Paul Ryan waited until very late on Friday afternoon, when his aides assumed no one would be paying any attention, to release his tax returns for the last two years (fewer than he made available to Team Romney). Did we learn anything scandalous? It doesn’t look like it – Ryan and his family paid 20 percent of their adjusted gross income in federal income taxes in 2011 and 15.9 percent in 2010, on income of $323,416 last year and $215,417 the year prior.
There were no Swiss bank accounts, shell corporations in Bermuda, or stashed cash in the Caymans.
But the developments were nevertheless interesting. For one thing, we’re reminded that Mitt Romney pays a much lower tax rate than his own running mate, despite Romney’s vast wealth. Even Bill Kristol said this morning, “I think it just seems kinda weird that he pays a lower rate than an awful lot of middle-class people.”
For another, Ryan’s disclosure keeps the focus on the tax-return issue itself, and Romney’s unyielding secrecy.
And then there’s the larger issue President Obama raised over the weekend.
For those who can’t watch clips online, the president said:
“[T]he centerpiece of my opponent’s entire economic plan is a new five trillion dollar tax cut, a lot of it going to the wealthiest Americans. His new running mate, Congressman Ryan, he put forward a plan that would let Governor Romney pay less than 1 percent in taxes each year. And here’s the kicker – he expects you to pick up the tab.
“Governor’s Romney tax plan – this is not my analysis now – this is the analysis of independent folks who analyze tax plans for a living. That’s what they do. Their analysis showed that Governor Romney’s tax plan would actually raise taxes on middle class families with children by an average of $2,000. Not to reduce the deficit, not to grow jobs, not to invest in education, but to give another tax cut to folks like him.
“Now, ask Governor Romney and his running mate, when they’re here in New Hampshire on Monday – they’re going to be coming here on Monday – ask them if that’s fair. Ask them how it will grow the economy. Ask them how it will strengthen the middle class.”
That part about Romney paying “less than 1 percent in taxes each year” was of particular interest.
Matthew O’Brien had a good piece on this last week.
Well, maybe not quite nothing. In 2010 – the only year we have seen a full return from him – Romney would have paid an effective tax rate of around 0.82 percent under the Ryan plan, rather than the 13.9 percent he actually did. How would someone with more than $21 million in taxable income pay so little? Well, the vast majority of Romney’s income came from capital gains, interest, and dividends. And Ryan wants to eliminate all taxes on capital gains, interest and dividends.
Romney, of course, criticized this idea when Newt Gingrich proposed it back in January by pointing out that zeroing out taxes on savings and investment would mean zeroing out his own taxes.
Almost. Romney did earn $593,996 in author and speaking fees in 2010 that would still be taxed under the Ryan plan. Just not much. Ryan would cut the top marginal tax rate from 35 to 25 percent and get rid of the Alternative Minimum Tax – saving Romney another $292,389 or so on his 2010 tax bill. Now, Romney would still owe self-employment taxes on his author and speaking fees, but that only amounts to $29,151. Add it all up, and Romney would have paid $177,650 out of a taxable income of $21,661,344, for a cool effective rate of 0.82 percent.
Right. When Gingrich presented this policy, Romney said it went too far. When Ryan presented this policy, Romney made him his running mate.
Taxes seem to be a rather peripheral issue in the 2012 race, but it seems like the kind of policy that may yet pack a punch. Romney is already paying a lower rate than most people who work for a living, and his running mate’s plan would push this multi-millionaire’s tax burden to almost nothing.
At the same time, Romney is pushing a proposal that independent analysts found would raise taxes on 95% of the country – everyone except the top 5%.
These details apparently have not escaped the president’s attention, and this remains an issue worth watching.