8
How Mitt Romney's tax rate stacks up
Republican presidential candidate, former Massachusetts Gov. Mitt Romney Mitt Romney speaks with the media after holding a Roundtable on Housing Issues on January 23, 2012 in Tampa, Florida.
To view this content, Javascript must be enabled and Adobe Flash Player must be installed.
Adriene Hill: After a whole lot of back and forth on the campaign trail, Republican Presidential Candidate Mitt Romney has released his tax returns.
We asked Marketplace's Jennifer Collins to run the numbers and give us a little perspective.
Jennifer Collins: Mitt Romney's returns show he makes more than $20 million a year. That means he could fall into the highest tax bracket: 35 percent. But because much of his income comes from investment, he's paying about $3 million a year, which brings his effective tax rate to... about 15 percent. Sounds low, but it actually may be higher than you and I pay. And that's because taxes are complicated. The tax bracket you fall into doesn't always tell the whole story. Because of nuances in the tax code, the effective rate is a better reflection of what we pay than the tax bracket.
Chris Bergin is with the news and analysis nonprofit Tax Analysts.
Chris Bergin: I pay a larger effective tax rate now than I did when I was starting out as a young editor writing about tax. I earn more income. I think that's fair.
The Tax Foundation says the average person pays an effective tax rate of 11 percent. Still Bergin says many will find Romney's tax burden too light.
Bergin: This is a self-inflicted wound. I'm not so sure it heals with just what he's releasing. I'm sure he's hoping it is.
And Romney is still paying lower taxes than the average millionaire. The Tax Foundation says most of them pay around 25 percent.
I'm Jennifer Collins for Marketplace.
One major oversight in all of your coverage of Romney's tax situation: half of Americans pay NO federal taxes at all. Comments about how 15% is "less than most of us pay" are therefore completely false. Even a 1% tax rate is more than what most people pay!
I'm curious why we have all this talk about Mitt Romney's tax rate, and a relative lack of coverage of his political peers and competitors. Most top Washington politicians are multimillionaires, and pay similar rates on their incomes. Why is Romney so interesting to the media? Because, to be honest, he's not very interesting to me.
I also was disappointed in the lack of depth in this story. You did not mention at all the controversy over "carried interest" (performance fees) being taxed at the same 15% rate as capital gains, even when private equity partners or hedge fund managers may not have invested any of their own money at all. Even if you believe that capital investment helps create jobs and so should get preferential tax treatment, it is hard to argue that "carried interest" should get that same preferential tax.
The story on Romney's tax rate is a disservice to your listeners. It gives the impression that Romney is paying his "fair share" without providing any evidence to support that inference. We are told to use the "effective" rate of taxation without being given any idea how to calculate it. We are told the "average" taxpayer pays an "effective" rate of 11% without being given any definition of "average taxpayer. " The conclusion from the story is that Romney is just an "average" taxpayer--just one of us. This is an important issue. I expect more from NPR.
I am an avid listener to Marketplace at many hours of the day and week and usually give the program high marks for appropriate thoroughness. However, I was very disappointed in this piece - you fell far short of your usual standards. In fact this is the first time I was so disappointed I have chosen to write about it to help prevent future mistakes like it. I believe this failure was due to carelessness on the part of the reporter and softness on the part of the editors in asking for meat rather than pablum on a piece for NPR of all places. This piece was the kind of weak reporting I turn away from commercial radio to avoid. Your expert raised several points that you didn't pursue and you dwelt on many things typical NPR listeners are already comfortable with. For example, he mentions that he is not concerned with the any rate at all, but more with what the rates motivate in behavior. This was an opening for the interviewer to ask, "For example, how would the rates affect behavior of interest to you?" That would have been useful. There was no mention made of why a rich investor's rates on the same gross income would be different from a salaried person's. And you overlooked totally what Romney did with money to avoid paying tax on it. Those issues are very relevant to voters assessing character and whether Romney's behavior seems sleazy or just exactly what the tax code is trying to encourage. Please exercise more are to make your pieces more worth listening to in the future.
