THE WALL STREET JOURNAL ONLINE
POLITICAL DIARY
19 January 2012
Quote of the Day
After
refusing for weeks to release his taxes, Mitt Romney now says he'll do
so -- by tax day, April 15. But the real news is what Romney has now
admitted about his taxes -- the fact he doesn't want to become news once
the media begin scouring his tax forms. It's not how much Romney earns.
Everyone knows he's comfortably in the top one-tenth of one percent . .
.
The real smoking gun is how Romney
manages to pay only 15 percent on what's been his money-gusher of
compensation from Bain Capital. Romney hasn't released his tax returns
yet, but the most obvious answer is he treats his Bain income as capital
gains -- subject to the current capital gains rate of only 15 percent.
A
loophole in the tax laws allows private-equity managers like Romney to
treat their compensation as capital gains. It's legal but it's a
scandal. Income from employment is employment income, period.
Private-equity managers cling to the technicality that the money they
take out of their companies comes from the appreciation of assets they
own and sell. That may be true, but it's still income they get from
their jobs. Common sense would dictate it be treated as ordinary income.
Congress has vowed for years to close this loophole. But somehow it
persists. Even when Democrats have been in charge, they haven't been
able to close it.
Guess why. The managers
and executives of private-equity funds are big donors to Republicans and
Democrats alike.
-- Robert Reich blogging at huffingtonpost.com on Jan. 17.
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