A senior adviser to Mitt Romney blamed charitable giving for the low tax rates that some wealthy Americans enjoy on Morning Joe Monday.
As the guests discussed tax reform ahead of President Obama’s announcement expected late morning that he will seek extension of tax cuts for families earning less than $250,000, regular Morning Joe contributor Mike Barnicle put a question to Dan Senor, who also advised President George W. Bush and now gives policy advice to Romney. (Video after the jump.)
“Why do so many people who are beneficiaries of the Bush tax cuts pay at a rate of 15% or 16%, and I’m paying at a rate of 35%,” asked Barnicle.
“Well, there’s a number of factors, not the least of which…” Senor began.
“My income,” interjected Barnicle.
“Yeah—but the charitable deductions,” Senor continued. “So, a lot of people if they weren’t giving a lot to charity, they’d be paying much higher than the 15%—they’d pay 19%, 20%, 21%—so there’s a number of factors that go into that reduced number.”
True, charitable deductions on the weathliest’s tax forms can have a huge impact, but this is the first thing that comes to mind for Senor?
Let’s look at Senor’s candidate for president, for example.
By now, it’s well-established that the effective tax rates that Mitt Romney paid in recent years (14% and 15% over the last two years) seemed a little low given his enormous wealth. Charitable giving helped Romney reduce his rate, perhaps to as low as 19%, The Washington Post points out, but that’s not all.
His charitable giving was not what initially struck debate over Romney’s taxes. Americans value philanthropy and reward it through such breaks. However, Romney is also able to avoid a higher tax rate, because much of his income comes from capital gains and dividends, rather than your typical employer-issued paycheck, and this is taxed at about half the rate of ordinary income.
Senor says he is for “broadening the tax base” and “making it a little more fair,” but like many Republicans, he’d prefer consideration of tax reform that doesn’t just include lower and middle class Americans, but rather lower corporate tax rates and extension of tax cuts for the wealthiest Americans, too.
The progressive American tax code already taxes the wealthiest more than the lower income, true. But we live in an era where the wealthier are getting richer and they are able to benefit from a sympathetic tax code. The Organization for Economic Cooperation and Development recently warned the United States about our rising income inequality and called on the country to reform the tax code so it no longer favors “the kind of income that the richest people make.”
On Morning Joe, Barnicle couldn’t hold back.
“Are you going to congratulate me for not bursting out laughing for saying, “It’s because they’re so charitable?” he sputtered.