The 15% Tax Meme

I’ve decided to take a break from my blogging exile, mostly to point out a recent problem I’ve seen in the Republican primaries that is driving me crazy. I’m talking about the 15% tax meme. While I’m not the biggest Mitt Romney fan, attacking him over his 15% tax rate is just plain stupid and takes a page from the Democrats’ class warfare playbook. 

The mainstream media and pundits get all they can out of this particular class warfare tactic. They never bother to explain how it is these people manage a perfectly legal 15% tax rate, though. 

Romney pays 15% on his INVESTMENTS income, which is all he has at the moment. If he had a paycheck, he'd pay payroll tax like everyone else. Think about this. You earn $1000. You pay taxes on that thousand dollars. You have about $700 left over and decide to invest it. A year later you decide to sell that stock... now you have to pay another 15% in taxes on the money you get from selling the investment. You've already paid taxes on the money you used to buy it! It's the called capital gains tax... and it's actually too darn high. Double taxation sucks. Just like income tax, it is a progressive tax meaning most people in the lowest income brackets pay 0% for their capital gains taxes. It is only the top brackets that even pay the 15%. 

If you start taxing any higher than that on the trade of stocks and bonds, who in their right mind would invest anything at all, unless it was an extremely long term investment, especially when you consider stocks can already be a risky investment. These stocks are what companies (both large and small) use to gather start-up capital, expand and grow. If you enforced a 30% tax rate on capital gains, the economy would collapse worse than it ever has because no one would invest. The odds that any stock would gain enough value in a reasonable amount of time (less than 20 years) to offset a 30% tax when you sell it are nearly astronomical. 


A stock certificate is nothing more than a piece of a company. An individual who owns stock in a company owns a piece of that company. Dividends are paid out to stock holders (owners) of said company based on the profits they made. Before that happens, however, those profits are taxed at the CORPORATE tax rate. The corporate tax rate in America is already among the highest tax rates in the world (depending on the state, it averages about 39% in the US). This doesn’t even take into account the myriad of taxes and fees associated with for normal operating expenses like gasoline for product transportation, property taxes on capital held by those companies and the many, many other fees paid to the government. As part owner of these companies he’s invested in, he’s already paid that tax on the “front end”. In addition to that 39%, he has to pay another 15% if he decides to sell the stock he has (and as I’ve already pointed out, the money invested into those stocks had already been taxed one time before). 

To insinuate that Romney or any other investor hasn’t paid their “fair share” is to buy into the “class warfare” philosophy of the modern Democratic Party, and it is why the economy will never grow or recover with these people in charge.

Candidates should try to build support for themselves by clearly communicating their own positions and policy intentions. Trying to build opposition to the other candidates by fueling resentment and class envy does not make you a more viable candidate. Like all personal attacks, it simply shows the weakness of your own platform. What Romney pays in taxes should be a non-story unless he breaks the law by not paying what he should. He has paid every penny of tax that was assessed against his income. Period.