Romney's 15% tax rate higher than most

By Colin McNickle

Between 87 percent and 97 percent of American taxpayers have an effective tax rate that is lower than the 15 percent Mitt Romney says he falls under. But let's not let the facts get in the way of a good ol' class-warfare smear.

Democrats and others hoping to capitalize on public ignorance made much of Romney's statement that his effective tax rate is about 15 percent. They bloviated along the lines of "Here's yet another rich bastard taxed at nearly half the rate of most working Americans!" Or, as one editorialist for a New Jersey newspaper put it, it's further proof that the "game is rigged for the fat cats."

These people either don't understand the facts or are intentionally misrepresenting them.

Yes, investment income is taxed at a lower rate than earned income. And there's a perfectly sound rationale for that.

First, the lower rate encourages reinvestment. And reinvestment underwrites research and development and creates jobs - even jobs for the soldiers of class warfare - and generates even more tax receipts.

Second, there is a matter of basic fairness: To have investments that generate income, Romney, like anybody else, had to earn the money and pay taxes on it when he did. Thus, he's been taxed twice.

In some scenarios, the government is conscripting nearly 50 cents of every dollar. It's remarkable that there's any money left to invest.

That said, most Americans do not pay federal taxes on their earned income at nearly double the rate that the Mitt Romneys of the nation do on their investment income. Given the structure of the U.S. tax code - including deductions, credits, and whatnot - those making under $100,000 a year are being taxed at an effective rate of around 4 percent to 12 percent.

The Internal Revenue Service reported that 97 percent of all taxpayers were taxed at an effective rate of less than 15 percent in 2009. In 2007, as the Wall Street Journal noted on Friday, citing Congressional Budget Office numbers, the average income-tax rate paid by the American middle class - those in the 21st to 80th income percentiles - was 4.2 percent.

Or, as Noel Sheppard put it for NewsBusters, "if Romney pays 15 percent as he stated, he's paying at a higher rate than 97 percent of his fellow citizens." And, "Even measuring this by taxable income, Romney is still paying more than 87 percent of filers."

This is what appalls Romney's critics? This is what has, according to a New York Times editorial, "reminded Americans of the fundamental unfairness of the current tax code"? Only if one misrepresents what Americans really pay.