Income...Whose Money Is It?

In the past 24 hours, the media is in a frenzy over Mitt Romney's announcement that he paid a 15% effective tax rate on his income.  Outcry and complaints over unfair tax codes and unfair breaks for the wealthy has dominated the headlines.  Even rival Newt Gingrich has chimed in. (Wait, whose side is he on again?)

And yet, in all of this commotion, not one report or person has suggested that Mitt Romney has done anything illegal or unethical.  

I am not a tax expert nor do I claim to fully understand our complex tax code system, but from what I understand, Mitt Romney's effective tax rate is completely legal.  Mitt Romney is a retired partner of Bain Capital and he is paying taxes on the capital gain of his investments.  The IRS imposes a 15% flat tax on capital gains...for everyone.  The same rule applies to stocks.

I would argue that the IRS got this tax right because it encourages and enables the wealthy to re-invest in the economy.

Over the course of his career, Romney's income was most likely taxed at 33%-35%.  He is no longer gainfully employed by Bain Capital.  I am guessing that he invested his earnings back into private equity firms like Bain Capital and is currently living off the gain.  Mitt Romney's tax rate is 15% because his income fits within the tax code.  It is completely legal and ethical.

The left is pouncing on this 15% arguing fairness and whether or not a multimillionaire should be allowed to pay such a low tax rate.  This is ridiculous and plays at the heart of the conservative movement.  The real question that should be asked is, "Income...Whose money is it really?  Why does the left think that Mitt Romney's income belongs to them?"

***

From the day that Obama was sworn into office, he has basically declared war on the rich.  "Redistribution of Wealth", "Fairness" and "Economic Equality"--themes that have echoed in nearly every major speech.

Obama believes that government can fix the economy.  He has led a $775 billion stimulus to artificially inject money into the US economy; it hasn't made a difference.  His claim: Government spending leads to job creation.  Well, it didn't work and most would say that it failed miserably.  The stimulus did not work.  

Liberals believe that the wealthy in our country should pay more in taxes.  A surge in taxes would allow the government to "redistribute" the wealth to fund programs to benefit the poor and middle class.  

Conservatives however, believe that the wealthy should not be penalized for success and firmly argue that the wealthy are responsible for job creation.

Mitt Romney's current tax situation is a perfect example of how the conservatives got it right.

***

Private equity firms take money from people like Mitt Romney and invest it in companies that are underperforming, but have potential to be be more prosperous.  They reshape these companies with the hope of making them more profitable--making them more successful.  If the investments work, the companies succeed and are more likely to hire additional employees.  

The tax code in America is a mess.  Taxing individuals disproportionately higher based on their income seems immoral and cannot be backed up by the Constitution, however I would argue that the IRS flat tax on capital gains is one tax they got right--because it allows the wealthy to re-invest in the economy.

Let's be honest, Mitt Romney's investment money is in a much safer and profitable place than in the hands of our legislators.

I firmly believe that a nation cannot tax itself into prosperity.   James Madison said, "I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents."

Photo from abcnews.com

I couldn't agree more.  Enough with the attacks on Mitt Romney's tax rate.  Quite frankly, he should be praised for having enough faith in our economy to invest in firms that are creating jobs.

Another great example of how Mitt Romney's vision for America will create a more prosperous nation.