Millionaires who owe no federal income tax

[Prof]

Both rich and poor may or may not have business expenses. I am "upper middle class" and have no business expenses (I am a member of an incorporated law firm and my "expenses" -- the firm expenses for all 140 employees-- are handled on that level). However, if I were a solo, even one with an LLC, I would have businesse expenses -- very significant business expenses.

Romney, for example, may have business expenses or he may just clip coupons and have very little in the way of business expenses (I haven't read his tax returns).

However, as long as he is just clipping coupons, he is paying taxes on investment income, which may be taxed as ordinary income, capital gains, etc., or may not be taxed at all -- municipals. All if this income has been subjected to income taxation when earned, unless based upon inherited funds or tax free retirement savings.

That boils down the issue to a simple question: Should the rich escape taxation because they can invest in, and live on, earnings from tax free issues or because they invest and only receive captital gains?

A 15% Captial gain rate doesn't disturb me, nor do tax free municipals. None of this violates "tax fairness."

[wserra]

(I haven't read his tax returns).

"Returns", plural? Neither has anyone else.

[Prof]

(I haven't read his tax returns).

"Returns", plural? Neither has anyone else.

Didn't he release one and promise another when he files?
So, he has really release only one.

[Quixote]

Yes, it does seem quite likely. The rich have business expenses, and the poor and middle class do not.

Poor and middle class business people have business expenses. Just look at the Statistics of Income Bulletins. For 2009, the last year for which figures are available, 1,212,176 returns showing AGI between $15,000 and $20,000 had a Schedule C showing net income. Another 307,869 had a Schedule C showing a net loss.

Anecdotally, I can tell you that there are a lot of small hair styling and child care businesses out there with net Schedule C income of between $10,000 and $15,000.

[webhick]

(I haven't read his tax returns).

"Returns", plural? Neither has anyone else.

I believe that The Daily Show has them going back ten years and has been informing us of some pretty awesome expenses, like the car catapult.

[Kestrel]

However, as long as he is just clipping coupons, he is paying taxes on investment income, which may be taxed as ordinary income, capital gains, etc., or may not be taxed at all -- municipals. All if this income has been subjected to income taxation when earned, unless based upon inherited funds or tax free retirement savings.

That boils down the issue to a simple question: Should the rich escape taxation because they can invest in, and live on, earnings from tax free issues or because they invest and only receive captital gains?

A 15% Captial gain rate doesn't disturb me, nor do tax free municipals. None of this violates "tax fairness."

Usually overlooked in the whole discussion about the fairness of "under" taxing dividend income: Double taxing of corporate profits. The corporation itself pays income tax on its earnings before it distributes earnings to its owners.

Sure, I have to pay tax on dividends. But the company that paid me the dividend, my ownership share of corporate earnings, already paid a big chunk of tax on that same income.

[Burnaby49]

However, as long as he is just clipping coupons, he is paying taxes on investment income, which may be taxed as ordinary income, capital gains, etc., or may not be taxed at all -- municipals. All if this income has been subjected to income taxation when earned, unless based upon inherited funds or tax free retirement savings.

That boils down the issue to a simple question: Should the rich escape taxation because they can invest in, and live on, earnings from tax free issues or because they invest and only receive captital gains?

A 15% Captial gain rate doesn't disturb me, nor do tax free municipals. None of this violates "tax fairness."

Usually overlooked in the whole discussion about the fairness of "under" taxing dividend income: Double taxing of corporate profits. The corporation itself pays income tax on its earnings before it distributes earnings to its owners.

Sure, I have to pay tax on dividends. But the company that paid me the dividend, my ownership share of corporate earnings, already paid a big chunk of tax on that same income.

The issue of double taxation of dividends was recognized by the government of Canada way back in the 60's. There was a radical revision of the Federal Income Tax Act in 1972 which had major changes such as the taxation of capital gains. I got my career-long job because of it because I started on the ground floor in the new and esoteric area of capital gains tax.

Anyhow a very large number of the senior, experienced Income Tax Department audit staff retired rather than learn the new Act. So they hired a huge number of new university graduates (ME!) untainted by any knowlege of the old act. One provision was the elimination of double taxation on personal tax payable on dividends already taxed at the corporate level. It worked perfectly for a while but then . . . Somehow things got more complex, the government started shaving the provisions in their favour, and now we're back to double taxation.

[Quixote]

I have no problem with so called double taxation. As long as corporations are separate legal entities with (limited) 14th amendment rights, they should pay taxes like the rest of us. If and when corporations revert back to being just another business structure we can stop taxing at the corporate level and tax dividends as ordinary income.

In the 1913 tax act, btw, some corporations were taxed, but dividends paid by those corporations were not. Brushaber's dividends from the Union Pacific, for example, were not includable in his gross income.

