Today the White House shot down one of the more interesting ideas of recent years, the trillion dollar coin. In case you missed it, this idea’s been floating around for more than two years as a way to deal with the debt ceiling. Using an obscure provision of the law intended to allow low-denomination collectible coins, Treasury would mint a single coin worth a trillion dollars (for example), deposit it at the Federal Reserve, and meet obligations with the newly created money.
Virginia Governor Bob McDonnell has proposed to eliminate the state’s gas tax and replace it with an increase of 0.8% in the sales tax and other fees including $100 on alternate fuel vehicles. The idea has been roundly lambasted, most importantly economists who study transportation taxation. The most obvious reason this is a bad idea is that it unties road building and maintenance costs from those necessitating them; taxing fuel comes about as close as we can in taxation to directly charging the users of a government service for its cost.
McDonnell would be proud to be the first state to eliminate a gas tax, boosting his bona fides in the Republican party. But he should be just as proud to be at the vanguard of a logical, economically sound change that is long overdue in states across the country: indexing gas taxes for inflation. This means that as the general price level increases, including the costs involved in road building and maintenance, so does the tax rate.
I have many drafts of things I started writing but didn’t finish. This is one of them, started back in April when Republican operative Brad Blakeman appeared on Fox News, citing an unnamed poll indicating 70% of Americans answered the question “are you better off than you were four years ago” with “no.”
Now this question, targeting Obama with Ronald Reagan’s famous 1980 quip, has been all over the media for a few weeks, it’s time for my typically late two cents.
This is a very high-risk tactic, one that can go very badly for the GOP. Because the fact is, unlike 1980, the country is in very much better shape economically than it was on election day 2008.
News today that some members of Congress, rather than working on reducing unemployment or preventing the economy from going over the “fiscal cliff,” have introduced legislation to exempt Olympic medal winners from taxes on their winnings. I won’t argue the wisdom of differentiating these winnings from other winnings, such as lotteries, game shows, poker tournaments, or sporting competitions. Not here anyway.
I want to look at the math.
Norquist’s Americans for Tax Reform (aka Americans for Lower Taxes Over All Else) posted an “analysis” of the tax impacts of winning medals. “American medalists face a top income tax rate of 35 percent,” wrote ATR’s Hugh Johnson. Under U.S. tax law, they must add the value of their Olympic medals and prizes to their taxable income. It is therefore easy to calculate the tax bite on Olympic glory.”
The post then leads into a table showing “total tax burden” with the question: “So how much will U.S. Olympic medal winners have to pay in taxes to the IRS?”
The problem: the table shows the maximum that medalists might pay. To reach the 35% bracket shown by Norquist’s group, a Olympian would have to have taxable income in excess of $388,350 — before winning the gold. How many medal-winning athletes do you think have incomes at this level? Michael Phelps and the men’s basketball team and…?
The silly thing here is that Norquist’s group doesn’t need to fudge the numbers to make their point. But for ATR, bigger numbers are scarier and the target audience eagerly swallows whatever ATR spoons out.
And so Congressional Republicans work to lower taxes for a hundred or so Olympic athletes, when they could be quite easily lowering future taxes on all taxable income under $250,000.
Maybe the ATR’s Olympic “analysis,” based on the few athletes making more than $388,350, is correctly focused after all.
Okay, for some of you the obvious answer is “nothing,” and for some of you the obvious answer is “12 years.” You’re both wrong.
Democrats constantly point to Romney’s father releasing 12 years of taxes as the obvious comparison. It’s not. Certainly it’s a reasonable comparison, and clearly an effective cudgel, but Mitt’s much wealthier than his father was and his finances are much more complicated.
Some Republicans point to John McCain, who released only two years of tax returns. But he provided public financial disclosures as a member of Congress; not the same thing, but much more than we have from Romney.
It seems the most comparable candidate was John Kerry, whose wife Teresa Heinz is worth about 57 bazillion dollars. Kerry released only two years of tax returns, Republicans say, but Kerry had filed 18 years of financial disclosure forms as a U.S. Senator. Democrats say this was an enormous level of disclosure, but it wasn’t; the Kerrys filed their taxes separately, and the vast majority of their income was Teresa’s.
Republicans raised quite a fuss over this in 2004 (objections which now ring hollow). But since Teresa Heinz Kerry never released much information, releasing only one year’s 1040 form before the election, she is the perfect benchmark for Romney.
If the Romneys won’t release their returns because they don’t want to provide hundreds of pages per year of information that would then be combed through for embarrassing nuggets — quite a reasonable concern, given the dressage horse kerfuffle — they have a clear and simple solution, following Heinz’s precedent: release a bunch of years’ worth of 1040s.
This would provide sufficient detail to satisfy any reasonable undecided voter, would be more than John Kerry provided about the vast majority of his wealth, and would not provide reams of potentially trouble-making data.
Unless. If the Romneys had sufficient capital losses in 2009 to bring their effective tax rate for that year to zero, or near zero, releasing the 1040 would make this plain and the fallout would likely be damaging.
Is there any other reason why Romney shouldn’t release his 1040s?
The best explanation for the timeline of Mitt Romney’s separation from Bain Capital comes from Salon’s Steve Kornacki and goes like this:
- In 1999, Romney was asked to take the helm of the struggling Salt Lake City Olympics, and very quickly (within a week or two) agreed and left Bain. This was a leave of absence, similar to ones he had taken in 1991-2 (to temporarily run Bain and Company, which was in financial trouble) and in 1993-4 (to run for U.S. Senate against Ted Kennedy).
- When (or as) the Olympics job was finishing up, Romney saw an opportunity to run for governor of Massachusetts; then acting Governor Jane Swift (R) was enormously unpopular and chose not to run for re-election.
- During 2001 and 2002, Romney was paid a salary by Bain of at least $100K.
- Either during or after the campaign, Romney finalized his departure from Bain. After his term as governor, Romney would be 59, and clearly had eyes on a run for President.
How do I know that Romney’s departure became “real” around 2001 rather than around 1999? Well, I don’t. But it makes more sense.
This has been bugging me for a while, but the latest impetus was a discussion about Tim Kaine diverging from President Obama over the income level where the Bush tax cuts should be allowed to expire. Obama says $250,000, Kaine says $500,000, apparently because $250,000 just isn’t that much income in northern Virginia, a key battleground in his Senate race against George Allen.
“Remember that $250,000, while it may be worth a lot to some folks,” explained National Journal Hotline editor-in-chief Reid Wilson, “to those voters say in the northern Virginia suburbs, it’s not that much money.”
Channeling Sherman T. Potter: “Horse hockey!”