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Posted on 01/27/2012 2:30:38 PM PST by BMCinSC
I've been hearing from the pro-Romney supporters that although his recent 15% tax rates are mainly based on dividend and capital gains income (that part is true), but they also state that his original income was taxed at ordinary tax rates (upwards of 36%) and even previously taxed at the corporate level. How do we know that is true? I've run limited partnerships as the general partner whereby my compensation fees were calculated as a percentage of profits (normally 20% of profits) and those were taxed at 15% capital gains rates, i.e. not ordinary income tax rates. Most Venture Capital and Private Equity Funds, such as Bain, operate this way. Now, I'm not saying that he broke any laws, but I'd like to know if its really true that he did in fact pay higher tax rates when he earned his wealth. Any one know?
The vast majority of Roney’s income is from cap gains. He doesn’t have a conventional job with compensation, so his effective tax rate was around 14-15%. People who earn a living and pay income taxes, then invest and get cap gains do get whacked twice.
Although you are right to be leery of a prior-taxation figure of 35% (it could be a good deal lower), the point that any GOP candidate should be making is that “it was already taxed once before” — a point that most leftist voters don’t really understand.
Based on experience of partners at Bain Capital - he probably paid close to 40% - if he earned it as regular income.
This is a discussion any capitalist should welcome, and any leftist should fear.
The problem is that “carried interest” in assets still held within the Bain umbrella is only ever taxed at the cap gains rate of taxation. It’s a tax loophole specifically applicable to the private equity industry. Charles Grassley has been trying to change it for years, because it’s actually fairly sneaky, but the lobbyists have stopped it from being changed.
First, I don’t like Romney. I think he is sneaky and a Scott Brown clone.
That aside though, I don’t recall that he or anyone else did say what tax rate he paid on the original earnings that have been invested and that he now lives on.
And besides that, so long as he earned the money legally and the taxes were paid legally it is none of our damn business what rate he paid so long as he didn’t lie about it and I don’t think he did lie about that.
I’m quite confident that you have taken advantage of every tax reduction method available. I hope you did so legally as well.
Tax evasion is a crime, tax avoidance is good business.
We must destroy anyone who’s successful.
We don't like the guy because he's a big government RINO, not because he's rich.
the carried interest is paid from which income stream pre or post tax? answer post, ergo those payments have already been taxed at the corporate rate. If the gov wants to let companies pay pretax income to investors, then ok let investors pay personal income tax rates. The disruption that would cause would be huge however.
Why are we even discussing Mittens’ tax rates? Why did Newt have to take us down this path in the first place? Why did he have to say Mittens makes “$20 million a year automatically without working”? Hey - great idea - let’s demonize capital gains taxes, so when Obama is re-elected, there can be a national backing to double them, and drive even more corporations and investors offshore.
Folks really need to start here, before going down this class warfare path:
I don’t like Romney. But if he pays the legal tax rate then I have no beef with him on that issue.
Capital gains should be low, because its not a salary. You risked your money in order to make money.
Obama made a big deal out of the fact that a secretary pays a higher rate than an investor does... but he didn’t offer to lower her tax rate. She didn’t risk anything to make her money, so its apples and oranges, but if you think its wrong for her to pay more, then lower her tax rate to equal capital gains. I think Romney and Gingrich both have that as their plan. Santorum still likes multiple tax rates for income though he does evidently agree with keeping capital gains low.
What’s relevant is what tax rate he wants us to pay, not what tax rate he paid way back when.
It's not just lefties. A lot of independents don't understand that. I'd wager a lot of RINO Republicans don't know that.
Whenever we discuss issues with Romney, we need to discuss them on multiple levels and think of them on a timeline - and consider how they would be problems if he becomes the Republican nominee (I just threw up a little in my mouth).
I believe a lot of independent voters will have a problem with Romeny's low tax rate if Obama and the media make it an issue. Those voters won't stop and listen to the long story about 'he was already taxed' and ' those are taxes on investment income."
Just the fact that he has money in Swiss bank accounts (and seems to have 'lost' $3 million) is an issue for independents who are wary of stereotypical Republican fat-cats.
His flip-flopping is going to be an issue with independents - because he has flip-flopped. With even a tiny amount of help from Obama or the media, they'll be thinking "do I believe Romney 1.0, Romney 2.0, Romney 3.0, Romney 3.1, Romney 3.1.1, or so on."
His "I earned a little" comments that end up referring to $350,00+ make it look as if he's out of touch with the common man (because, well, he likely is).
They'll be leery of a guy who says "I'll bet you $10K" when they bet $10.
We may have problem with his liberal views here - but for Romney to win, he has to convince some of the middle-grounders that he's not a clueless, born-to-the-silver-spoon, Swiss-banking, I-forgot-$3-million, say-what-strikes-me-as-right-today, cufflinks-with-jeans, watch-my-PAC-engage-in-massive-hypocrisy, Hollywood-move-script, Republican straight out of Central Casting.
Which may be hard. Because he, well, he appears to be just that.
I think the weekly budget to maintain Romney’s coiffure easily outpaces my weekly grocery bill...
You don’t understand what carried interest is or how it works, so that is going to make it difficult to explain to you why it is a significant tax loophole that is available to private equity fund managers and not available to anyone else.
Basically it is the compensation that a private equity fund manager receives, but it is taxed as though it were an investment.
Say you were a real estate broker, and you sold a house and instead of being paid a commission in cash, you retained a 3% ownership interest in the house tax free. Then 5 years later the house is sold again, and you get the 3% amount paid in cash now, but it’s only taxed to you, the broker on the previous transaction, at a 15% rate, because it was an investment. You basically never paid any regular income tax on acquiring that asset.
That is how Carried Interest works, and it probably needs to be changed.
so your saying the carry comes from the pretax profits of a corporation similar to salaries of employees, thus reducing total pretax corporate profits? otherwise the income stream has already been taxed.
No, it is not a dividend from the profits of the company.
It is a grant of an equity interest, usually in the form of freshly issued shares, to a fund manager, as his fee for managing the private equity fund. However at the time the equity is granted, it is not taxed to the manager or anyone else, and when he ultimately sells it, it is only taxed at a 15% rate.
It’s no different from if you worked at Ford, and instead of a salary they gave you cars tax free, and then when you sold them you only paid a 15% tax on the proceeds.
so your saying the dividend/payment comes from retained earnings, ie post tax income. thus those funds have already paid corporate taxes.
So you think a 50%+ tax rate is ok.
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