Why Mitt Romney Doesn't Want To Release His Taxes

A blog about business and economics.
July 13 2012 8:56 AM

Why Mitt Romney Doesn't Want To Release His Taxes

Mitt Romney
Mitt Romney

Photograph by Eric Kayne/Getty Images.

Mitt Romney's been willing to get himself into a lot of weird political corners rather than release his income tax returns. One possible reason why is that he's trying to hide something illegal, but that strikes me as unlikely. Violating the letter of tax law is normally something that low-income people do by accident, or that middle-class people do foolishly. A guy as rich as Romney is going to have lawyers and accountants ruthlessly exploit every permissable tax-minimization tactic, but the whole point of hiring professionals is to avoid breaking the law.

I think this is just one of these cases in which the real scandal is what's legal and the real problem for Romney is a huge wedge between elite and mass opinion on tax issues.


Karlyn Bowman's AEI compilation of public polling is (PDF) as usual useful on this. Among policy elites, all conservatives and many liberals think it makes sense to tax investment income more lightly than labor income in order to encourage capital formation and long-term growth. But few voters agree with this. A January 2012 National Journal poll asked, "The President Barack Obama says he is proposing a 30 percent tax on millionaires because many wealthy Americans pay a 15 percent tax on their investment income, such as capital gains and dividends. Do you think investment income should be taxed at a lower rate than wages or should it be taxed at the same rate as wages?" It turned out that 6 percent think it should be taxed at a higher rate, 56 percent say it should be taxed at the same rate, and just 27 percent of voters agree with the elite conventional wisdom that a lower rate is appropriate.

A Gallup poll showed that 60 percent of Americans and 43 percent of Republicans think households with more than $1 million in income should be required to pay at least 30 percent of their income in taxes. A different CNN poll showed 70 percent of voters and 53 percent of Republicans supporting the Buffett Rule. Anything that further highlights the extent of the shenanigans used under current law will further highlight this super-popular aspect of the president's agenda.

What's more, though traditionally even liberal economists have favored light taxation of capital income, there's something of a backlash against this that Romney personifies quite well. The issue is that though you can certainly construct a model in which you stipulate a sharp distinction between labor income and investment income, in the real world things get fuzzy. A business owner can choose at the margin whether revenue will flow to himself as salary or as profit. A CEO is paid a wage, but paid in large part in the form of equity shares, and in practice is deriving compensation in part from operational control over the enterprise. And through what's known as the "carried interest loophole" hedge fund and private equity managers have contrived to get a large share of their compensation for management classified for tax purposes as capital gains. Normal people probably don't care at all whether Romney's Bain income was in some metaphysical sense really labor income or capital income, but the fact that he and others in his industry are doing this is exactly what a certain swathe of Democratic Party wonks need to point to in order to justify a "Buffett Rule"-style policy.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.


Medical Examiner

Here’s Where We Stand With Ebola

Even experienced international disaster responders are shocked at how bad it’s gotten.

Why Are Lighter-Skinned Latinos and Asians More Likely to Vote Republican?

A Woman Who Escaped the Extreme Babymaking Christian Fundamentalism of Quiverfull

The XX Factor
Sept. 22 2014 12:29 PM A Woman Who Escaped the Extreme Babymaking Christian Fundamentalism of Quiverfull

Subprime Loans Are Back

And believe it or not, that’s a good thing.

It Is Very Stupid to Compare Hope Solo to Ray Rice

Building a Better Workplace

In Defense of HR

Startups and small businesses shouldn’t skip over a human resources department.

How Ted Cruz and Scott Brown Misunderstand What It Means to Be an American Citizen

Divestment Is Fine but Mostly Symbolic. There’s a Better Way for Universities to Fight Climate Change.

  News & Politics
Sept. 22 2014 6:30 PM What Does It Mean to Be an American? Ted Cruz and Scott Brown think it’s about ideology. It’s really about culture.
Sept. 22 2014 5:38 PM Apple Won't Shut Down Beats Music After All (But Will Probably Rename It)
Dear Prudence
Sept. 23 2014 6:00 AM Naked and Afraid Prudie offers advice on whether a young boy should sleep in the same room with his nude grandfather.
  Double X
The XX Factor
Sept. 22 2014 7:43 PM Emma Watson Threatened With Nude Photo Leak for Speaking Out About Women's Equality
  Slate Plus
Slate Plus
Sept. 22 2014 1:52 PM Tell Us What You Think About Slate Plus Help us improve our new membership program.
Brow Beat
Sept. 23 2014 8:46 AM How Men Talk About Relationships in Rom-Coms: While Playing Sports
Future Tense
Sept. 22 2014 6:27 PM Should We All Be Learning How to Type in Virtual Reality?
  Health & Science
Bad Astronomy
Sept. 23 2014 7:00 AM I Stand with Emma Watson
Sports Nut
Sept. 18 2014 11:42 AM Grandmaster Clash One of the most amazing feats in chess history just happened, and no one noticed.