The revelation that Mitt Romney pays a tax rate of around 15 percent opens the door to another question: How much would his own taxes fall under the tax plan he would pass if elected president?
Here’s the answer, according to a new analysis by Citizens for Tax Justice that was provided to me this morning. Under his plan, Romney in 2013 would see his taxes cut by nearly half of what they would be if you use current law as a baseline.
Another way to put this: If Romney, whose wealth is estimated at as much as $250 million, is elected president and gets his way on tax policy, he would pay barely more than half as much in taxes than he would if Obama is reelected and gets his way — and the Bush tax cuts on the wealthy expire and an additional Medicare tax as part of the Affordable Care Act kicks in.
Here’s how Citizens for Tax Justice, which is liberal leaning but nonpartisan, calculated this finding. It’s based on Romney’s 2011 financial disclosure form for the year 2010, which reported that Romney made an annual income that year of between $6.6 million and $40 million.
Some of that was based on royalties, salary, and interest, which would have been taxed at 35 percent, though that payment was minimized dramatically by deductions. A far bigger chunk was in and capital gains and dividends, which would have been taxed at the lower rate of 15 percent.
Citizens for Tax Justice first calculated what Romney would pay in 2013 under current law. That assumes that the Bush tax cuts would expire, driving the 15 percent rate on capital gains up to 20 percent, and that the top rate on other income, including dividends, would go up to 39.6 percent. It also assumes he’d be subjected to health reform’s new Medicare tax on investment income.
Under that regime, Romney would pay an overall tax rate of around 24 percent.
The group then calculated what Romney would pay if his own plan passed. That is, if you kept the Bush tax cuts in place, including keeping the capital gains tax at 15 percent, and scrapped the Medicare tax, as Romney wants to do.
Under that system, Romney would pay a rate of a little under 15 percent — because virtually all his income is from capital gains and dividends.
The group calculates that this means Romney’s plan would give him a tax cut of more than 40 percent.
“This doesn't even include Romney’s proposal to cut corporate taxes from 35 percent to 25 percent, which would primarily benefit wealthy shareholders like himself,” Robert McIntyre, the director of Citizens for Tax Justice, tells me.
Here’s the chart version provided to me by the group: