Why Mitt Romney's Taxes Matter

CNBC’s Maria Bartiromo lashes out at demands that Mitt Romney follow in the footsteps of nearly every major party presidential candidate in modern history, including his father, and release his taxes:

“Do you think Americans will then care about Mitt Romney's or any politician's tax returns? No, most will not even remember this moment. […] We must come back to the facts and the issues that matter to the country. No matter how much the media pushes through these petty issues surrounding any candidate, if it doesn't improve the needle on improving people's life it will likely not be an issue, at all, in the ballot booth come November.”

Christian Heinze agrees: “Does anyone seriously think that Romney's tax returns would have any bearing on the relative rise or fall of the economy during his potential first term?”

Several years ago, I would have agreed with Bartiromo and Heinze. I have a stubborn belief that even presidential candidates deserve their privacy, and that absent compelling evidence of corruption, it’s better to judge candidates by their policy preferences than their finances or other personal qualities. But back in January -- long before Harry Reid made it fashionable -- I raised the possibility that there was at least one year in which Romney paid no income taxes, and ever since, I’ve relentlessly insisted that Romney release his taxes. So why the shift? Because I’ve concluded that there is evidence of corruption that requires the disclosure of tax documents by elected officials and those who seek office.

The typical member of Congress is ten times wealthier than the average person he represents -- and that gap has been growing. From 1984 to 2009, the net worth of the typical member of Congress more than doubled in inflation-adjusted terms; meanwhile, the media American family’s net worth decreased. Meanwhile, tax and economic policy -- policy set, remember, by politicians who are far wealthier than their constituents -- increasingly favors the rich at the expense of the rest of us. Top marginal tax rates and capital gains tax rates have been slashed, exacerbating the growing income gap between the rich and everyone else. And this isn’t an accident: Politicians who justified cutting the capital gains tax in the past by arguing it would primarily benefit the middle class have seen the data proving that it primarily benefits the rich, and want to cut it some more. Meanwhile, the governing class’s favorite solutions to the budget shortfalls that result from their eagerness to make sure billionaires pay as little in taxes as possible are all things that would hurt the middle class and poor, while the rich would never notice -- “entitlement reform,” raising the retirement age, etc. And we’re just scratching the surface: We haven’t even gotten to things like policymakers’ preferences for low inflation and high unemployment, which rig the economy in favor of the already-wealthy.

So we have a governing elite that is far wealthier than the people it supposedly represents, and that continually enacts policies that favor the wealthy at the expense of the rest of the country. This governing elite gains and maintains office largely through the financial support of other people and corporations who are far wealthier than the rest of the country. It gets its news from media elites that are far wealthier than the rest of the country, and it relies on policy briefings from think tanks funded by big oil companies and tax-hating billionaires. Its statements are policed by “fact-checkers” who think the rich are the only taxpayers who matter. Without impugning the conscious motives of any individual policymaker, it’s clear that this is a corrupt system.

Conservatives who seek to destroy the social safety net that helps keep our middle class from being poor and our poor from starving in the streets (or, by the way, storming the nation’s gated communities in search of bread, but that’s another story) argue that our problems stem from a nation of freeloaders voting themselves funds from the public treasury. Here’s Powerline’s John Hinderaker earlier this month:

“With over 100 million Americans receiving federal welfare benefits, millions more going on Social Security disability, and many millions on top of that living on entitlement programs–not to mention enormous numbers of public employees–we may have gotten to the point where the government economy is more important, in the short term, than the real economy. My father, the least cynical of men, used to quote a political philosopher to the effect that democracy will work until people figure out they can vote themselves money. I fear that time may have come.”

The cruelty of Hinderaker’s hostility towards ensuring the poor and the elderly don’t have to choose between medicine and food aside (and not to mention his contempt for the “public employees” who enrich his life in countless ways, from the Marines who protect the nation’s interests to the good people who give him roads to drive on) this badly misses the mark. First, people don’t vote themselves money, they vote themselves representatives. And, as you may have noticed, they don’t tend to vote for representatives who promise guaranteed incomes and single-payer health care.

But the underlying point is sound: There is cause for concern when people who control public funds make policy decisions that benefit themselves rather than the greater good. But the people in question are our elected representatives, and they’re making policy decisions that benefit rich people like themselves.

