Obama -Romney-US Taxpayer Comparison

[Richard]

Tax rates and amounts paid comparisons from Tax Policy Center and USA TODAY research sources.

And so it goes...

Richard

Comparing Tax Rates For Obama, Romney and You
USAToday, 20 Aug 2012

Mitt Romney says he has not paid less than 13% of his income in federal taxes during the past 10 years. Thanks to exemptions, deductions, child tax credits and the like, many Americans pay less than that. But when payroll taxes are considered, most Americans pay substantially more than 13%.

Romney's ability to reduce his tax liability stems largely from two things: The majority of his income is in capital gains and dividends, which are taxed at a 15% rate, lower than most income. And with only a small business income, he pays little in payroll taxes, which are subtracted from paychecks to support Social Security and Medicare.

Income is taxed at six different rates, ranging from 10% for the first $16,700 up to 35% for adjusted gross income above $372,950. A typical middle-income or upper-income American family pays several different rates.

President Obama wants to establish a mandatory minimum 30% tax rate for millionaires — the so-called "Buffett tax," named after billionaire investor Warren Buffett, who has complained that he pays a lower tax rate than his secretary. In 2010, Buffett paid an effective tax rate of 11% on nearly $63 million in adjusted gross income.

"What this whole discussion demonstrates radically is that we need tax reform," says Washington, D.C., tax expert Clint Stretch. "It is not a sensible system (when) you have world-class surgeons who are handling the lives of other people earning a lot of money and paying tax at 35%, and you've got other people who are making investments, and they're paying tax at 15%."

The last comprehensive tax reform in 1986 solved that problem, lowering the top income tax rate and raising the tax rate on capital gains and dividends so they all were 28%. But the capital gains tax rate was reduced to 20% under President Bill Clinton in 1997, and both capital gains and dividend taxes were slashed to 15% under President George W. Bush in 2003.

Here's a comparison of the taxes paid by Obama and Romney last year, along with examples of typical taxpayers. They don't include state and local taxes. In Romney's case, the figures are estimates released by his campaign:

President Obama

Income

Wages: $394,821

Other income: $449,764

Adjusted gross income (AGI): $789,674 (Obama's adjusted gross income was reduced $54,911 by adjustments that partially offset wages and other income)

Minus exemptions, deductions: $293,298

Equals taxable income: $496,376

Taxes paid

Income taxes (19.02% of AGI): $150,253

Payroll tax (4.35% of AGI; Payroll tax includes employee and employer share): $34,378

Tax rate (19.02% + 4.35%): 23.37%.

Federal tax paid: $184,631

After-tax income: $605,043

Mitt Romney

Income

Wages: 0

Business income: $110,500

Other income (34.2% tax rate): $9,274,725

Capital gains, dividends (15% tax rate): $11,515,850

Adjusted gross income (AGI): $20,901,075

Minus exemptions, deductions: $5,695,579

Taxable income: $15,205,496

Taxes paid

Income taxes (15.37% of AGI): $3,213,051

Payroll taxes (0.06% of AGI; Payroll tax includes employee and employer share): $13,572

Tax rate (15.37% + 0.06%): 15.4%

Federal tax paid: $3,226,623

After-tax income: $17,674,452

Typical middle-income couple, two dependent children

Income

Wages: $69,700

Other income : $100

Adjusted gross income (AGI) : $69,800

Exemptions, deductions : $29,000

Equals taxable income: $40,800

Taxes paid

Income tax (3.45% of AGI): $2,410

Payroll tax (13.27% of AGI; Payroll tax includes employee and employer share): $9.270

Tax rate (3.45% + 13.27%): 16.72%

Federal tax paid: $11,680

After-tax income: $58,120

Typical upper-income couple, two dependent children

Income

Wages: $135,300

Other income: $800

Adjusted gross income (AGI): $136,100

Exemptions, deductions: $40,800

Equals taxable income: $95,300

Taxes paid

Income taxes (10.59% of AGI): $14,410

Payroll taxes (13.23% of AGI; Payroll tax includes employee and employer share): $17,995

Tax rate (10.58% + 13.23%): 23.81%

Federal tax paid: $32,405

After-tax income: $103,695

Typical single person, no children

Income

Wages: $43,200

Other income: $100

Adjusted gross income (AGI): $43,300

Exclusions, deductions: $9,500

Equals taxable income: $33,800

Taxes paid

Income taxes (10.69% of AGI): $4,630

Payroll taxes (13.27% of AGI): $5,746

Tax rate (10.69% +13.27%): 23.96%

Federal tax paid: $10,376

After-tax income: $32,924

http://www.usatoday.com/news/politic...hooModule_News

[afchic]

One more reason for a flat tax! Here is my opinion. As long as all the individuals mentioned above filed their taxes legally, then what is the problem? If folks are pissed that they are paying more than someone like Mitt, then they need to lobby their representatives on tax reform. Is anyone going to fault someone for taking all the legal deductions they can?

What pisses me off that there is almost 50% of this country that doesn't pay any taxes at all.

[Dusty]

Well, let's just re-elect Obama, then.

[Richard]

The libs said they'd abolish poverty - the conservatives said they'd abolish bureaucracy - Odin said he'd abolish the Ice Giants.

Seen any Ice Giants lately?

Vote Odin in 2012!

