Mitt Romney (like most of the top 1%) is completely out of touch with middle America. Look at the evidence:
- he bet another candidate $10,000 without a second thought;
- he said $374,000 in speaking fees was "not very much";
- he demolished a $12 million beach-front mansion to build another one 4 times bigger;
- he claimed he was "unemployed" in a ham-handed attempt to identify with the 30 million Americans who can't find work,
- and he said at one time that he too feared getting a "pink slip".
Romney is a caricature of a tin-eared Wall Street exec who refuses to see (or admit to) how the tax system is rigged in his favor, and instead blames all our country's problems on the poor. Mitt's own tax plan would LOWER his tax rate even further. That's just plain nuts!
And why would an American citizen need to keep cash in a Swiss bank or in the Cayman Islands, unless they were breaking the law and evading taxes? I suppose for some people, $259 million just isn't nearly enough.
President Barack Obama used his State of the Union address to call for a new minimum effective tax rate for millionaires and billionaires. "Tax reform should follow the Buffett rule: If you make more than $1 million a year, you should not pay less than 30 percent in taxes," Obama told a joint session of Congress Tuesday night.
"In fact, if you're earning a million dollars a year, you shouldn't get special tax subsidies or deductions. On the other hand, if you make under $250,000 a year, like 98 percent of American families, your taxes shouldn't go up."
One radical right-wing corporate sympathizer wrote to me today regarding my post on Mitt Romney's taxes, "What kind of socialist rant is this? The tax code specifies that capital gains are taxed at 15%. It should be ZERO! The money has already been taxed. The fact is that some decided to invest their money while others spend it. The problems are not that Washington doesn't have enough revenue, the problem is that they spend too much."
First of all, there is nothing "socialist" about taxing higher wage earners a little more than the poor and middle-class. America has had a progressive tax system for over a century.
That radical right-wing corporate sympathizer was referring to the myth of "double taxation", and was only was spewing the same old Republican and Tea Party propaganda that I had once been indoctrinated with...before I researched the facts and saw the light.
There's no such thing as "double taxation" on corporate executives, and these CEOs and their tax attorneys know very well that's true...they know better than anyone.
My hourly wage is taxed in my paycheck, so then, why should I ever pay another tax on these earnings ever again? My union pension, 401k plan, and my Roth IRA is taxed as "regular income" when I withdrawal funds, so why aren't I allowed to pay a lower tax rate like Mitt Romney? Why should I have to pay any tax at all?
The term "double taxation" was a term that corporations lobbied for in congress to have it included in the U.S. tax code to mislead and confuse common citizens (those who are not engaged in "free market" enterprise) to have it appear as though it was somehow an unfair form of tax on corporate entities.
And the largest corporations have also benefited greatly through crony capitalism, the exact opposite of a true "free market" system, of which the Tea Party claims they totally support.
The profits that are generated from a business that is "incorporated" and publicly traded on the stock market don't go directly into the shareholder's pockets at the end of ever year. They reside in the company's common treasury to be used to operate the business.
Corporate company capital (not personal capital) is used to acquire commodities and services necessary to run the business to churn a profit...or to acquire other companies in mergers and acquisitions. Sometimes profits may be used for research and development when they're not getting it for free from the taxpayers. The profits are taxed before executive pay and dividends are allocated to individuals for their personal use. Corporate capital is being taxed, not personal capital.
A portion of company profits might go into an executive "bonus pool" and/or be allocated for corporate executive's stock options (in lieu of, or in conjunction to, a base cash salary/wage for executive compensation). When they "cash out" financial instruments such as stock options, they pay a 15% tax for capital gains on their stock shares (taxed as personal capital/income).
Company profits also are used to expand operations (capital investment) and can receive tax credits. Company profits also are used to pay it's hourly or salaried employees, who are paid in regular payroll wages. Their employee's wages are taxed for federal income tax and FICA taxes - deducted on behalf of the IRS. And this is also exempt from corporate taxes.
