BOSTON – Should we all start praying for Mitt Romney? The GOP presidential hopeful from Bain Capital has become a walking, talking object lesson on how our plutocracy works – and why we desperately need to end it.
Egalitarians seem to be doing a lot of praying since Saturday’s GOP primary in South Carolina. If you listen closely, you can almost hear their prayer: Please, Lord, let Mitt Romney win the 2012 Republican presidential nomination.
Why this swelling of affection for one of the richest Americans ever to run for the White House? Over recent weeks, Romney has put a long-overdue “human face” on American plutocracy at its job-destroying, tax-avoiding worst. No wonder one of his Republican primary foes labeled his actions “vulture capitalism. “
Thanks to Romney, millions of people now understand how private equity kingpins funnel fortunes, to themselves, out of middle class misfortune. Millions more, thanks to Mitt’s on-the-stump candor, have a window into the world of people so rich that $370,000 – Mitt’s income from speaking fees last year – rates as “not very much.”
Every day seems to bring another “teachable moment” on plutocracy from the Romney campaign: The intricacies of the “carried interest” loophole one moment, the allure of Cayman Islands offshore tax haven the next.
All of this came before Mitt released his tax returns. That release only redoubled the scrutiny. Mitt has, to be sure, already spilled his basic tax return beans. His overall federal income tax rate last year, Romney has shared, hovered around only 15 percent. (As Warren Buffett would say, that’s less than the rate his secretary pays.)
Mitt’s campaign as a teachable moment machine has one other fantastic advantage: Matt had a wealthy father. Even better, Mitt’s wealthy father, American Motors CEO George Romney, released 12 years of his tax returns when he ran for the 1968 GOP presidential nomination.
These papa Romney tax returns offer a window of their own – into just how amazingly rich people-friendly America’s current tax code has become.
From 1955 through 1966, George Romney reported income of $2.97 million, about $22 million in today’s dollars, and paid 36.9 percent of that in federal income tax.
George in his heyday rated as one of America’s highest income-earners. In 1960, his rewards from American Motors helped bring his total personal income to $661,423, equivalent to a bit over $5 million today. The IRS only counted 533 taxpayers who made between $500,000 and $750,000 in 1960 – and only 508 taxpayers in the entire country who made more than $750,000.
How did George Romney’s tax rate compare to the tax rate of his fellow rich? George actually paid a smaller share of his income to Uncle Sam than his peers, mainly because he donated almost a quarter of his income to charity and church.
America’s 1960 rich in George’s $500,000-to-$750,000 cohort – a range that would equal from $3.8 million to $5.7 million today – paid an average 45.3 percent of their incomes in federal taxes, after exploiting every tax loophole they could find.
The true millionaires of 1960 – the 306 taxpayers who reported at least $1 million in income, the equivalent of $7.6 million today – paid taxes at a slightly higher rate, 45.8 percent. These millionaires averaged, in today’s dollars, about a little over $15 million each in income.
How does that $15 million average for America’s richest in 1960 compare to the income of America’s richest today? The 1960 rich, even after adjusting for inflation, only made a tiny fraction of the incomes our rich today pull down. America’s top 25 hedge fund managers http://www.peoplesworld.org/a-modest-essay-on-extraordinary-paychecks/ averaged $882.8 million-each – in 2010.
Their tax rate? We don’t know that for sure. But hedge fund managers exploit the same “carried interest” loophole that has proved so lucrative to private equity power suits like Mitt Romney.
The top 25 hedge fund manager federal income tax rate most likely floats between 15 percent-Mitt’s rate-and 18.1 percent, the average federal income tax rate on America’s 400 richest taxpayers in 2008, the most recent year with IRS data available.
So let’s review the bidding here. Today’s top hedge fund managers make 59 times more income than the richest Americans in 1960, after taking inflation into account. Yet the richest Americans of 1960 paid three times more of their income in federal income taxes than today’s top hedge fund managers pay.
Statistics as revealing as these are haven’t yet filtered into America’s political consciousness. But just wait. If Mitt Romney gets the Republican nod, the wonderfully illuminating national seminar on inequality that his campaign has become will be running, glory be, straight into November.
Photo: Detail of the front page of the estimated 2011 IRS 1040 tax form for Mitt Romney & his wife Ann. Yes, he’s really rich. His returns, released under political pressure Jan. 24, represent an extraordinary financial accounting of one of the wealthiest U.S. presidential candidates in generations, with his annual income topping $20 million. (AP Photo/Romney Campaign)