The Problem With Romney’s Taxes
Senior Editor, CNBC.com
The extraordinary wealth of Mitt Romney should not be a cause for surprise, much less alarm. For as long as anyone has known the name Mitt Romney, he has been associated with wealth and power — as many of our presidents, good and bad, have been.
Americans do not require that our presidents emerge from the middle classes. If anything, the opposite seems to be the case. We like our presidents wealthy or at least to have the trappings of wealth, such as a degree from Harvard Law School. We are a country that admires success, and from before the beginning of our republic we’ve had a strong tendency to look at the possession of wealth as a sign of merit.
But Romney’s tax returns did not just reveal his income. It revealed his tax rate, which was around just 14 percent of his income. And this is a problem.
No one supposes that Romney achieved his tax rate through any illegality. He strikes most of us as perhaps too upstanding, hardly a guy to bend or break the requirements of the tax code. But it is the very fact that Romney can pay such a small share of his income in taxes and be safely within the law that vexes.
Many Americans — whether they are of the Tea Party or Occupy Wall Street persuasion, or somewhere in between — increasingly sense that our public institutions do not treat us as equals. Regulations benefit entrenched corporate interests, bailouts rescue financiers and automotive chiefs, politicians serve their special interest clients rather than the common weal, and the tax system — that dreaded monstrosity — destroys the income of the middle classes while somehow, someway allowing the Mitt Romneys of the world to pay just a fraction of what the rest of us pay.
It is not so much the unequal distribution of wealth that bothers us, it is the unequal treatment by government. The very place we are meant to meet as equals regardless of our social status — the political sphere — has decayed or been abandoned. That grand and shining city on the hill where we held a truth about our equality before the law to be self-evident increasingly stands like a ruin, a reminder of a lost civilization.
The problem is not that the rich have too much money but that the wealthy and the politically powerful — all too often, one and the same — are insulated from our common life. This can be seen in many areas but let us stick to taxes right now. Most working Americans are overtaxed, burdened beyond anything the benefits of public goods could justify. But some of us — and here “us” is used in the loosest sense — have escaped these common burdens.
Americans who might never seek to undo the effects of market processes shudder when they see that inequality has crept up out of the marketplace and taken over our politics. Or, to be more accurate, the realm of politics and the realm of markets have intermingled too much.
And, despite the best intentions of progressives who believed that they could spread equality before the law into the market, the effect has been to spread inequality into politics.
The political effects of this blended system are obvious enough. The economic consequences, however, have been perverse. The middle classes are increasingly proletarianized, forced out of the once boisterous stance of insubordinate Americans and into a class laboring forever under fear of unemployment, unwieldy debt and the loss of a feeling of national community.
Romney’s tax rate demonstrates that he is one of the beneficiaries of this new system. He has prospered under the system under which many Americans continue to suffer. Even if Romney can claim to have earned his income because he is a “successful businessman,” he retains more of his income because that income is earned in ways our tax code favors.
Underlying much of the current Tea Party uprising in the Republican Party is a growing sense that the dispossessed middle class Americans must form a distinct social and political identity in order to overcome the incumbent elite influence in government and economics. If it does not act on its own behalf, it will not only be unable to retain the benefits it once enjoyed but continue to be exploited — continue to lose prestige, influence, security, income and freedom.
Romney’s tax return shows that he is, at least, an unlikely leader of this revolt. The burden lies upon his shoulders to demonstrate that this appearance is less than fully accurate.
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