Company profits from corporate income can be used to buy a corporate jet. Personal income that corporate executives earn from capital gains and dividends (acquired through stock options) can also be used to buy a personal private jet.
The corporation is then taxed after all deductions (and tax loopholes), and then pays an "effective" corporate tax rate to the IRS to help pay for all the infrastructure, the courts, and the security that they enjoy for the operation of their business in this country. Businesses don't survive, grow, and prosper in a vacuum -- they need us too.
In 1909 Congress levied a 1% corporate tax on net corporate incomes of more than $5,000.
During the 1950's this tax rate was over 50%, did we then live in a "socialist" country when a Republican and 4-Star General was our sitting president? Google Dwight. D. Eisenhower.
The current maximum tax rate for a U.S. corporation is 35%, but the average "effective" tax rate that's actually paid by the largest U.S. corporations on the Forbes Global 2000 over the past 25 years has averaged about 18% (in China it's 25%).
After corporate taxes, the CEOs are taxed at 15% on their vested stock options (which could be in the millions of dollars, and is their personal income), and they are only taxed at 35% if they receive salaried wages of over $375,000 year (minus their personal deductions). But the middle-class is taxed at 25% on their personal incomes.
You've heard of the AIG CEO getting paid $1 a year for a base salary, because this would have been taxed as "regular income", not at the lower rate as "capital gains" if he was being paid in stocks and earning dividends.
Corporations and LLCs (limited liability companies) are
both separate legal entities (business structures) that also enjoy many certain
protections under the law, and very important benefits. Most people form a legal
business structure to safeguard their personal assets.
Incorporating, or forming a Limited Liability Company (LLC), allows them to conduct their business without worrying that they might lose their home, their car, or their personal savings -- because any business liability, such as a lawsuit for wrong-doing or negligence (Republicans want "tort reform" so corporations can't be sued at all, or only be held accountable with very low caps put in place on any liability).
Corporations and LLCs allow owners (CEOs, shareholders, etc) to separate and protect their personal assets. Owners have also enjoyed limited liability for business debts and obligations. This way bankruptcy and/or "bailouts" work out very well for them whenever they need to restructure burdensome debt or dissolve labor contracts. The CEOs (and shareholders, which are usually one and the same) are exempt from any personal financial risk at all. They have the best of both worlds...less personal risk while enjoying lower personal tax breaks.
Corporations and LLCs also have "perpetual existence" and continue
to exist, even if ownership or management changes. (Although, the Republicans
and the Supreme Court believe "corporations" are real people.)
Sole proprietorships and partnerships usually just end if an owner dies or
leaves the business.
Corporations and LLCs also have a lot of tax flexibility. Example: The United States allows a foreign tax credit by which taxes paid to foreign countries can be offset against U.S. tax liability attributable to foreign income.
Though profit and loss typically pass through* an LLC and get reported on the personal income tax returns of owners, an LLC can also elect to be taxed as a corporation. Likewise, a corporation can avoid the so-called double taxation* of corporate profits and dividends by electing Subchapter S* tax status.
- Deductions - Corporations and LLCs have deductible expenses. They may
deduct normal business expenses, like salaries, before they allocate income
- Pass-through taxation - Rather than tax the income of the entity, taxation
is "passed through" to the individual shareholders in S
Corporations (and LLCs). Income or losses are declared on their individual
- Double taxation - Double taxation refers to corporate and shareholder
taxes. Corporations must pay taxes on their earnings. Individual
shareholders must also pay taxes on any dividends they receive.
- Stock options:
- Incentive stock options (ISOs) - Pay for "performance" in which the employee is able to defer taxation until the shares bought with the option are sold. The company does not receive a tax deduction for this type of option.
- Nonqualified stock options (NSOs) in which the employee must pay
income tax on the 'spread' between the value of the stock and the amount
paid for the option. The company may receive a tax deduction on the
- Subchapter S tax - S corporations are corporations that elect to pass corporate income, losses, deductions and credit through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income. S corporations are responsible for tax on certain built-in gains and passive income.
