August 12, 2012

Getting it just plain wrong - silly season starts

Matthew O'Brien, writing at The Atlantic, needs to get his facts straight before committing them to the web.
From his article on Paul Ryan:

Mitt Romney Would Pay 0.82 Percent in Taxes Under Paul Ryan's Plan
Under Paul Ryan's plan, Mitt Romney wouldn't pay any taxes for the next ten years — or any of the years after that. Now, do I know that that's true. Yes, I'm certain.

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.

Unnhhhh — you are overlooking the little item of double-taxation. As Mr. O'Brien noted: “the vast majority of Romney's income came from capital gains, interest, and dividends”.

How do you get this money? You invest money that you have already earned and reap the dividends. The money that you have already earned was taxed at the normal rate set by the IRS — if I were to earn $1 Million this year, I would be required to hand over $334,935.75 of that to the IRS. Let's say that I take the remaining $665,064.25 and invest it and I make some well researched decisions and come out ahead to the tune of $200K profits. Why should I be taxed at the regular 35% on those earnings when I already paid the $334K tax on the original stake.

What's more, by buying the stock I am, by proxy, investing in that company and helping it to grow — this directly leads to that company doing more business, paying more taxes and hiring more people.

If instead, I put my money into municipal bonds, I would be helping some city build a bridge or modernize a water system leading to the better welfare of it's citizens and more construction workers being hired.

The liberal morons like Mr. O'Brien all seem to think that this is a bad idea…

One little bit more:

It might seem impossible to fund the government when the super-rich pay no taxes. That is accurate. Ryan would actually raise taxes on the bottom 30 percent of earners, according to the nonpartisan Tax Policy Center

The bottom 47% of people simply do not pay any taxes at all — funds are deducted from their paycheck but all is returned when they file. The lowest tax rate will only be 10% from zero to $100K for joint filers. Anyone who thinks that this is sticking it to the poor people needs to reflect that under the current (they cite 2009 rates) system, joint filers earning a combined $16,700 to $67,900 would be subject to a rate of 15% — to put this in simple terms, if my household had a combined income of $20K in 2009, my tax would be $3,000. Under Paul Ryan's plan my tax rate would be a thousand dollars less or $2,000.

If you are going to write something, at least have the courtesy to tell the entire story and get your facts correct. Mr. Matthew O'Brien, I am talking directly to you…

Posted by DaveH at August 12, 2012 01:59 PM
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