Now that Mitt Romney has named Paul Ryan as his running mate, more attention is going to be paid to the Ryan Plan for budget and taxes. And guess what? Under his plan, Romney, worth something in the range of $250 million, would pay even less in taxes than he does now. Like almost none.
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…
Almost. Romney did earn $593,996 in author and speaking fees in 2010 that still would be taxed under the Ryan plan. Just not much. Ryan would cut the top marginal tax rate from 35 to 25 percent and get rid of the Alternative Minimum Tax — saving Romney another $292,389 or so on his 2010 tax bill. Now, Romney would still owe self-employment taxes on his author and speaking fees, but that only amounts to $29,151. Add it all up, and Romney would have paid $177,650 out of a taxable income of $21,661,344, for a cool effective rate of 0.82 percent.
But what about corporate taxes? Aren’t they a double tax on savings and investment, so Romney’s “real” rate is higher than his headline rate? No. As Jared Bernstein of the Center on Budget and Policy Priorities has pointed out, Romney has structured his investments as “pass-throughs” that avoid corporate tax. In other words, the 0.82 percent tax rate is really a 0.82 percent tax rate.
And Romney would hardly be alone. Most of the super rich have their finances arranged in this manner, so most of their income is taxed as capital gains at the 15% rate — or nothing at all if Ryan had his way. But Ryan’s plan would also raise taxes on the poorest third of Americans. To be fair, Romney was against the idea of eliminating the capital gains tax during the primary when it was proposed by Newt Gingrich, but we all know how much it means when Romney says he’s for or against something; wait five minutes and he’ll change his mind.