by The MDTAXES Network | Sep 20, 2012 | Commentary
By Andrew D. Schwartz, CPA
Election?season is upon us and the voting?is?just a two months away. Let’s take a look at Mitt Romney’s tax policy based on information posted on his campaign’s official website, www.mittromney.com.
Extend the Bush Tax Cuts:
If Congress doesn’t act by the end of the year, the 2001 Bush tax cuts will expire on December 31st causing tax rates across the board to increase. According to Mitt Romney:
While the entire tax code is in dire need of a fundamental overhaul, Mitt Romney believes in holding the line against increases in marginal tax rates. The goals that President Bush pursued in bringing rates down to their current level? to spur economic growth, encourage savings and investment, and help struggling Americans make ends meet?are just as important today as they were a decade ago. Letting them lapse, as President Obama promises to do in 2012, is a step in precisely the wrong direction. If anything, the lower rates established by President Bush should be regarded as a directional marker on the road to more fundamental reform.
Eliminate Taxes on Investment Income for People Earning Below $200k:
Romney’s Tax Policy includes a provision to cut taxes for taxpayers earning less than $200k. Let’s see what the Romney Campaign calls the Middle-Class Tax Savings Plan:
As with the marginal income tax rates, Mitt Romney will seek to make permanent the lower tax rates for investment income put in place by President Bush. Another step in the right direction would be a Middle-Class Tax Savings Plan that would enable most Americans to save more for retirement. As president, Romney will seek to eliminate taxation on capital gains, dividends, and interest for any taxpayer with an adjusted gross income of under $200,000, helping Americans to prepare for retirement and enjoy the freedom that accompanies financial security. This would encourage more Americans to save and to invest for the long-term, which would in turn free up capital for investment flowing back into the economy and helping to facilitate economic growth.
Implement Tax Simplification:
Promising tax simplification is nothing new. When I started practicing accounting in 1987, President Reagan had just signed the huge Tax Reform Act of 1986 into law. That Tax Act really complicated the tax code, and it has continued to become increasing more complex over the past 25 years. Remember Steve Forbes? He ran two presidential campaigns on his Flat Tax Platform.
Here is Romney’s spin on tax simplification:
In the long run, Mitt Romney will pursue a conservative overhaul of the tax system that includes lower and flatter rates on a broader tax base. The approach taken by the Bowles-Simpson Commission is a good starting point for the discussion. The goal should be a simpler, more efficient, user-friendly, and less onerous tax system. Every American would be readily able to ascertain what they owed and why they owed it, and many forms of unproductive tax gamesmanship would be brought to an end. Conversely, tax reform should not be used as an under-the-radar means of raising taxes. Where reforms that simplify the code or encourage growth have the effect of increasing the tax burden, they should be offset by reductions in marginal rates. Washington?s problem is not too little revenue, but rather too much spending.
Mitt Romney also wants to eliminate the Death Tax and repeal the Alternative Minimum Tax. You can read Mitt Romney’s complete Tax Policy at www.mittromney.com/sites/default/files/shared/TaxPolicy.pdf
In my next post, I’ll look at President Obama’s rebuttal and which candidate’s tax policy makes the most sense. Stay tuned!
by The MDTAXES Network | Feb 3, 2012 | Commentary
By Andrew Schwartz, CPA
Last month, Presidential Candidate Mitt Romney released his 2011 and 2010 tax returns to the public.? You can download a complete copy of these federal tax returns at:
Here is?a continuation of?what I observed upon reviewing his returns (Read Part 1):
- The total 2011 tax liability reflected on this tax return is $3,226,623 – or just over 15% of his gross income of $20,908,880.? This might seem quite low, but he claimed a substantial deduction of $4,020,572 for donations to charities.? Without his charitable donations, his total federal tax liability would have been approximately $4.6 million, or 22% of his gross income.
- The total 2010 tax liability reflected on this tax return is $3,009,766 – or just under 14% of his gross income of $21,646,507.? This might also seem very low, but he claimed substantial donations to charities of $2,983,974.? He also saved taxes by taking a $129,697 credit for Foreign Taxes paid during the year.? Without these two tax breaks, his total federal tax liability would have been approximately $4.2 million, or 19.5% of his gross income.
- The Romneys claimed itemized deductions of $5,688,179 on their 2011 Schedule A and $4,519,140 on their 2010 Schedule A.? For 2011, their itemized deductions include: $4,020,572 of charitable donations, $46,033 in investment interest expense, $226,356 in real estate taxes, and $1,323,094 in state income taxes.? They also claimed $490,000 in Miscellaneous Itemized Deductions that were passed through to him by one of his investment trusts or partnerships, of which only $71,978 was deductible since Miscellaneous Itemized Deductions are only allowable to the extent they exceed 2% of your income.?
- Finally (and surprisingly), Mitt Romney had a sizeable capital loss carryover reported on 2010 Schedule D.? Take a look at line 14 of that year’s Schedule D and you’ll see that he went into 2010 with a capital loss carryover of $4,844,089.? His returns don’t indicate when or how those losses arose.
Extremely? Complicated Return
These tax? returns are anything but straightforward.? In my office, we don’t prepare? any returns nearly as involved as Mitt Romney’s 2011 and 2010 returns.? I? can only imagine how many hours the staff of PriceWaterhouseCoopers spent on? preparing and reviewing these tax returns.
by The MDTAXES Network | Feb 2, 2012 | Commentary
By Andrew Schwartz, CPA
Last month, Presidential Candidate Mitt Romney released his 2011 and 2010 tax returns to the public.? You can download a complete copy of these federal tax returns at:
Here is? what I observed upon reviewing his returns:
- Mitt Romney reported gross income of just about $21 million for each of these two years.? A little more than 50% of this income was from long-term capital gains and qualified dividends, which are taxed at the maximum rate of 15% for the regular tax calculation.??
- With respect to his self-employment income, Mitt Romney did not appear to be very concerned about minimizing his tax burden.? Take a look at the Schedule C each year, and while he did not claim any expenses against his Author/Speaking Fees income of $110,500 in 2011, he did claim his agent commission of $39,756 and advertising expenses of $9,000, for a total of $48,756, against his gross self-employment income of $528,871in 2010. Apparently, he decided not to claim any other expenses, including the home office or automobile mileage, that many self-employed individuals claim on their Schedule C each year. Mitt Romney also did not contribute to a retirement plan either year based on his net self-employment income, which would have reduced his taxable income.
- If you look at line 45 of his tax return for both year, you’ll see that he paid a ton of Alternative Minimum Taxes each year.? Based on these returns, his AMT was $224,425 in 2011 and $232,989 in 2010.? While most taxpayers with income greater than $1 million pay no AMT, people with substantial long-term capital gains and qualified dividends end up paying this tax due to how this tax calculation works.
More tomorrow!