Richard

[PRB]

Apples and oranges.
Raising the Cap Gains tax does not make sense for investors....like the HMO that invests, or the Union, or the County Govt.
Maybe you'd like to pay 35% on your invested money, money that has already been taxed.
The reason Cap Gains is lower is to encourage investment. When one invests there is no guarantee of success, you could lose every dime of it so Cap Gains % was an offset to the gamble.
When you have a salary, like that poor surgeon, you are gueranteed that amt of money monthly/yearly...there is no gamble.
If you take some of your savings that have been taxed at 30% and invest them you will pay 13-15% on the return for you willingness to invest in our sysytem.
If you think raising cap gains will just be 'fair' then I'd say the 2nd and 3rd order of effects will only hurt the economy that much more.
Many Countries tax at a lower rate on Cap gains for that reason.

[tonyz]

In my experience those world-class surgeons discussed in the cited article and others who generate substantial income - almost universally - utilize paid tax preparers/consultants whose job is to subtantially reduce the amount of tax paid by these types of folks. The very last thing we want is for bureaucrats to determine who pays more tax or who pays less tax merely by profession. Lower, flatter tax rates for all is the better answer for the country.

Moreover, the tax code has been polluted by lobbyists and gutless politicians.

Most any serious student of - or manipulator - of the current tax system be they an economist, an attorney, consultant, CFO, controller, investment banker or CPA, knows that lowering the tax rates and broadening the tax base results in a substantially more efficient revenue generation system and income stream for the country. Of course, that would result in less need for the rather expensive services provided by such folks.

Below is another take on paying taxes --

"Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands."

Judge Learned Hand
(1872-1961)

[MR2]

Originally Posted by Richard

Vote Odin in 2012!

Danes rule!

[Badger52]

Originally Posted by afchic

Is anyone going to fault someone for taking all the legal deductions they can?

What pisses me off that there is almost 50% of this country that doesn't pay any taxes at all.

As to the first, not I. tonyz summed that up nicely citing Judge Hand.

As to the second ma'am, this statistic (~50%) is tossed about alot. (Sometimes it erroneously includes people who overpaid and get a refund or who make so little that - under current tax code - their tax liability is 0. Those the people?) I'm kinda curious about this 50% thing that gets bandied about. If it is people who have zero income, but who consume public services, what to do about them? At its core, it's not lamentable that they had no income ergo paid no taxes - it's that they still consume resources. This sometimes spawns, "no tax paid, no vote" platforms.

And absent record-keeping in behavior that eschews that, how does the Govt know the number of people simply trading goods for services, when the 'good' rendered in return for the service is cash?

The 'system' is largely at the mercy of individual honesty; it doesn't play catch-up very well.

[tonyz]

Badger52 is spot on with his observations - fairness and honesty are cornerstones of a voluntary tax compliance system.

Too many games can be played with the current system - it can be perceived as unfair and lead to increased dishonesty - games and dishonesty both result in lower revenues.

Remove the incentive to play so many tax games - lower rates, broaden the base, make most all pay something. Reward responsible business risk (lower cap gains rates), reward hard work and saving.

Hey, it's tax not rocket science.

[plato]

Originally Posted by Richard

Tax rates and amounts paid comparisons from Tax Policy Center and USA TODAY research sources.

And so it goes...

Richard

Romney's ability to reduce his tax liability stems largely from two things: The majority of his income is in capital gains and dividends, which are taxed at a 15% rate, lower than most income. And with only a small business income, he pays little in payroll taxes, which are subtracted from paychecks to support Social Security and Medicare.

And perhaps because he's a typical Republican, and donates more to help others.

"Of the 10 least generous states, nine voted for Democrat Barack Obama for president in the last election. By contrast, of the 10 most generous states, eight voted for Republican John McCain."

http://www.boston.com/news/local/new...ss_to_charity/

So much for stereotyping by the Temporary Prez and his followers.

[GratefulCitizen]

Tax rates aren't terribly important.
Tax burdens slosh around the economy and affect prices.

People with cash on hand or access to cheap, easy credit can buy things when prices are depressed.
People running at their financial redline can't take advantage of low prices and end up bearing the burden when prices rise.

Money isn't real.
Goods and services are real.

[Peregrino]

Back to my original contention - "Pay no taxes, get no vote". Then we can discuss a flat tax; everybody pays the exact same rate on ALL income with NO deductions. 10% ought to be sufficient to cover national defense, interstate commerce, foreign affairs, and such services as are necessary to manage the first three. Interesting that Romney by himself paid more taxes than 47% of the rest of the country PUT TOGETHER. That's obscene.

[miclo18d]

Originally Posted by Peregrino

Back to my original contention - "Pay no taxes, get no vote".

Exactly. When you have skin in the game you start to think about your vote. It keeps gubment honest.

[Dusty]

Originally Posted by miclo18d

Exactly. When you have skin in the game you start to think about your vote. It keeps gubment honest.

Let's not go overboard.

"Honest-er", maybe.

It's an outstanding idea; you'd lose millions of voters, though...

[Pete]

Mitt Romney paid 30%, not 13% in Federal Income Taxes

http://www.forbes.com/sites/charlesk...-income-taxes/

An interesting piece on Taxes, what gets taxed where and how it impacts your income. The goverment sure is handy at skimming money at all levels.

But then again there are Americans who pay $4,000 to the IRS through the year, get a $1,800 Tax refund and then say "I didn't have to pay any taxes this year, I got a refund.

"..............................I can only wish that Romney had engaged this issue by adding the following sound bite: “Properly calculated, my tax rate was about 30%.”.................................."