Taxes And Presidential Politics

You probably know who the two men pictured above are -- President Barack Obama and soon-to-be Republican presidential nominee Willard Mitt Romney. Why is one smiling and the other scowling? It could be because the smiling one just paid his fair share in taxes, and the scowling one knows that will just further embarrass him because he pays a smaller rate than a middle class American (even though he makes millions).

The presidential family, Barack and Michelle Obama, have just released their tax return for 2011. They made $789,684 -- $395,000 from his presidential salary, $11,000 from interest income, and the rest from book sales. The Obamas paid $162,074 in income taxes. That's 20.52% of their total income. But they also gave 172,130 to charity, with the biggest donations going to the Fisher House Foundation (a scholarship fund for the children of soldiers who were killed or disabled). After those non-taxable charitable donations are subtracted, we find that the president and first lady actually paid a tax rate of 26.25%.

What about Willard Mitt Romney (aka Wall Street Willie) and his wife? Well, they haven't actually released their 2011 tax statements. The Romneys have just given us "estimates" of their income and taxes, and these estimates (which could be shaded to make themselves look better) make them look like stingy rich people (who don't want to pay their fair share of taxes. Romney "estimates" his income to be about $20.9 million, and his tax liability to be about $3.2 million. That's a tax rate of about 15.31% (a smaller rate than many in the middle class pay).

Both the president and Wall Street Willie have proposed changes in income taxes. The president wants to eliminate the Bush tax cuts for the rich (which would increase his own tax liability) and pass what is known as the "Buffett rule", which would increase taxes on those making more than a million dollars a year. The "Buffett rule" would not increase the president's taxes since his book sales have slowed and he no longer makes above a million dollars a year (but it would not decrease his tax liability either).

Wall Street Willie's plan is very different. He wants to extend the Bush tax cuts (which benefits rich people like him the most). He has also submitted a tax proposal which would benefit rich people by lowering the top tax rate (and would cut his own taxes by nearly 50%). In short, Romney is not interested in paying his fair share of income taxes -- either now or in the future.

What about the American people. Do they want taxes on the rich raised (Obama's plan) or significantly lowered (Romney's plan)? Poll after poll has shown that the average American would like for the rich to pay their fair share in taxes, which would mean raising taxes on those making more than a million dollars a year. A new Gallup Poll has just been released which again verifies this. Here are the numbers:

WOULD YOU FAVOR OR OPPOSE A NEW LAW REQUIRING HOUSEHOLDS MAKING $1 MILLION A YEAR TO PAY 30% OF THEIR INCOME IN TAXES?

All Americans
favor...............60%
oppose...............37%

Republicans
favor...............43%
oppose...............54%

Independents
favor...............63%
oppose...............33%

Democrats
favor...............74%
oppose...............24%

Once again, it seems that Romney is out-of-step with the majority of Americans (including about 43% of the people in his own party). His Wall Street buddies may like his proposal to lower taxes for the rich, but it's not going to play well with most others -- and that's not going to help him in November.