Analysts have put a pencil to how Paul Ryan's ideal tax plan would work for millionaires like Mitt Romney. It's stunning. If you think a 13 percent income tax rate on $21 million in income is a bargain for Romney check this:
Democrats have speculated that Mitt Romney might have paid little to no taxes in the years covered in his unreleased tax returns. If Paul Ryan had his way, they’d be right.
Romney’s new running mate proposed eliminating the capital gains tax in his 2010 “Roadmap for America’s Future.” Since Romney, like many ultra-wealthy Americans, derives virtually all of his income from investments, he would pay virtually no taxes at all under such a plan.
In 2010 — the only year we have seen a full return from him — Romney would have paid an effective tax rate of around 0.82 percent under the Ryan plan, rather than the 13.9 percent he actually did. How would someone with more than $21 million in taxable income pay so little? Well, the vast majority of Romney's income came from capital gains, interest, and dividends. And Ryan wants to eliminate all taxes on capital gains, interest and dividends.
Romney, of course, criticized this idea when Newt Gingrich proposed it back in January by pointing out that zeroing out taxes on savings and investment would mean zeroing out his own taxes.
Almost. Romney did earn $593,996 in author and speaking fees in 2010 that would still be taxed under the Ryan plan. Just not much. Ryan would cut the top marginal tax rate from 35 to 25 percent and get rid of the Alternative Minimum Tax — saving Romney another $292,389 or so on his 2010 tax bill. Now, Romney would still owe self-employment taxes on his author and speaking fees, but that only amounts to $29,151. Add it all up, and Romney would have paid $177,650 out of a taxable income of $21,661,344, for a cool effective rate of 0.82 percent.
Forget about the double-tax talk. Romney's investments were structured as pass-throughs to avoid corporate tax.
How do you run government if the rich pay no taxes? Uh huh.
Ryan would actually raise taxes on the bottom 30 percent of earners, according to the nonpartisan Tax Policy Center, but that hardly fills the revenue hole he would create. The solution? All but eliminate all government outside of Social Security and defense — a point my colleague Derek Thompson has made in incredible chart form.