Few of us probably know offhand what tax bracket we're in, but if Mitt Romney is anywhere near correct about his, it's a safe bet that most people aren't in his.
Most people are in a higher one.
Romney told a news conference today that he's "probably" in the 15-percent bracket.
What is it in dollars and cents?
The 15% tax bracket for an individual is a ataxable income between $8,500 and $34,500. For a married couple filing jointly, it's between $17,000 and $69,000 of taxable income.
"Taxable income" is really regularly taxed Income minus adjustments, deductions, and exemptions.
How does a rich guy like Romney pull off paying taxes like a working stiff?
"Because my last 10 years, my income comes overwhelmingly from some investments made in the past, whether ordinary income or earned annually. I got a little bit of income from my book, but I gave that all away. And then I get speakers' fees from time to time, but not very much.' "
Not very much would be about $362,000 in speaking fees. His net worth is about $200 million.
If just half of that is liquid (not likely) and he gets the miniscule 1% return each year, based on current rates, that's $1 million a year. That is to say: It takes a lot of work to be that wealthy and be in that tax bracket.
The 15-percent tax bracket, by the way, is one of the few tax brackets that were not affected by tax increases in the last several decades. It was unaffected by the tax increase of 1993, which targeted the wealthy.
Whoever claims that tax law isn't written to benefit a certain class of individual is sorely misinformed.
The problem is that most people think that the tax code is written to benefit the poor, not the rich. Real numbers and real stories about this will help correct that perception.
Thanks for aiding the dialogue, Bob.
Also he dosent pay F.I.C.A. or Medicare on his earnings on capitol gains.
One quibble, Bob: Romney's talking about his effective tax rate, rather than his marginal rate. That said, this exchange definitely does show what a sweet deal he gets for getting most of his income from investments.
The 8501st dollar of his taxable income is taxed at the same 15% rate as yours, mine, and Warren Buffet's, but his last dollar will be in the higher bracket. His bracket is always going to be higher than his effective rate. Punching a million dollar income, all taxable, into SmartMoney(.com)'s effective rate calculator yields a marginal rate of 35% (the top rate right now), and an effective rate of 32%. If the taxable is $1M and the total is $2M, that gets us to 35% marginal, and 15.99% effective. To have an income as presumably large as his, and still have such a small fraction of it taxable, must be nice.
I will be fascinated to see his actual returns, provided he actually releases them.
Fred--that is only true if one's income is from working. If it is from investing, his tax rate is considerably lower than what one has to pay if they actually work for a living. Cap Gains are taxed at 15%, not your marginal tax rate.
We will become more and more of an oligarchy and less and less of a democracy
unless corporate personhood is rescinded, serious campaign reform is enacted,
and the wealthy are asked to contribute an equal percent of their income towards the common good as a member of the rapidly diminishing middle class.
We will need to invent a new descriptive phrase to describe Mr Romney as a presidential candidate. "Completely out of touch" isn't nearly strong enough.
Mitt Romney: the result of an experiment that asks the question: "Can robots lie and be greedy?"