In urging a reluctant Mitt Romney to finally release his tax returns, Newt Gingrich produced his own last night during the debate. His 2010 returns reveal an adjusted gross income of $3.1 million with an effective tax rate of almost 32 percent. That’s more than twice the rate that Romney said he pays — unless, of course, Gingrich gets his way.
Seeking to overhaul the U.S. tax code, Gingrich announced his plan last month to introduce a new, parallel tax system with what he calls a “flat” 15 percent rate. But as the Tax Policy Center notes, that plan would mean that millionaires would actually pay much lower tax rates than those below them on the income scale — millionaires like Newt Gingrich.
According to calculations by Center for American Progress Action Fund’s Seth Hanlon, Gingrich’s own tax plan would slash his effective tax rate from 31.6 percent down to 14.6 percent, right around where Romney sits comfortably under the existing code. That amounts to a $536,000 tax cut that Gingrich is proposing to give himself.
It is important to note that while Gingrich released his individual return as well as the one for his charitable foundation, he chose not to disclose the returns from his multiple business entities like Gingrich Holdings, which constitutes the primary source of his wealth. Together, they brought in $2.6 million for the Gingriches. Because his proposal includes business tax cuts as well, it is possible that his tax break would be even larger.
Meanwhile, middle-class families would pay significantly higher federal taxes than one-percenters like Gingrich and Romney. In fact, because Romney essentially admits he accrues nearly all of his wealth from investments, which are tax-free under Gingrich’s plan, Gingrich’s plan would allow Romney to pay almost no taxes at all.
And while Gingrich tries to sell his plan as a one that will “allow Americans the freedom to choose to file their taxes on a postcard,” middle-class families will have to do their taxes under the regular system and Gingrich’s system to see which actually affords them a better return.
Incidentally, that $500,000 windfall from his tax plan also happens to be the amount of credit Gingrich and his wife had at Tiffany and Co., the jewelry store. Whether to feed a high-end habit or provide a tax “choice” to American families, Gingrich definitely walks away from his tax plan a much richer man.