Mitt had a fundraiser....

[nathanm]

No fair counting employer-sponsored benefits. (unless you do agree after all that the entire 15.3% payroll tax should properly be allocated to the employee when considering overall tax rates)

Is at least 35% of your net worth due to your taking advantage of tax loopholes? Romney's is. This isn't like the standard deduction or whatever. Romney's ability to contribute $100 million to his IRA(s) probably wasn't intended by Congress. After all, the limits were set specifically to prevent people from gaming the system by putting all their income into a retirement fund so as to avoid taxation. It would be interesting to know how much, if any, Romney has borrowed against his IRA.

[Red Arrow]

No fair counting employer-sponsored benefits. (unless you do agree after all that the entire 15.3% payroll tax should properly be allocated to the employee when considering overall tax rates)

I consider the payroll tax to be a separate program from income tax and this thread is talking about income tax.  You also seem to refuse to acknowledge that the lower income folks will receive a far greater percentage benefit during retirement from SS than upper income folks.  You also seem to believe it is unfair that they contribute a greater portion of their income to receive that benefit.  We disagree.   Just to be clear, someone with no retirement savings will be 100% dependent on SS if they quit working.   The amount of money a rich person with lots of savings receives from SS will be a small (but paid for in principal) portion of their retirement.

Is at least 35% of your net worth due to your taking advantage of tax loopholes? Romney's is. This isn't like the standard deduction or whatever.

One man's deduction is another man's loophole.  I believe that things like standard deduction or whatever are a significant factor in reducing one's tax liability in the lower income groups.  For 2011, someone making  $19,000 gets to deduct the same $9500 that I deducted.  That's 50% of their gross income immediately knocked off the tax rolls.  That same $9500 is a lot smaller than 50% for me but not nearly as small as for a rich person.

I didn't include them because they don't apply directly to me but the home mortgage deduction and the deduction for dependents can also significantly knock down the tax liability for the lower income groups but at a much smaller percentage for a rich person.

Romney's ability to contribute $100 million to his IRA(s) probably wasn't intended by Congress. After all, the limits were set specifically to prevent people from gaming the system by putting all their income into a retirement fund so as to avoid taxation. It would be interesting to know how much, if any, Romney has borrowed against his IRA.

I'm going to need some documentation on the $100M IRA and the gift to his son.  I expect there are some important details being omitted, perhaps by your source.

[Teatownclown]

Conan, $13,000 until Jan.1.

Dim, please define "social group."

[nathanm]

One question. How do you give someone a $100,000,000 gift tax free?

Isn't the limit still $10K per year?

A husband and wife can do $20,000 to any given recipient. Additionally, if you want to use up some of your estate tax exemption, you can do that as well, although most tax advisers would probably tell you to pay the income tax rather than use up your exemption, at least for us little guys.

RA, Bloomberg probably isn't good enough for you, but here's a starting point on the IRA: http://www.bloomberg.com/news/2012-07-15/the-secret-behind-romney-s-magical-ira.html

And regarding the gifts: http://blogs.reuters.com/david-cay-johnston/2012/01/31/romneys-gift-from-congress/

[Red Arrow]

A husband and wife can do $20,000 to any given recipient. Additionally, if you want to use up some of your estate tax exemption, you can do that as well, although most tax advisers would probably tell you to pay the income tax rather than use up your exemption, at least for us little guys.

RA, Bloomberg probably isn't good enough for you, but here's a starting point on the IRA: http://www.bloomberg.com/news/2012-07-15/the-secret-behind-romney-s-magical-ira.html

And regarding the gifts: http://blogs.reuters.com/david-cay-johnston/2012/01/31/romneys-gift-from-congress/

Seems to be a lot of "what if", conjecture, and theories in those links.  I think to make things fair that the gift tax should apply to everyone.  If you want to give me $10., when you stop laughing at the concept, you should pay the feds $3.50 in gift tax.

[nathanm]

Seems to be a lot of "what if", conjecture, and theories in those links.  I think to make things fair that the gift tax should apply to everyone.  If you want to give me $10., when you stop laughing at the concept, you should pay the feds $3.50 in gift tax.

Once over the yearly exemption and presuming my marginal income tax rate is in fact 35%, sure. Anyway, of course there's a lot of conjecture, Romney hasn't released enough tax returns to be able to see how these oddly large accounts actually came to have the value they have, so conjecture is all that's possible. There are some constraints on how these accounts came to be, barring rank tax evasion on Romney's part, so it is possible to make an educated guess here.

[Red Arrow]

Once over the yearly exemption and presuming my marginal income tax rate is in fact 35%, sure. Anyway, of course there's a lot of conjecture, Romney hasn't released enough tax returns to be able to see how these oddly large accounts actually came to have the value they have, so conjecture is all that's possible. There are some constraints on how these accounts came to be, barring rank tax evasion on Romney's part, so it is possible to make an educated guess here.

Yearly exemptions are an arbitrary amount.  That amount should be without limit or zero.   There is no reason to tie the gift tax to your marginal rate.  It's a gift tax, not an income tax to you. This is a tax on the giver, not the receiver.  Why not assign a 90% rate?  Make sure no one gives anyone anything.  If you buy me a beer, (again, I will wait for you to stop laughing) should you pay a tax on the privilege of buying me a beer.