[fortinbras]

Well, ordinary I wouldn't want to inject mundane politics into this, but Mitt Romney - besides holding back on all but one year's tax return - says that it's a good thing that he exploited every tax loophole to pay minimal taxes; he said that if he paid more taxes than he absolutely had to, that fact would prove he was unfit to be President. On the other hand, back in 1968, his dad made public 23 years' worth of tax returns and it became very obvious that dad hadn't exploited every loophole, that George Romney had paid and was paying more in taxes than if he had ruthlessly exploited every loophole.

There's nothing particularly patriotic about paying too much in taxes, but most reasonable people see a difference between paying taxes efficiently and economically on the one hand, and spending an enormous amount of time and effort (and money!) to begrudge the govt every possible dollar.

[Prof]

I have a different take on Romney and taxes:

As a very serious contender, if not the only real contender, for the Republican Presidential nomination, why didn't he clean up his act? Prepare properly redacted tax returns for release and repatriate funds (paying the taxes) while closing the Swiss account. Given the stakes, this seems a small price to pay when seeking the Presidency.

[fortinbras]

Since you have allowed me to allude to the tax situation of Willard Mitt Romney ....

Back in 2008, when Mitt Romney was hoping to be picked for the VP slot by John McCain, Romney provided the McCain camp with copies of his tax returns -- 23 years' worth, according to reports (that must have been virtually every tax return Romney had worked up to that date). This means that, today, Romney has copies of those same returns in his own files - there wouldn't be any tedious problem prying loose copies from the IRS for him. He showed them to McCain, but he won't show them to the voters, now.

It would be intriguing if someone associated with the McCain campaign could dredge up those copies and make them public!!

So it's not a question of digging up a lot of old papers at enormous difficulty. Mitt showed those papers to McCain .... and McCain didn't pick Mitt to be his VP.

Mitt has been less than forthcoming on the very things that he brags about in his campaign. He's supposedly a successful businessman - but he's sort of vague about exactly when he was in business. He was the brains behind the Salt Lake Olympics - but the papers associated with that project are still locked away. He was a governor - but he seems to have amnesia about the one big achievement of his administration. He claims to be financially clever and not paid too much in taxes - and to be free of obligations to various fat cats - but he won't reveal his tax returns even though his own father did in 1968 (and George Romney's tax returns showed that he wasn't quite so obsessive about begrudging the govt every nickle).

[Number Six]

Mr. Romney is a textbook example of what David Cay Johnston wrote about in his book "Perfectly Legal". Surrounding him are trust and tax attorneys, most likely also Mormon, who will do anything for him to make sure his will to power comes to be. For the rest of us it does look unbelievably stupid politically to be avoiding income taxes to the nth degree but when you live in a protective bubble surrounded by yes men, you won't hear the contrarian view or how he might come clean in the name of open and honest government. "Dubya" had the same problem. I honestly don't know if corporations disguised as human beings could do an action that would be truly humble, original and egalitarian like taking a huge loss to his net fortune as repatriating his wealth. And on the other side it looks to me like Michelle wears the pants in the family, with Biden coming in a close second.

[The Observer]

What I find slightly amusing about the obsession about Romney's returns is that the behavior patterns of the people demanding that he turn over the returns for public inspection is very similar to the "birthers" demanding that Obama turn over his birth certificate for public review. In both cases, the axe-grinders, having nothing more than suspicion and personal loathing for the candidate in question, have decided that he must be hiding something by not giving to their demands, and that the information will somehow prove that he is not elgible or worthwhile for the office of president.

Of course, the irony is even more amusing when you realize that some of people demanding Romney's returns are the same ones who are always labeling the birthers as idiots.

[JamesVincent]

What I find slightly amusing about the obsession about Romney's returns is that the behavior patterns of the people demanding that he turn over the returns for public inspection is very similar to the "birthers" demanding that Obama turn over his birth certificate for public review. In both cases, the axe-grinders, having nothing more than suspicion and personal loathing for the candidate in question, have decided that he must be hiding something by not giving to their demands, and that the information will somehow prove that he is not elgible or worthwhile for the office of president.

Of course, the irony is even more amusing when you realize that some of people demanding Romney's returns are the same ones who are always labeling the birthers as idiots.

What is even more amusing is that Romney's tax returns have absolutely nothing to do with his being president or considered for president. Whether or not he paid more then his obligation is a moot point as long as he did indeed pay his obligation. According to the return he did show he was paying around what most people of his caliber pay, % wise. Not counting his tithe to his Church. And there is nothing in law to force a candidate to release his tax returns to the public. Romney's tax plan he proposed, IIRC, had no real cuts for his level, had nominal cuts for the middle class and a token increase to lower level incomes. Which, to me, seems to be more fair then just making one part of society pay more % wise then any other part. Like the Cap'n said, people need to get the entitlement bone out of their azz and actually read and understand the crap that their spouting.