It is no coincidence that policymakers tend to prefer raising the retirement age for Social Security to lifting the cap on income subject to payroll taxes: A wealthy Senator can easily continue working his desk job with no clock to punch or boss to please -- and has no need for the benefits in any case. And nearly everyone he encounters on a daily basis is similarly situated in a job in which working a couple of extra years is vastly less difficult than it is for a factory worker or schoolteacher. But lifting the cap on payroll taxes -- that would cost the Senator (and almost none of his constituents) thousands of dollars a year.

That’s why it is important that elected officials publicly disclose their tax returns: To shine a light on the corruption in the system. Voters should know when elected officials vote themselves money from the public coffers and when they make policy decisions that would hurt their constituents but save themselves a few dollars. Elected officials and candidates for office already must disclose financial information including stocks and other assets. The goal of these disclosure requirements -- revealing, and thus discouraging, conflicts of interest -- is laudable, but the requirements fall far short. it’s good that we know when a member of Congress votes for a bill that would help a company in which he holds stock, but that’s a rather indirect way to line your own pocket compared to simply voting for tax policies work to your advantage.

It’s time for mandatory public disclosure of tax returns by all federal elected officials and candidates for public office. The House and Senate ethics committees should then create a mechanism for calculating the effect of proposed legislation on members’ tax liability -- in real time, before votes in Congress are cast. When a member of Congress casts a vote to protect only 375 residents of her state from a tax, we should know whether she was protecting her own bank balance. When a presidential candidate who pays a lower effective tax rate on tens of millions of dollars in income than you do on $50,000, we should know exactly how his tax bill would be affected by policies he and his party favor.

It is important to note that this would reveal not only explicit and intentional corruption, but the more generalized corruption in the system. I don’t imagine there are many Senators who, faced with a policy choice, consciously think “Lifting the cap on payroll taxes would cost me $7,000 a year, whereas raising the retirement age wouldn’t affect me at all, so that’s the way I’ll go.” Far more likely, it never occurs to them that raising the retirement age would badly hurt their constituents, because it wouldn’t badly hurt most of the people they encounter on a daily basis. And it never occurs to them that subjecting high-income earners to the same payroll taxes the rest of us pay would affect very few people, because it would affect nearly everyone the Senator regularly encounters. When you and your peers and associates are all far richer than the people you represent, it skews your understanding of what is typical. (And it leads to things like Mitt Romney thinking someone who makes $250,000 a year is “middle class,” thought that income would place the person among the top two percent of the nation’s taxpayers.)

Many members of Congress would likely be surprised to learn that their policy choices would enrich themselves while harming their constituents. Regardless, their constituents have a right to know. And the effects of this knowledge could be profound: It is no stretch to imagine that greater -- and more specific -- public understanding of the ways in which their elected representatives favor the wealthy could result in a shift in behavior by the governing class, away from policies that benefit the wealthy and towards those that benefit the nation as a whole.

Comments

[PixSher]

Wouldn't he have paid $0 for 2 years due to 10-15% income bracket 0% Capital Gains exception?

Mitt to Newt: If not for Capital Gains, I'd have paid $0 tax.

http://t.co/Ckm4Wpbj

0%CapGainsRule

http://t.co/kenJxr64

Neither of these means "paid":
Mitt: legally due
tax atty: owed

Why avg 20yrs when we only asked for 10?

[Lois]

I'd like to see you and mainstream journalist write about the importance of discovering if Romney enrolled in the Amnesty Program in 2009 to avoid criminal charges.

Of all the reasons suggested of why he won't disclose tax records from 2002 forward, enrollment in the AP is the most viable. As a condition of enrollment, those years' returns had to be amended to show fines, interest and penalties.

As a condition for voluntarily enrolling in the AP program, prosecution for tax evasion (a fraud) was waived. Even though prosecution was waived, fraud was still committed.

I think the act of tax evasion would disqualify Mr. Romney from the presidency - waived or not. I hope you consider writing about this issue.

Paul Abrams wrote a compelling post about this yesterday at Huffington Post. http://www.huffingtonpost.com/social/GroveGal10/what-romneys-hiding-its-t_b_1908104_190425456.html