Why Mitt Romney’s taxes matter

Mitt Romney

by Michael Tamayo

It is no secret that Mitt Romney is a wealthy man. His net worth is estimated to be somewhere between $190 million and $250 million. He cofounded Bain Capital and was the “sole stockholder, chairman of the board, chief executive officer, and president” of the venture capital firm. Politicians are typically wealthier than most other Americans, but if elected, Romney would be one of the wealthiest presidents in American history. To get an idea of just how wealthy Romney is, combine the wealth of the past eight presidents, and then double that. This is the ethos Romney exudes. There is no escaping it and there is no spinning it.

Romney, for his part, has not been very successful at distancing himself from his rich guy image, making remarks in passing and doing interviews that only add fuel to the fire. He once dismissed questions about income inequality and class tensions as being driven by envy towards wealthy Americans. And who can forget Romney’s plethora of gaffes which makes him appear out of touch with ordinary Americans? On the one hand, we have a candidate who constantly (albeit inadvertently) reminds us that he is a very wealthy man. On the other hand, he is quite unforthcoming about his finances. This combination of circumstances only generates more public interest in his finances.

It’s little surprise, then, that Romney’s tax returns are subject to scrutiny in this election cycle. Keep in mind that presidential candidates are not required by law to release their tax returns. Candidates can choose to release however many years worth of tax returns as they like. It varies from candidate to candidate, regardless of political party. Romney has promised only two years of tax returns compared to President Obama’s 12, but he isn’t the only candidate who is reticent about his taxes. John McCain released two years of his returns in 2008, and both Jimmy Carter and Ronald Reagan released just one year of tax returns for their presidential bids in 1976 and 1980, respectively. But these candidates were not dogged with the same kind of scrutiny that Romney is facing.

What, then, makes Romney’s case special?

Romney’s taxes matter because they are a symbol for the socioeconomic divide between wealthy and poor so prominent in America today. Romney has had spectacularly unfortunate timing to become the standard-bearer of a major political party with a shot to win the next election. At a time when millions of Americans are still struggling to make ends meet, Romney’s rich guy image can alienate voters who think he’s out of touch, especially undecided voters, independents, and — predictably — Democratic voters. Perhaps Romney’s taxes would not be as salient an issue if he had been the nominee in previous elections, but we will never know for certain. What is certain is that this particular election cycle was a bad time for Romney to become the nominee of the Republican Party, at least in a symbolic sense. A number of different factors shows why this is the case, including the following reasons:

Heightened Class Antagonism

With the slogan “We are the 99 percent,” Occupy Wall Street has, whether it is true or not, popularized the notion that political and economic conditions are rigged against 99 percent of Americans while the top 1 percent reap most of the system’s benefits. The idea behind the slogan is to “otherize” the top one percent of wealthiest Americans, rendering them out of touch with ordinary citizens. This is not exactly an accurate assessment of socioeconomic conditions in the United States today. It is an arbitrarily chosen percentage, it is polemical, and it is insensibly rigid. Is this to say that those in the 98th percentile are ordinary citizens who struggle to make ends meet alongside those in, say, the bottom 30, 40, or 50 percent? But the slogan did its job: It made Americans think about class divisions in the United States. On the other side of spectrum, there are those who deride the poor as free-riders who demand for benefits they don’t deserve. There isn’t a uniform slogan for this camp, but one just needs to look at a few examples to get an idea of the rhetoric being used.

Newt Gingrich once told Occupiers to take a bath and get a job. Members of the Chicago Board of Trade dropped piles of McDonald’s job applications on Occupiers’ heads in Chicago. Rush Limbaugh blasted Occupiers as being “perpetually lazy (and) spoiled.”

Neither side captures an accurate view of the other, and their criticisms are convenient but hardly constructive. The idea, however, is clear: Tensions between different socioeconomic classes have been rising in recent years, especially since the beginning of the Great Recession.

Rising Income Inequality

The heightened class antagonism we see in the country is not without reason. The United States has seen income inequality rise over the past few decades with little in the way to slow it down or reverse it. Wealthy Americans have seen their income increase while median income has stagnated. The 400 wealthiest Americans have as much wealth as the bottom 150 million citizens combined.

The United States ranks highly in income inequality among developed nations, which is an odd trait for such a wealthy country. These developments pose questions for Americans to think about. Is there a particular distribution of income that actually fosters economic growth? Is too much economic inequality harmful?

