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Published: Thursday, Jan. 26 2012 12:00 a.m. MST

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ECR
Burke, VA

Lets first acknowledge that Mitt Romney has done nothing illegal in obtaining his vast fortune. Working within existing U.S. tax law, he was able to amass great wealth for himself as well as his partners and investors. But can we not make claims of his sainthood by giving false impressions of his intentions?

Romneys income for 2010 and 2011 includes about $13 million in carried interest. Carried interest is a share of the profits of a successful investment partnership that is paid to the investment manager of the partnership (in this case, money to paid Romney as part of his buyout at Bain) as a form of compensation, incentive to maximize performance of the investment fund. Carried interest is usually referred to as a "performance fee." It's not his money that is invested, it belongs to his investors. The issue is that this income is taxed at the same rate as capital gains, or investment income, while it is actually a fee for services rendered.

Which raises the question - why should Mitt Romney be taxed at a lower rate for his services than I am for delivering the services of my profession? Thats all.

Baron Scarpia
Logan, UT

Don't forget, Romney invests in the Cayman Islands to avoid U.S. taxes altogether... but that's another point. Yes, it's legal. Good for him! Clearly, we as citizens have to decide if we want a president who dodges taxes and engages in practices that only the rich can do. The rest of us 99 percenters have to keep our cash at Zions Bank and pay fees because we live paycheck-to-paycheck and can't maintain the minimum deposit to avoid user fees... So the banks exploit us AND the government expects us to pay taxes on our meager savings if we don't send it to the Caymans.

The other point is, however, should tax code tax LABOR at a higher rate than NON-LABOR. Since most Americans have to work for a living, is it fair that we have to pay a higher rate of our income to the government than folks who don't have to work? The tax rates should at least be equal.

I thought the GOP was all pro flat-tax... what happened to that conversation?

Mike Richards
South Jordan, Utah

Everyone of us would be paying Mitt Romney's tax rate IF we first paid 35% on our corporate income - as he has - and then invested the money in people and businesses - as he has.

I can't believe how many liberals are telling us that he does not deserve to be taxed at 15%. I agree. He has already been taxed at 35%. Let him, and everyone else, who invests money in people and businesses have an even lower tax rate. They have proven that they are willing to invest in people and in businesses. Isn't that what we need MORE of? Don't we need millions of new jobs? Isn't the lack of jobs the reason that people are not paying income taxes?

If more Americans only paid 15%, there would be more capital available to start businesses and to hire people. Instead, Mr. Obama thinks that the best thing to do is to take away that capital and then pay people to NOT work. He doesn't have a clue about what it takes to create jobs, but he has proven that he knows how to add $5 TRILLION to the deficit in a mere three years.

ECR
Burke, VA

Sorry Mike Richards. Mr. Romney did not pay 35% on anything. In case you missed the news, he released his most recent tax returns which show that he payed less than 15% because virtually all of his income is derived from interest, capital gains and carried interest.

He has done nothing wrong. In fact his best contribution to the debate is his willingness to show how the tax system actually benefits those who are wealthy and have the money to put into investments while those who get up and go to work every day are actually taxed at a higher rate. And has been illustrated in my previous post, a certain part of Mr. Romney's income - $13 million over two years - was not earned by his own investments but rather was a fee paid for investing other people's money.

As mentioned ad nauseam, Mr. Romney has done nothing wrong but there is a question of whether these circumstances seem fair to everyone. Apparently it is fair to some.

Mike Richards
South Jordan, Utah

ECR,

It would be some kind of magic trick to earn interest without first having a nestegg. That nestegg was taxed at the same rate that you or I would pay on ordinary income.

The government didn't "gift" him his nestegg.

If you have savings or shares in the stock market, you will have the priviledge of paying twice taxes twice, once when you earned it and again when you spent you profits.

Mitt Romney is not cheating. He is not "gouging". He paid his taxes. Just because his money NOW comes from investments does not mean that he never paid the maximum corporate when that "investment nestegg" was earned.

Mark B
Eureka, CA

Thanks to ECR for dispassionately explaining a subject not understood by many. But just the fact that all this wealth was amassed legally says that the financial/tax system of this country is tipped to favor the wealthy. This shouldn't surprise us. After all, they are the ones with the lobbyists on their side, checkbooks our for legislators who see things their way.

BTW, it's only deeply devoted Republicans who have the nerve to refer to the process of stripping out assets and job destruction using others' money as "investment."

VIDAR
Murray, UT

Mike Richards | 9:30 a.m. Jan. 26, 2012

As you have pointed out, too many times to say on this site. Businesses do not pay taxes. They just pass their tax cost onto customers.
So Mitt Romney did not pay 35%, and then another 15%. He paid a tax rate of 15%. Which is much less then most tax paying americans.
So if we want the super rich to pay their fair share. We must tax then on their individual income at a higher rate, without regards to what the business they own, or work for pays.

Gildas
LOGAN, UT

I like Mitt but, so far as this debate on taxation is concerned, it is my understanding that corporate tax is simply passed on to the consumer and we all pay it, even the poorest consumer.

Corporate taxes make the USA much less competitive than it could or should be internationally, and makes us all poorer. It seems to promote a common disadvantage to all of us. It would promote the general interest to eliminate it entirely.

Ultra Bob
Cottonwood Heights, UT

I believe that the statement the a person has already paid tax on the capital gains income is a lie.

The part of the investment, as one calls it a nestegg, is the only part of the investment previously taxed and it is not taxed again as a capital gain.

