NEW YORK -- It was Oct. 26, 2011, eons ago in political time. Newt Gingrich was beginning his climb in the polls. With Republicans divided, nobody was left to defend the memory of Ronald Reagan against President Barack Obama's suggestion that he might have supported the Buffett Rule.
But one brave conservative was willing to win one for the Gipper. A plucky, wonky Wisconsin representative rose to the Heritage Foundation rostrum to defend his political idol.
"Obama quotes Reagan as saying that bus drivers shouldn’t pay a higher effective tax rate than millionaires. Well, that’s a no-brainer. Nobody disagrees with that," Rep. Paul Ryan (R-Wis.) said. "But it is simply disingenuous to use this quote as evidence that Reagan would have supported the tax increases that Obama wants Congress to pass."
"Nobody disagrees with that": a simple statement of principle apparently shared by Obama, Ryan and Reagan alike.
But as questions continue to linger over Republican presidential candidate Mitt Romney's tax returns -- and his plans for tax code reform -- it might be worth taking a look at Ryan's tax plans and that humble, everyman bus driver.
Ryan's 2010 "Roadmap For America's Future" plan would have "eliminat[ed] taxes on interest, capital gains, and dividends." Eliminate capital gains taxes, Romney said in a January debate, and his tax liability would be "zero."
Romney may have been exaggerating a bit. If you add in his speaking fees, which get taxed like regular income, he would have paid a 0.82 percent effective tax rate. But Romney was getting at a larger truth: Because he's a former private equity manager, much of his money comes in the form of carried interest, a special breed of income taxed at only 15 percent.
A bus driver, meanwhile, made an average annual salary of $29,160 in 2010, according to the Bureau of Labor Statistics. The average effective federal tax rate for someone who made that much was 5.2 percent in 2010, meaning the bus driver would have paid a higher tax rate than Romney.
Where do Romney and Ryan stand today? The campaign did not respond to a request for comment.
Romney has said he would like to limit capital gains taxes to 15 percent. But in an August interview, he wouldn't give a straight answer on how to tax carried interest, which made up $7.4 million of his income in 2010.
Ryan, asked just Tuesday morning about carried interest, also dodged the question.
Perhaps Ryan should look to Ronald Reagan, who targeted the carried interest loophole in the Tax Reform Act of 1986 that Ryan praised in his Heritage speech. Under that law, taxes on the special form of income went up to 28 percent -- far higher than today's rate.