Is Romney really paying less in taxes than you?

Romney’s admission to paying 15% in income taxes last year is certainly causing a stir, with headlines such as CNN’s “Romneys Tax Rate Lower than yours” and ABC News’ “Multmillionaires Low Rate” and articles making claims that this multimillionaire is paying less than the average American all over the news.

First off the claim that 15% is less than what the average American pays is very misleading, when in 2009 (the most recent year data is available from the IRS) the average American was taxed at about 11%. Second there is no magical tax code section that allows only rich people to legally evade paying taxes. The special capital gains rate does not only apply to the rich, when you go out and purchase stocks and subsequently sell them, that same special rate will apply to you too.

As far as Romney goes, his tax preparer popped his information into a tax software program and the system generated what he owed according the law – we’re not talking about something that he did illegally. And don’t forget the intention of the lower capital gains rate to begin with, which was to encourage investment – exactly what Romney did.

I really have a hard time understanding the mind set of enacting laws with the intention of creating growth and then villainizing people when they follow them. I especially can’t stand the medias attempt to further the divide between the so called rich and poor by using misleading information. Something you’ll hear a lot from us here is that we all need to work together – whether you like it or not the top 50% of people pay 97.7% of all taxes, with the top 1% paying 36.7%, this is certainly significant.

Check out this site which shows different income tax statistics.

The C Word

These days Corporation has taken over as the new dirty word. It elicits feelings of disgust and visions of corporate greed and overindulgence. But are corporations really so evil? After the banks were bailed out and CEO’s spent millions on lavish parties and bonuses, its hard to argue that they are not. But is it possible that the very corporations we feel so strongly opposed to could actually be good for us?

How could they be good for us? They create jobs. It’s just that simple. When we chase corporations out with our high corporate tax rates and over regulation we lose jobs and revenue. Studies done by the Organisation for Economic Co-operation and Development (OECD) show that corporate taxes are the most harmful to economic growth. Recognizing this many countries have lowered their corporate tax rates. So why is it then that the U.S. remains unchanged and has one of the highest corporate tax rates out of all developed countries? Because Corporation has become a dirty word and the general public has been made to hate them. Albeit not without good reason, but it’s that old saying cutting off your nose to spite your face. We force out the corporations and with them their jobs and their revenues.

It’s certainly true that large corporations can choke out small businesses, treat employees poorly and unevenly distribute profits. As a small business owner myself I can absolutely appreciate the sentiment of protecting the future of the mom and pop shops, but the truth is my business wouldn’t exist without corporations. The cost of producing many of the raw materials I use in my products would be to large for a small business to bear on its own. It may be a hard pill to swallow but corporations exist and make up a part of our 100%. We should be working together to create policies that entice corporations to stay and create jobs while holding them accountable to the communities they operate within.

This synergistic approach has not gone unrecognized by corporations who affectionately refer to it as “creating shared value” – no longer is charitable giving a percentage of a budget its becoming an integral part of the business model. Nestle Co. created shared value when they launched their “Cocoa Plan” – an intiative to improve, stabilize and reduce poverty in the rural communities where their cocoa is produced. In 2010, they trained 2,400 farmers, produced 210,000 plants, implemented clean water programs in 12 villages and bought 6,400 tons of cocoa from 9,056 different farms in 20 cooperatives.  What does shared value mean to them -”Creating Shared Value is the basic way we do business, which states that in order to create long-term value for shareholders, we have to create value for society.”

As corporations begin to evolve, understanding the value in aligning shareholder goals with community ones, shouldn’t our politics begin to evolve as well? This isn’t to say Corporations deserve a get out of jail free card for their bad behavior, but it’s time both sides worked together towards mutually benficial goals.

Want to read more about Nestle – click here

See the full OECD study – click here