Each year as I prepare my income tax I receive notices from banks about the interest my accounts have earned and which they have credited to my accounts. While it sure seems that the interest is like a capital gain, I pay my normal rate of income tax on that money.

All income is income, no matter what the source.

The amount of tax on capital gains has little if any effect on investments.

People who refuse to pay their fair share of the cost of our government should be called criminals and dealt with accordingly.

Mark l
SALT LAKE CITY, UT

To really encourage investment in Americans, let's reform the tax code to eliminate all taxes on income and investment and tax only consumption. Check out the ideas at fairtax dot org. That way tax policy would encourage savings and investment, then when you build a nest egg you won't be taxed again on that investment income. You only would be taxed when you consume. The enviros should like that too. Consumption could be taxed, and thereby discouraging consumption. To eliminate the regressiveness we allow prebates for those with the smallest income. This would be fair for everyone.

ECR
Burke, VA

OK Mike. So I've see you've decided to refuse to learn something other than your own opinions. But just because you say something over and over again..with emphasis...doesn't make it true.

The facts are that a portion of the income Mr. Romnety earned was not derived from interest in an investment, it was a fee called "carried interest" - similar to the fee a doctor gets or an engineer gets or an IT technician gets for services rendered - paid to Mr. Romney (or his old partners at Bain) for investing other peoples money. And although I don't know, I would assume that the other interest income he received for his total income was paid on investments he earned in the past in the same manner. If that is the case then none of that was taxed at 35%, but rather at the lower rate of 15%. You are right to say he didn't cheat or gouge anyone and he paid the tax that was owed. But the tax system favors those who earn there livlihood from interest on wealth and punushes those who earn their income from blood and sweat. That you cannot dispute. That's all I'm saying.

PaulSpringville
SPRINGVILLE, UT

It amazes me how many people comment that the tax rates are unfair because Mitt pays 15% overall, while they shoulder the burden of 30%. I would like to see people actually report what their personal overall federal taxes are before they through out just top tax brackets.

I just completed my 2011 taxes and here are the results:
Gross Income: $71,618
AGI: $62,062
Taxes withheld: $3,176
Refund: $3,940

I paid 0% taxes for 2011. I do have three children under the age of 17 which helps a lot; but bottom line I think most people pay under 15% overall.

Irony Guy
Bountiful, Utah

This writer doesn't understand that you get taxed on your income. An investor pays 15% on investment income over and above any salaries, which are taxed at a much higher rate. Mitt is NOT being "double taxed."

Gildas
LOGAN, UT

I may be misunderstanding this but to say: let's not tax our incomes until we try to spend them , is puzzling to me.

What is the point of an income unless we exchange it for items of usefulness and value. We need to rein in government spending and stop taxing our incomes OR taxing our spending to fund the often counter-productive causes of our princes or rulers.

atl134
Salt Lake City, UT

Capital gains taxes only apply to the profit, not the amount invested. There's no double taxation and the only reason you didn't hear the media say it is because the media tends to not lie (unless it's Glenn Beck whose producer has said that, then it's not lying, just ignorance).

atl134
Salt Lake City, UT

@Mike Richards
He didn't "already pay 35%". Here's how this works. Romney has a million dollars he invests that he paid 35% on. That million becomes 2 million which he takes out. That first million that he invested and paid 35% on does not get taxed any. The second million is what gets taxed at 15%. So with his first million taxed at 35% and his second million taxed at 15%, the overall average tax rate he paid on his two million is 25%. There's no 35%+ in here. If Romney reinvests that 2 million somewhere and it becomes 4 million he's not taxed on the first two million, just the second two million at 15%. Now he's paid 35% 15% 15% and 15% on his 4 million dollars and his overall tax rate is just 20%.

You have a bank savings account, which gains interest, albeit at a rediculously low rate. You have to report that interest on your tax return because it's earned income and subject to the 15% tax. That tax doesn't apply to the amount you "invested" in the savings account, just the profit.

sergio
Phoenix, AZ

Just because something may be legal does not mean that it is right. Romney is an extremely fortunate man who America has made rich, but what has he given in return: he has never worked at a real job, he has never lived or associated with average citizens, he is and elitist who avoided military service, he has no record of community service, he has no record of concern for helping the less fortunate or sticking up for the common man, he is content to strip others of their goods to enrich himself. He has more in common with the ambitions of a king than a president of a democratic people.

Wally West
SLC, UT

re: Mark l 10:09 a.m. Jan. 26, 2012

"To really encourage investment in Americans, let's reform the tax code to eliminate all taxes on income and investment and tax only consumption."

Agreed but it'll never happen as it makes too much sense.

The unintended bonus is might shrink the government i.e. reduce the size of the IRS & SEC.

LDS Liberal
Farmington, UT

Republican elitists like Romney are so far out of touch with Middle and Lower America.

If he finally wins the GOP nomination -- I can hardly wait for the "How much is a gallon of milk, or loaf of bread" questions he's gonna get. ala, George HW Bush in 1992.

I'd bet he would have a better idea of Middle America if he'd just lost $100 Million a year for the last 3 years -- on HIS investments like the rest of did in housing!

Let them eat cake....

Esquire
Springville, UT

Huh? Are you saying that investment income is double taxed? This seems to be an apologist argument for the rich paying less than the middle class. If Mitt's money was in active rather than passive investments, I would be more sympathetic. But where has it been shown that his accounts in the Caymans or Switzerland are creating jobs?

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