Since 2008 Obama has pursued a class warfare agenda, narrowing his focus over time from the Top 5% to the Top 2% to the Top 1%. This year Obama has narrowed his focus even further, singling out those millionaires and billionaires who pay a lower tax rate than their secretaries.
To the extent there is any truth to Obama’s “bosses versus secretaries” class warfare theme, it rests on the distinction between those who pay ordinary income tax rates on wages and other income, and those who pay the long term capital gains tax rate on investment income, which now stands at 15%. (Note, Obama’s claim is disputed.)
Warren Buffett and the so-called Patriotic Millionaires have joined in this crusade to eliminate the secretary gap, practically begging for higher taxes. It dovetails nicely with Obama’s campaign 2012 theme of the bosses versus the secretaries.
So who are we likely to nominate, at least if the National Review gets its way? The person for whom the Obama campaign theme was tailor made, a candidate who not only is tremendously wealthy based on investment banking, but whose income almost certainly comes entirely from investments and is taxed at the lower capital gains rate.
Romney’s campaign team has clearly decided that the political risk of releasing the returns outweighs the potential problems of not doing so. No one knows for sure what the documents would say, but by the candidate’s own admission, the bulk of Romney’s retirement income from Bain has been from capital gains, which are subject to 15% tax rate.
That means that for the past 10 years, Romney has likely been paying a lower tax rate than most middle class voters. If this is the case, that information could be devastating to Romney’s presidential bid.
The recognition of Obama’s campaign theme may be why Romney tailored his proposed reduction in capital gains taxes to exclude those making over $250,000 per year, to the chagrin of many conservatives. Think how it would have looked if the candidate who lives at the capital gains rate proposed a cut which would accrue hugely to his benefit.
Nonetheless, even at the current rate, Romney benefits more so than anyone else in the race, and far more so than Obama.
Is Romney’s living off his investments and paying the lower capital gains rate justifiable on the merits? Absolutely. There are very good reasons why we have a lower rate for investment income; we want to encourage investment and capital formation.
But let’s talk pure electability, not what’s fair or right. The conservative media has spent the last month obsessing over Newt’s real and imagined electability problems and trying to turn Newt into a martian cartoon caricature, yet Romney’s electability problem is ignored.
If I were a Democrat and I expected to run against Mitt Romney, I would have designed precisely the “bosses versus secretaries” theme being pursued by the Obama campaign.
I guess you could say I don’t believe in coincidences. And we’re not even talking about it.