Although I see some practical reasons, I don't see any legal reasons why you cannot participate in the tax breaks you cite for Romney.  You might need to invest wisely and become a big whig but I see no legal reason why you cannot do that.  We disagree a lot on almost everything, but I do not think you are stupid.

One of my friends is in the oil business.  Many years ago I was complaining about the price of oil and the middle men. He asked if he should voluntarily take a significantly less price for his oil than the market price.  I had to say no.  If you don't like breaks for the rich which bring their rate down to the average level of most of us, you are certainly entitled to work to get rid of them.  I may even agree with some.  The thing I object to is the trial by media that Romney or anyone else is presumed guilty of tax evasion (not avoidance) merely because they are not living from paycheck to paycheck.


Anyway, in todays environment, conjecture becomes fact and a person can be "convicted" without all the facts. 

[nathanm]

Yearly exemptions are an arbitrary amount.  That amount should be without limit or zero.   There is no reason to tie the gift tax to your marginal rate.  It's a gift tax, not an income tax to you. This is a tax on the giver, not the receiver.  Why not assign a 90% rate?  Make sure no one gives anyone anything.  If you buy me a beer, (again, I will wait for you to stop laughing) should you pay a tax on the privilege of buying me a beer.

I'm not against buying you a beer, just don't expect me to buy you a case.

The gift tax is necessary to make the estate tax enforceable. Without it, a person could simply sign over enough of their assets to their heirs before death that their estate would be valued at less than $10 million at the time it transfers. It's there to close the obvious loophole. The exception is because nobody really wants to live in a country where they can't give other people things without filing forms with the IRS. There's nothing wrong with gifting, it's great. Since it can be used as a tax avoidance technique, however, we have to have seemingly stupid rules.

Although I see some practical reasons, I don't see any legal reasons why you cannot participate in the tax breaks you cite for Romney.  You might need to invest wisely and become a big whig but I see no legal reason why you cannot do that.  We disagree a lot on almost everything, but I do not think you are stupid.

First, assume you're a hedge fund manager....

[AquaMan]

Seems we could have cut two or more pages off of this thread and several others if the guy would just release his tax returns, explain them to those who think he abused the system or face up to any mistakes he may have made. Not making them public is causing conjecture and conspiracy theories to proliferate.

That is not the fault of media. Its the fault of a guy who seems to have a problem with a cost/benefits analysis of his own decision. It is a preview of how and why he makes decisions and how he will govern.

[Red Arrow]

I'm not against buying you a beer, just don't expect me to buy you a case.

The gift tax is necessary to make the estate tax enforceable. Without it, a person could simply sign over enough of their assets to their heirs before death that their estate would be valued at less than $10 million at the time it transfers. It's there to close the obvious loophole. The exception is because nobody really wants to live in a country where they can't give other people things without filing forms with the IRS. There's nothing wrong with gifting, it's great. Since it can be used as a tax avoidance technique, however, we have to have seemingly stupid rules.

First, assume you're a hedge fund manager....

Then the gift tax is unnecessary since I don't believe in the estate tax.   

Is there any legal reason you cannot be a hedge fund manager?  I didn't say it would be easy.

[nathanm]

Then the gift tax is unnecessary since I don't believe in the estate tax.

I take it you don't believe in the capital gains tax, either?

Is there any legal reason you cannot be a hedge fund manager?  I didn't say it would be easy.

It's a reapplication of the punchline to an old physics joke.

[Red Arrow]

I take it you don't believe in the capital gains tax, either?

I don't like it but accept it.  I do support a lower tax rate for capital gains compared to ordinary income as a reward for taking a risk.  I would also support a lower tax rate than ordinary income for regular savings interest to encourage savings.   I also accept taking lower interest rates for my savings that are FDIC and the Credit Union equivalent (that I can't remember the letters for at the moment) than I could get elsewhere in exchange for the security of my principal.

It's a reapplication of the punchline to an old physics joke.

Missed it, sorry.

[Red Arrow]

explain them to those who think he abused the system

Do you really think that he could change anyone's mind on that regardless of facts?  I don't.  Even if everything is perfectly legal and is just use of the existing system, not abuse, many will say that he just shouldn't do it.

[Red Arrow]

I'm not against buying you a beer, just don't expect me to buy you a case.

OK, but I expect a good beer.  Not a Millercoorsbud Lite.

[nathanm]

I don't like it but accept it.  I do support a lower tax rate for capital gains compared to ordinary income as a reward for taking a risk.

I've always been of the opinion that unearned income ought to be taxed more heavily than earned income. I don't really feel like the government needs to be in the business of rewarding risk, at least in general. That is the role of the market. Perhaps in specific cases where research into a given technology is required and the market is not providing, like tax rebates on biodiesel production or whatever, but in general, no.

RA, nobody's going to throw Romney in jail for use of legal tax shelters. There's not really any reason to believe he didn't use any abusive tax shelters, though. I hope he didn't, but it's depressingly common, and would be a good reason for him to keep his returns to himself. I don't think most people realize the scale of the loopholes and quite how tailor-made they are for certain people, though. Anything that shone some light on that would be welcome indeed.