Judging from the number of tax preparation services, computer tax programs and statistics put out by the Internal Revenue Service, my guess is that most Americans, particularly those living between the relatively more affluent coasts, know very little about how personal income taxes are computed. As such, it may come as a shock to them that Mitt Romney, our multimillionaire Republican contender for his party’s presidential nomination paid less, as percentage of his income, in taxes than did the average working stiff.
Capital gains, dividends, and so-called “carried interests” are taxed at a preferential rate of 15 percent. Moreover, this income is not subject to Social Security or Medicare tax and you can deduct your losses (should you have them) from your gains.
For the life of me I cannot understand why capital gains and dividends are taxed at a lower rate than the paltry income I garner from a bank certificate of deposit. And investor assumes certain risks when making an investment choice, but so does a gambler at a casino or racetrack. Making a type of investment which has both risks and rewards should not carry with it a tax advantage not bestowed on more conservative investors.
So “thank you” Mr. Romney for highlighting this inequity to the public. Hopefully, your unintended candor will ignite an effort for serious tax reform in this country.