The Romney campaign has finally released his 2011 tax return which shows that the Republican candidate paid $1.95 million in taxes on an income of $13.7 million. This amounts to an effective tax rate of 14.1%, which makes sense given that most this was investment income, which is taxed preferentially. The campaign has also released a 20-year summary of Romney's taxes from 1990-2009, which shows that he paid an average annual tax rate of 20.2%.
None of this is surprising, of course, but what does it really say? Two simple things:
1. Romney is the personification of the Income Gap problem in AmericaNever mind that the average CEO makes 379 times the salary of the average worker, but the type of income that made Romney extremely rich is taxed at 15% instead of the 35% that most Americans pay on ordinary wages. The combined effect of these two factors makes Romney the poster child for the inequality that has caused a massive wealth gap between rich Americans and everyone else (288 times). This inequality is a ticking time bomb that will eventually lead to a breakdown of our labor market, the stock market, and eventually our entire economy.
2. Romney's Charitable Contributions are Generous but OverblownThe Romney campaign also released (a little opportunistically, I feel) his charitable contributions for 2011, which amount to $4 million, or 30% of Romney's gross income. If you adjust this for the fact that $2.25 million of this was deducted against taxes, that reduces the net contribution to about $3.2 million or 23% of income. Still not too shabby except that for the 20-year period from 1990-2009, the average Romney contribution to charity was only 13.5% and in 2011, Romney was preparing for a Presidential run. Unless you are five years old, it's not difficult to read between the lines here.
In conclusion, we should thank Romney for finally releasing his returns and showing at least some degree of respect for the American public and our political process, but there is nothing in these returns that changes the story line. Romney is a representative of the top 1% and if elected, has promised to pursue elitist policies that will maximize the benefits to this rarefied class. In addition, he has blatant disdain for the remaining 99% of America, whom he considers to be mostly lazy bums and freeloaders. I applaud his charitable instincts and have nothing bad to say about that, but these elections are not about whether Romney is fit to be a human being but whether he is fit to be President of the United States and the leader of all 100% of our great people.
Sanjay Sanghoee has worked at leading investment banks Lazard Freres and Dresdner Kleinwort Wasserstein as well as at a multi-billion dollar hedge fund. He is also the author of the financial thriller, "Merger" (available below). Please visit www.sanghoee.com for more information.