A Salient Tax Policy Debate

A unique aspect of this election cycle is a debate over whether we should raise taxes on the wealthiest Americans, which we have not done for about two decades. On the one hand, President Obama and congressional Democrats do want to raise taxes on the wealthiest Americans. Obama has even named his plan after the billionaire who endorsed it. On the other hand, we have Grover Norquist and Republicans in Congress who have committed themselves never to raise taxes on anybody. They even signed a promise pledge.

In fact, Romney and many congressional Republicans want to lower the taxes for the wealthy. Lingering in the background of these debates about our tax code are questions about the progressive nature of our tax system. Who should bear the tax burden in the United States? Is the middle class being squeezed, and is our democracy suffering as a result of that? Do the wealthy pay enough in taxes, and are we better off when they pay more or when they pay less?

To blame or not to blame Romney?

It isn’t very difficult to see why Romney’s tax returns are subject to such perusal while other candidates’ returns have not been similarly perused. Romney is an icon of this heightened class antagonism, this rising income inequality, this debate over how the wealthiest Americans should be taxed. His tax returns would all but confirm voters’ fears that, yes, the system works heavily in favor of the wealthy and, yes, it does not do enough to relieve poorer people who are struggling to make ends meet. Romney’s tax returns would legitimize the notion that there indeed is class warfare in America, that the income gap is widening and continues to widen, and that the wealthy do not pay as much in taxes as they can afford to. The reality isn’t as severe as Occupy Wall Street would have Americans believe, but it is still significant enough to draw concern. Voters already know this, but it hasn’t been made “official” yet. It hasn’t been certified with Romney’s numbers and dollar figures and deductions and exemptions.

We don’t have all the numbers, but we have been fed bits of information and glimpses of Romney’s tax returns. He paid an effective rate of 13.9 percent in 2010 and 14.1 percent in 2011, each year earning several million dollars in income. His campaign also insists that he paid an effective rate of 20 percent over the past two decades. But this is little comfort to the individual who makes $40,000 a year from wages and pays a tax rate of 25 percent. It’s little comfort to millions of middle-class Americans who might be unsettled that Governor Romney pays a lower tax rate than they do and that Governor Romney would rather dodge the questions than own up to the truth.

Here we see why Romney’s taxes matter so much in this election. We have an electorate pushing for a wealthy man — potentially the next president of the United States — to show us his records, daring him to prove that there isn’t a socioeconomic divide in America today. And he can’t. His tax returns are the embodiment, the epitome of this divide, and he does not want to corroborate what Americans already suspect.

On this issue, Romney is a conduit. It is through him that Americans can learn about class antagonism, income inequality, and tax policies in the United States today. Between a rock and a hard place, Romney must tread carefully if he is to dodge questions about his tax returns and shift attention away from topics he would rather not discuss. It puts him in an awkward spot. After all, it was Romney’s own father, Governor George Romney, who released twelve years of his tax returns when running for president in the 1960s, explaining that “one year could be a fluke, perhaps done for show.”

It is important to remember, however, that it is not fair to direct criticism at Romney himself. Instead, voters must consider the merits of the policies that allowed the socioeconomic divide which Romney symbolizes to accumulate in the first place. There should be no attempt to demonize Romney himself, nor should there be accusations of potential felonies he is supposedly hiding in his tax returns. We simply don’t know enough to accuse him of committing a felony. These criticisms are irresponsible ones and do not advance public debate. Furthermore, Romney is not legally required to release his taxes, and he has a right to withhold them if he so desires.

But if we are to scrutinize Romney’s tax returns, we ought to be doing so for the right reasons. Too many Americans would rather make ad hominem attacks on Romney than talk about what’s at the heart of this tax return issue. At the heart of this issue is not whether Romney is a good person but whether it is fair that government policies allow such a prominent socioeconomic divide between wealthy and poor to accumulate.

Let that be the foundation upon which we build a serious discussion about income inequality, social programs that help the poor, and tax policy. Let that be the springboard upon which we launch discussions about how the government should treat its poor and its wealthy, what it should do if a socioeconomic divide accumulates and little has been done to stop it. At the end of the day, Romney’s tax returns — and all the things they symbolize — captivate us because of one fundamental question they ask us to consider. Is income inequality threatening the integrity of the American Dream?


photo of Mitt Romney by Gage Skidmore: http://www.flickr.com/photos/gageskidmore/5447030803/