Mitt Romney: It's fair I pay a lower tax rate than people making $50,000

[jmowreader]

58. He is so glad I didn't interview him

Me: Now, you made on your investments, personally, about $20 million last year. And you paid 14 percent in federal taxes. That's the capital gains rate. Is that fair to the guy who makes $50,000 and paid a higher rate than you did?

Romney: It is a low rate. And one of the reasons why the capital gains tax rate is lower is because capital has already been taxed once at the corporate level, as high as 35 percent.

Me: Except that in a lot of cases, the capital hasn't been taxed at the corporate rate. Let's say I work for General Electric, and part of my compensation is an option to buy 100,000 shares of their stock for $15 per share. I exercise my option and pay $1.5 million to a brokerage for this stock. Right now it's trading on the open market at $22. If I hold that stock for two years and sell it back to the brokerage I bought it from, or to any other brokerage for that matter, I pay capital gains tax on the profit. Now, what this translates into is a situation where if I receive a $1.5 million paycheck in a form I can take to the bank and deposit now I pay 35 percent on it, but if I receive the same $1.5 million paycheck in a form I have to leave in the dresser drawer for two years before I can cash it, I pay 15 percent. Better: the paycheck you're paying 15 percent tax on might grow significantly in those two years because stocks are known to do that. You're talking dividends but my guess, and it must remain a guess because you refuse to release your returns, is that most of your income comes from redeeming options and selling stock -- and you paying 15 percent on this is total bullshit.

(On edit: if I would have hit him with this, the next thing you would have seen is a Romney-face-shaped blob of MAC NW30 hit the desk because he would have fainted so fast and thoroughly he would have fallen out of his makeup.)