Mitt Romney Would Pay 0.82 Percent in Taxes Under Paul Ryan's Plan

[hue]

http://www.theatlantic.com/business/archive/2012/08/mitt-romney-would-pay-082-percent-in-taxes-under-paul-ryans-plan/261027/

Under Paul Ryan's plan, Mitt Romney wouldn't pay any taxes for the next ten years -- or any of the years after that. Now, do I know that that's true. Yes, I'm certain.

Well, maybe not quite nothing. In 2010 -- the only year we have seen a full return from him -- Romney would have paid an effective tax rate of around 0.82 percent under the Ryan plan, rather than the 13.9 percent he actually did. How would someone with more than $21 million in taxable income pay so little? Well, the vast majority of Romney's income came from capital gains, interest, and dividends. And Ryan wants to eliminate all taxes on capital gains, interest and dividends.

Romney, of course, criticized this idea when Newt Gingrich proposed it back in January by pointing out that zeroing out taxes on savings and investment would mean zeroing out his own taxes.
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Matthew O'Brien - Matthew O'Brien is an associate editor at The Atlantic covering business and economics. He has previously written for The New Republic.

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Mitt Romney Would Pay 0.82 Percent in Taxes Under Paul Ryan's Plan
By Matthew O'Brien

inShare37 Aug 11 2012, 4:52 PM ET 440

Paul Ryan's plan is a path to prosperity for Mitt Romney

Ryan2.jpg
(Reuters)

Under Paul Ryan's plan, Mitt Romney wouldn't pay any taxes for the next ten years -- or any of the years after that. Now, do I know that that's true. Yes, I'm certain.

Well, maybe not quite nothing. In 2010 -- the only year we have seen a full return from him -- Romney would have paid an effective tax rate of around 0.82 percent under the Ryan plan, rather than the 13.9 percent he actually did. How would someone with more than $21 million in taxable income pay so little? Well, the vast majority of Romney's income came from capital gains, interest, and dividends. And Ryan wants to eliminate all taxes on capital gains, interest and dividends.

Romney, of course, criticized this idea when Newt Gingrich proposed it back in January by pointing out that zeroing out taxes on savings and investment would mean zeroing out his own taxes.


Almost. Romney did earn $593,996 in author and speaking fees in 2010 that would still be taxed under the Ryan plan. Just not much. Ryan would cut the top marginal tax rate from 35 to 25 percent and get rid of the Alternative Minimum Tax -- saving Romney another $292,389 or so on his 2010 tax bill. Now, Romney would still owe self-employment taxes on his author and speaking fees, but that only amounts to $29,151. Add it all up, and Romney would have paid $177,650 out of a taxable income of $21,661,344, for a cool effective rate of 0.82 percent.

But what about corporate taxes? Aren't they a double tax on savings and investment, so Romney's "real" rate is higher than his headline rate? No. As Jared Bernstein of the Center on Budget and Policy Priorities has pointed out, Romney has structured his investments as "pass-throughs" that avoid corporate tax. In other words, the 0.82 percent tax rate is really a 0.82 percent tax rate.