When President Obama introduced the “Buffett rule,” aimed at ensuring that millionaires and billionaires can’t pay a lower tax rate than middle-class families, 2012 GOP presidential contender Mitt Romney called it “class warfare,” adding that it is “simply the wrong way to go.” At the time, we noted that Romney may be sensitive to the Buffett Rule because it likely applies to him.
One of the major ways in which the wealthy are able to pay lower taxes than the middle-class is through the preferential treatment of investment income. The top capital gains tax rate of 15 percent — as opposed to the 35 percent top income tax rate — means that those wealthy individuals who make their money from investments pay a lower tax rate than middle-class families in the 28 percent or 25 percent brackets, and the same as those in the 15 percent bracket.
A Citizens for Tax Justice analysis found that Romney would have paid about a 14 percent tax rate in 2010, because of his millions in capital gains income.
Romney won’t release his tax returns, so it’s impossible to tell with complete precision what his tax rate actually is. However, during an interview today with the editorial board of the Des Moines Register, Romney said that all of his income is from interest, dividends and capital gains, meaning that the CTJ analysis of his tax plan likely has a lot of truth to it, if it doesn’t overestimate how much he paid:
My own calculation is, if that were the case, for anybody, no taxes on interest, dividends, and capital gains, I would have paid no taxes in the last ten years, because all my income is from dividends, interest, and capital gains.
So it would seem that there really is a Romney rule: lower taxes for investors like him than for working middle-class families. Romney claims that his economic plan would provide the middle-class with a tax cut because it completely eliminates the tax on capital gains for anyone making less than $200,000 annually. However, the vast majority of people who make that much have literally no capital gains income whatsoever.