From a recent interview on 60 Minutes:
In the “60 Minutes” interview, Romney defended his federal income tax rate, which at about 14 percent is lower than the rate paid by many Americans.
“It is a low rate,” Romney said. “And one of the reasons why the capital gains tax rate is lower is because capital has already been taxed once at the corporate level, as high as 35 percent.”
Below the fold, let's explore and debunk this dishonest notion.
Let's suppose you bought 1000 shares of General Electric common stock on November 1, 2010 for $15.83 per share. You sold them on September 4, 2012 for 22.36 per share for a tidy long term capital gain of $6,530 or 41.25%. Your tax bill on this transaction: 15% on your gain, or $979.50. (You also collected $1210 in dividends, but that's another calculation.)
What actually happened is that you made a bet that the price of GE stock would rise, and your bet was successful. The management of GE couldn't care less about this transaction, and didn't benefit from it by a penny. You bought the stock from an unknown investor and sold it to another unknown investor. But according to Romney, you somehow get credit for the taxes GE paid during that period, which might have been as high as 35%. (The actual tax rate was nowhere near that high in actual fact, but that's another story for the tag "corporate welfare".)
If you go to the racetrack and win money by betting on a horse, you pay income tax on the gain, but you don't get any special break for the income taxes paid by the jockey.
The second flaw in Romney's statement is that the $$15,830 you paid for those 1000 shares was not "capital" at all, at least not in the sense of economic theory. It was not available to GE to buy machinery or to build factories. You were just making a side bet with your Wall street buddies. Just because the government calls it a "capital gain" doesn't make it so.
The third flaw in Romney's argument is that it assumes that the shareholder bears 100% of the true burden of the corporate tax. Actually that tax burden is also borne by the company's customers in the form of higher prices, and by its employees in the form of lower wages. The real breakdown is probably different for every company, and my gut instinct is that corporate taxes are borne mostly by the workers and the customers.
In order to amass a quarter billion $$ Mitt romney must have some understanding of investments. He cannot possibly believe the bullshit he is spouting. My conclusion is that he is just lying to us (again!) in order to line his own pockets. I haven't the slightest doubt that he will, if elected, sign or veto every bill with his own net worth firmly in mind. That's who he is.
Your opinion?