Out of touch rich guys and tax time fun

I’ve only got a few minutes at lunch, so I need to keep this brief. (good thing I type 85 words per minute!) Since I’ve been spending more time watching TV lately (baby in my hands and I’ve got to do something) I’ve been watching more of the news punditry, and the stupidity is driving me batty. I can’t believe that I’m about to defend Mitt Romney of all people…

For the record, I’m not a Romney supporter. My issue with him is that I don’t think he is conservative enough, or at least he totally fails to articulate his belief in the philosophy if he is. I don’t like government healthcare and I don’t like gun control, two things Romney has in his past. I said it in 2008 and I’ll say it again now, electable in Massachusetts means unpalatable most everywhere else. I suppose I’m one of those Anybody But Romney conservatives they keep talking about, but I’d amend that to Anybody But Romney As Long As It Isn’t Newt Gingrich, because holy crap, that is a dude with some serious baggage.

That said, whoever gets the Republican nomination is a billion times better than Barack Obama.

But back to Romney, two things.

First, his 15% tax rate… I’ve been a professional accountant for most of my adult life, and hearing non-accountant news morons talking about taxes makes me want to take a flamethrower to their studio. Listen, you ignorant sluts, that is the capital gains tax. That is the tax that you pay on investments. Investment income is different than regular income.

When you invest and purchase stock in a company you pay capital gains taxes on the profit you make. However, that money has already been taxed, because the corporation you own stock in pays the corporate tax rate on what they make. So, keeping it simple, you buy stock in a company. That company made a profit and already paid a much higher corporate tax on what they made. They pay you a dividend and you pay 15% on what you made. If the money you used to buy that stock came from a regular income, then you were taxed when you received it at a higher rate as well. Oh, but rich guys inherit their money! Okay, that inheritance got taxed too, and depending on when he got that inheritance, it might have been at the highest tax rate of all (and ironically Romney donated his inheritance to charity too).

Right now most of my money comes from 1099 income, which means that I also get to pay all those withholdings that most people who get a paycheck never even see because their employers pay for them. (just think what everybody in America could do if they got a 16% raise tomorrow?) So my overall tax rate percentage is way higher than Romney’s. I’m totally cool with that, and you should be to, because if you are smart then eventually you will be living off of your investments as well.

So, income gets taxed higher. Investments get taxed lower. That’s why rich guys who now live off of their investments pay a lower overall rate. That’s why Buffet’s secretary gets taxed at a higher rate than her megalomaniacal attention whore of a boss.

“But they need to pay their FAIR SHARE!” you bleat.   

Dude paid more last year than you’ve paid in your life times five, but that’s not fair enough? But I digress. You want to tax the rich more? Okay, raise the capital gains tax… And watch as the economy tanks even further.

Here’s the thing about why capital gains needs to be lower than income tax…

RISK.

When you invest in something, you are gambling with the money you already have. There is no guarantee that you will make a profit, and in fact you may lose everything. Risk is the greatest disincentive to investment.  The only reason we have investment is because the potential rewards outweigh the risks. As you lower the incentives to invest, you lower the amount that will be invested. The second biggest disincentive is that even if you make $100 on that stock you bought, you’re going to give the government $15. Raise that to $35 and you just made risky investing look even less interesting. Make it not worth it, and people quit investing their money at all and sit on it instead. Then watch the economy implode.

“But fair share! FAIR SHARE!” sob sob whine blather.

Because half of us not paying anything in income taxes at all isn’t fair enough? Okay, so raising the capital gains tax is stupid, but you still want to stick it to those pesky rich people. I know! Let’s raise the corporate income tax! Rich people own corporations! That’ll show them!

(for the record, do you have a 401K? Then you own corporations too)

Despite already having one of the highest corporate tax rates in the functioning world, let’s go ahead and jack that sucker up! Except that corporations look at taxes as another expense. If you tax them more, they simply pass that along in the cost of their product to the consumer, as in you and me. If the expense becomes too much of a burden and causes their prices to rise to the point that they are noncompetitive, they either go out of business and you lose your job, or they move to another country that doesn’t molest them as much, and you still lose your job. They exist to make a profit for their stockholders, not to pay for your good time.

See why class warfare sucks?

And the second topic that is ticking me off, Romney is “out of touch from the common people” a meme that I’ve heard repeated over and over… (I can’t believe I’m defending Mitt Romney here, ugh).

I’m a Mormon, same religion as Mitt Romney, so I do know one thing about the whole Out of Touch Rich Guy crap they’re trying to sell. Romney has been what we call a Stake President. If you have any clue at all what a Stake President does, then you would know that there is no such thing as a Stake President that is out of touch with the issues of the common man.

This is how it works. Latter Day Saints don’t have a professional clergy like most churches. We have volunteer leaders. You don’t ask for a job, but rather you are asked to fulfill an assignment by the volunteer leaders that are above you. We don’t get paid.

I’ll try to keep this simple. The LDS church is divided into Wards. A Ward covers a geographic area, and is usually made up of 500-1,000 people. A Ward is run by a Bishop. Bishops still have their day jobs, but they fulfill a church calling which is equivalent to a pastor or priest in other churches. Most Bishops put in another fulltime job worth of hours a week fulfilling this unpaid calling. They normally do it for 3-5 years before they get released and get put out to pasture to go be a Sunday School teacher or Scoutmaster or something awesome like that which only takes up a few hours a week.

Unless they get called to be a Stake President afterwards. An LDS Stake is made up of about 8-10 Wards. The Stake President is the man that runs the whole Stake. The Bishops report to him. It is a ridiculous amount of responsibility. Like being Bishop, you will usually fill this calling for 3-5 years, during which you will age 10.

Now here’s the thing. Bishops and Stake Presidents aren’t just managers. They’re ecclesiastical leaders. Most of what they do consists of helping individuals in their Wards or Stakes. Every problem that pops up in some member’s life, every family issue, every marriage, every birth, every death, every divorce, every crisis, Dad got laid off, Mom got hit by a truck, Little Timmy is having trouble in school, whatever, that’s the bread and butter of what a Bishop deals with daily. Mormons have our own welfare system and the Bishops are in charge of it. Part of their job is to counsel, uplift, and help the members through their trials. If there is a sad story because of a bad choice or past baggage, then a Bishop has heard it at some point.  

So Mitt Romney has spent a giant chunk of his life listening to the daily problems and concerns of normal people, and then helping them find solutions. (which for Mormons usually don’t involve the government) He was a community organizer before community organizing was cool.

My main problem with Romney is his overall squishiness. He should OWN THIS ISSUE. But he doesn’t. He gets pushed around by the press and has his morals questioned by a serial adulterer who worked for Freddy Mac. “You only paid 15% in taxes!” and we get squish squish squish, instead of “Which was all I was legally required to pay, and I’ve  given more to charity than half the democrats in congress put together, and I didn’t take a salary for being governor or saving the Olympics, so SUCK IT, NEWT! BLAM!” My gosh, if we actually got some fire out of the guy like that we wouldn’t all be so meh about him.

 

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