Raise the minimum wage, however, doing it gradually to study its economic effects. 3: De-fund Planned Parenthood and use that money for women’s health centers. 4: End the war on drugs. The financial cost is absurd. I do not condone their use, however, as a matter of personal freedom, I believe that other people should use them if they wish to.
We agree on number 4, Jeffrey, though number 2 sounds reasonable.
Arlen Grossman, I am open to the idea of raising the minimum wage if its end result leads to less government spending on welfare programs. You said that you agreed with me on points 2 and 4 on what I would do if I had enough say so. Unlike many conservatives, I see no real problem with raising the minimum wage. Having said that, I would raise it gradually and study its effects on the economy. Assuming that there was no damage to employment, I would say raise it, however, I would do it gradually. Now, a 25% tax rate may seem high to some people and low to other people. However, if you allow a certain amount of income to be tax-free, as well as eliminating the payroll tax, both would put more money in people’s pockets.
Arlen Grossman, even if there was a degree of inequality, a certain income threshold is free of tax. So, the income inequality talking point has limited validity to it. Your statement omits the issue of savings, so even if there was a level of income inequality, it would be made up for by people having more money to save and invest.
I’m really talking about wealth inequality, not just income. Savings comes under that, though I’m not entirely sure what you meant. But I think your proposal is a good start for a fair tax plan.
Arlen Grossman, both forms of inequality, wealth inequality and income inequality, are problematic. The problem is that our current tax code punishes people who save and invest their money. Perhaps it can be argued that I am doing the same thing with my idea of a sliding scale regarding Capital Gains taxation, however, I am trying to put forth an idea that should appeal to both sides of the political aisle.
Arlen Grossman, If Mitt Romney had advocated a top marginal tax rate at 25%, with the Capital Gains tax at 25%, would you be all right with that?
Maybe, but I would have to know a lot more.
Arlen Grossman, under the idea I offer, poor and most middle income families would pay nothing in federal income taxes. The payroll tax would also be eliminated in favor of a simple flat business tax of 15%. Now, from the standpoint of earned income, if you earn $50, 000.00 a year or less, you pay nothing, not even payroll taxes, as I said. If you earn $58, 000.00 a year or more, you pay 25%.