Tuesday, January 24, 2012

Is Mitt Romney a Financial Parasite?

“Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.”. -- Abraham Lincoln
How does the good of a few greedy parasites, beholden to nothing, outweigh the good of the nation? How does anyone justify legislation and policy that further lines the pockets of these parasites? Even if parasitic wealth was taxed at the same rate as the rest of us, they would still be filthy rich! And, they don't create jobs. Hell, most of them never worked a day in their life. But apparently, enough of us believe in their speculative finance economy that has made them obscenely wealthy, and the propaganda that they spew that we are willing to risk an economic catastrophe to protect that obscene wealth.

Which brings me to presidential candidate, Mitt Romney, whose fiscal plan delivers huge tax cuts to the wealthiest Americans while simultaneously forcing massive cuts to public services and social security on which the middle class rely. Then, there is the matter of his personal finances...

Not only, according to his released tax returns, did Romney make $42.7 million over the past two years, paying only $6.2 million in taxes - that’s an effective tax rate of less than 13.9% for doing nothing - he took advantage of a giant tax loophole that's available to only a very select few. It's called the carried interest loophole, or as it's often called the hedge fund manager tax loophole (in 2009 Top 10 Hedge Fund Honchos Averaged $900,000/Hr). Why hedge-fund tax loophole? Because hedge fund managers, partners in real estate ventures, and private equity kingpins are the select few who can use this legal provision to escape paying what the 99.9999 of the population are forced to pay.

What exactly is carried interest? 

Well, aside from the fact that closing this loophole could save taxpayers and the deficit $15 billion by 2015, it is the percentage - usually 20% - that  hedge fund managers and private equity kingpins can claim as investment,  taxed at the long-term capital gain of 15% rate,  instead of claiming what it actually is, fees or income,  which would be taxed at what the rest of us pay, 35%.

Wait, it gets better.  The maximum amount a married couple can pass to their children without paying gift taxes is $10 million, but Romney paid zero gift tax on the $100 million trust funds he set up for his sons. That's right, they avoided $31 million in gift tax that 99.9999% of the population would've had to pay if they did the same thing! According to David Cay Johnston, they "gave their sons some of their carried interest. And because the carried interest is not an ownership, it is a right to receive profits, Congress lets you value that gift at zero". 

In a nutshell, top hedge fund managers, gifted with a much lower tax rate, who do not produce anything tangible, or, some might argue, anything of any value whatsoever, make  more hourly, than most Americans will earn in a lifetime,  and financial parasites presidential candidates, who left their company 13 years ago,  still receives a share of the firm’s “carried interest” profits – taxed at the same low rate. It's the gift that keeps on giving to those with ghastly gobs of power and privilege.

8 comments:

Anonymous,  18:06  

Here's a history of federal income bottom and top bracket rates

http://www.ntu.org/tax-basics/history-of-federal-individual-1.html

Mike Perry,  18:54  

My job, along with 50 other jobs were shipped off-shore to India because the company's profit margin wasn't as expected. The CEO and high paid executives of the company received million dollar bonuses for their brilliant cost cutting, meanwhile the rest of us are either working for HALF of what they used to make as I am, or are jobless.

More and more people are finding themselves in this situation every day. Which should tell you that our political leaders and the wealthy 1% have no interest in changing things.

In other words, it doesn't matter who gets elected into office. Nothing will change.

Roth's stepchild 19:58  

Thanks for the history of fed tax rates, 18:06.

Mike, I couldn't agree more. Every president accelerates "the agenda" of the ruling class that much further. And if anyone thinks, if elected, that Ron Paul will do anything different, they're foolish. He's as much a tool of the sociopathic elite as all of the other candidates.

Having said that, even though they're all puppets, I do believe some candidates are more evil than others. For instance, Gingrich. Just as Hitler, also a "tool" of the aristocracy, may have taken the already depraved agenda to another level of wickedness, I believe someone like Gingrich could make things even worse than whatever they have planned.

Sorry to hear about your situation. Good luck.

Anonymous,  21:13  

During the Eisenhower administration, the richest rich were taxed 92%. 50 years before Reagan the tax rate was 50% and higher. Now, the greedy GOP pigs hold the debt ceiling hostage to keep lower taxes for their even greedier parasitic puppet masters.

How does anyone in their right mind vote for these fuckers.

Anonymous,  22:25  

Born on third base this guy thinks he hit a triple.

The reason Romney does not want to release the tax returns from his Bain years is because it might start up a conversation about the carried interest loophole, which is essentially money earned on another person's investment. These hedge fund and private equity managers earn MOST of their income from other people's investments! All they do is find a lucrative investment, find others to invest in it, then charge a percentage of the capital gain as a fee. This fee is "carried interest" and is taxed like a capital gain at 15%. That income should be earned income and should be taxed at the upper marginal income tax rate of 35%.

Mike Perry,  22:29  

I used to think Ron Paul was different but after I did a little research I discovered he's nothing more than a typical politician who will say whatever gets him more funds.

The only solution is throw the bums out and start from scratch.

Roth's stepchild 15:37  

21:13, the only reason I can think of is that people are so indoctrinated that they literally cannot see what's right in front of their face, and because they trust the "mainstream" they do not question, or if they question, they refuse to step out of the carefully constructed framework set up to keep us in our place. The older a person is the harder it is to break out of your comfort zone.

I agree, 22:25.

You got it, Mike. However, it will take an enormous catastrophe for people to see the light, so to speak, and by that time, imho, it will be too late, if it's not already.

Rogan Matthew 16:33  

People have a right to know how the millions of dollars he received from Bain Capital was paid, and whether or not it's been subjected to any taxation at all.

It's so obvious he's trying to get away with something with this shell-game disclosure routine. He thinks feeding us a few crumbs from his latest returns will satisfy and quench the public's thirst, and the sad thing is, it probably will.

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