To qualify for S corporation status, the corporation must meet the following requirements:
- Be a domestic corporation
- Have only allowable shareholders
- including individuals, certain trust, and estates and
- may not include partnerships, corporations or non-resident alien shareholders
- Have no more than 100 shareholders
- Have one class of stock
- Not be an ineligible corporation i.e. certain financial institutions, insurance companies, and domestic international sales corporations.
Small business entrepreneur vs. large corporate CEO
Should a CEO of a big oil company only have to pay a 15% tax rate on a $5 million salary, while the owner of a small business has to pay a 35% tax rate on a salary over $380,000? (And Social Security taxes are capped in each of those cases on their first $110,000 earned...whereas everybody else earning less than $110,000 a year pays Social Security taxes on 100% of their wages.)
A sole proprietor is someone who owns an unincorporated business by himself or herself. However, if you are the sole member of a domestic limited liability company (LLC), you are not a sole proprietor if you elect to treat the LLC as a corporation. Then the owners would pay either a regular income tax or a self-employment tax, based on the current tax brackets for gross income.
How many people do you know that
own a mom-and-pop business
are "free-market entrepreneurs", live in a mansion, fly to Washington
D.C. in a private jet to receive a multi-billion government hand-out, and only
have to pay a 15% tax rate on their personal income taxes?
All small business owners that I know pay the 35% tax rate.
I get bored with all those radical right-wing corporate sympathizers that whine and complain without ever presenting any facts. And besides...
...if a corporation no longer wants to pay corporate taxes, then they can just un-incorporate. It's as simple as that.
More posts on Mitt Romney:
- Mitt Romney Comes Clean
- Mitt Romney, the Forbes Fortune 400, and Taxes
- How Mitt Romney & the 1% Evades Taxes
- Mitt Romney - Mister 15% and Platinum Parachutes
- Efficiency expert Mitt Romney: "You're expendable."
- Mitt Romney Knows Envy Better than Anyone
- Mitt Romney Connected to $8.5 billion Ponzi Scheme
- For Mitt Romney, the Joke's on Us
- Mitt Romney was the real-life Gordon Gekko
My related Posts:
- How the 1% Bilks the 99%
- Investment versus Speculation
- The "SWAG" Economy of the 1%
- Mitt Romney Knows Envy Better than Anyone
- Mitt Romney Connected to $8.5 billion Ponzi Scheme
- GOP Claims Tax Evasion as Excuse to Cut Taxes
- For Mitt Romney, the Joke's on Us
- Subsidies for the Rich and Famous
- Historical Tax Rates on the Rich (1862 to 2011)
- The Second Gilded Age: History Repeats Itself
- Mellon: The Banker Who Rigged the U.S. Tax Code
- The GOP Tax Plan - Ignorance, Insanity, or Greed?
- We have a Revenue Problem, Not A Spending Problem
- 280 Corporations are "Too Big to Tax"
- Trickle-Down Economics: The Cruel 30-Year Hoax
- You Pay Hidden Entitlements for the Rich
- Record Profits + Record Bonuses = Zero Jobs
- Low Wages Kills Jobs, Not High Taxes
- Trade Agreement Passes in Middle of Job Crisis
- Apple Inc. is Rotten to the Core
- America's Race to the Bottom
- Corporations & Banks Now Sit on $3.6 Trillion
- Who will "Live Free or Die" with FREE MARKETS in 2012?
Other Related Outside Articles:
- "The richest 1 percent have more financial wealth than the bottom 95 percent combined."
- The total net worth on the Forbes 400 List marks $1.5 Trillion in 2011
- The Global Super-Rich Stash: Now $25 Trillion
- Historical Tax Rates and Time-line
- Capital gains from Citizens for Tax Justice
- 1977 - 2007 tax rates from U.S. Treasury
- Economic Policy Institute on capital gains taxes
- Capital gains explained from U.S. Internal Revenue Service
- The great corporate tax scam