[Prof]

James/CPT: My point about both the offshore accounts and (I think) Wes's point about the returns is Romney has show little common sense in avoiding distractions from his political message. He has allowed and even encouraged speculation about his offshore investments, IRA's, taxes, income, all by playing hide and seek. If I were running for President, I would make sure that-- to the extent possible -- my opponents could not take cheap shots. I would try to emulate "Ceasar's wife."

[JamesVincent]

James/CPT: My point about both the offshore accounts and (I think) Wes's point about the returns is Romney has show little common sense in avoiding distractions from his political message. He has allowed and even encouraged speculation about his offshore investments, IRA's, taxes, income, all by playing hide and seek. If I were running for President, I would make sure that-- to the extent possible -- my opponents could not take cheap shots. I would try to emulate "Ceasar's wife."

Birfer's come to mind Prof. There is no way to avoid "cheap shots". Obama himself is handing out cheap shots left and right regarding Romney's time at Bain Capital, calling him a corporate raider amongst other things. Even the Washington Post came up in an article and called Obama cheap and disproved every allegation he had made in his ads and in speeches by going through the SEC records and other public records. And, again, like the Cap'n said, as long as he followed the law and disclosed those accounts and the earnings they make there really shouldnt be a big deal made out of it. Except that people are really monkeys who love to fling pooh.

[Prof]

James/CPT: My point about both the offshore accounts and (I think) Wes's point about the returns is Romney has show little common sense in avoiding distractions from his political message. He has allowed and even encouraged speculation about his offshore investments, IRA's, taxes, income, all by playing hide and seek. If I were running for President, I would make sure that-- to the extent possible -- my opponents could not take cheap shots. I would try to emulate "Ceasar's wife."

Hey Prof. Is it true you stopped molesting the farm animals? - Just kidding, but regardless of your idea of running a campaign where your opponent could not take cheap shots at you, your opponent will take cheap shots at you, like asking if you have stopped molesting farm animals.

Or Harry Reid blathering about he heard that Romney hasn't paid any taxes in 10 years, or that some of the deductions taken should make him a felon, or that the candidate may have been born in Kenya.

By and large, politicians are base animals and the bulk of the electorate drooling idiots.

As to farm animals, since I left the farm (in Horry County, S.C.) and Clemson (A & M) University, the opportunites to enjoy farm animals, other than as dinner, have certainly been limited.

[Number Six]

Huh. And here I had always thought that taking every legal advantage possible to reduce your taxes was part and parcel of "the American Way."

For all the whining and b*tching some people are doing regarding Romney and his taxes, how much of it is driven by envy and how much is driven by the fact that those people and their tax advisors did not think of it first?

Also, Romney has accounts in Switzerland and the Caymans. BFD. So long as he is reporting any interest/earnings received on those accounts, there is no problem, except for those who want to play at class warfare and want to drag everyone down to the same level of muck and mire.

Here is an idea, instead of whining like little b*tches because Romney is wealthy and has Swiss and Cayman Island accounts and you don't, why not get off your lazy, parasitic, government-teat sucking *sses and work hard towards having the same for yourself? Be warned though, it will require hard work and careful thoughts and actions, and you likely won't get to that level. But so what. Are you going to sack up and accept the challenge, or sit there like a baby in your own filth, houlding out a dirty, grubby, sticky, soft little hand expecting everything to be handed to you and screaming when it isn't?

The aforementioned, Mr. Johnston has done an excellent job reporting on this topic, especially as it applies to Mr. Romney. I have no bias in this, just a sense of unfairness. I never have gotten a government check nor do I look to the "deserving" rich as leading lights.

[webhick]

Is it true you stopped molesting the farm animals?

I believe that, in a political venue, the correct answer is "I am deeply offended by the suggestion that I could ever stop."

[The Observer]

If I were running for President, I would make sure that-- to the extent possible -- my opponents could not take cheap shots. I would try to emulate "Ceasar's wife."

But by that philosophy, Obama should have immediately released his birth certificate to avoid the cheap shots being taken at him over the legitimacy of his US citizenship. And I think a number of people here both on right and left thoughthat would have been a caving into pressure and would have led to even more ridiculous demands for more personal information - that simply would have led nowhere. And I think they were right.

Likewise for Romney. This demand for his return is simply politically motivated by those who fear that Obama/the Democrats will lose the White House; this is because the election numbers are very tight and have not moved significantly for the last several months. Their desperate hope is simply to turn the election into a class-warfare issue and paint Romney as rich - therefore insensitive to the lower and middle classes. The argument will be he didnt pay his "fair share" (but there is no agreed definition on "fair share" by any of these howler monkeys; we are currently at 20% of the population paying 94% of the taxes and they still insist that somehow that is not enough).

And even the returns were released, what would happen if the release did not result in better numbers for Obama. Would we see demands for Romney to release proof that he doesn't have more than one wife? Or that he needs to reveal what the secret writing on his Mormon underwear says? Or provide evidence that he really did write all of his own homework papers? Where do we draw the line?