Vicki Schmitt – 1/15/12

This page was last updated on January 17, 2012.

Romney plan unfair; Vicki Schmitt; Beaver County Times; January 15, 2012.

This appears to be Ms. Schmitt’s first politics-related letter. Last week Jay Schmitt, also of Ambridge, wrote his first politics-related letter “Three groups to blame for website crash.” I don’t know if these folks are related, but their politics appear to be.

Below is a detailed critique of the subject letter.

“Mitt Romney sure won’t be getting my vote for president.”

[RWC] After you read the rest of the letter, ask yourself to picture Ms. Schmitt voting for anyone without a “D” after their name regardless of their tax position.

“Under his tax plan, Romney protects the richest Americans from paying higher taxes and requires the poorest Americans to pay more in taxes. Hardworking middle class Americans earning less than $40,000 a year will surely see a tax increase and people making less than $10,000 will see the biggest tax increase. However, Mitt plans to have the top 0.001 percent pay less taxes, with the average millionaire’s rate dropping by 5 percent. Seems pretty unfair to me.”

[RWC] As for “the richest Americans,” based on 2009 income tax data the top 1% (about 1.4 million taxpayers with AGI greater than $344,000) of filers paid 37% of the total and the top 5% (about 6.9 million taxpayers with AGI greater than $155,000) paid 59%. The average tax rate for the top 1% was 24% and 20.5% for the top 5%. The bottom 50% (about 69 million taxpayers with AGI less than $33,000) paid 2.3% of the total and their average tax rate was 1.8%. The data shows if Ms. Schmitt is truly concerned about something “pretty unfair,” she’s looking in the wrong direction.

As you read this letter, note Ms. Schmitt uses “tax” and “tax rate” interchangeably. Does Ms. Schmitt really mean “the top 0.001 percent?” I ask because “0.001 percent” is one in 100,000, or about 1,400 taxpayers.

You can find Mr. Romney’s plan at http://mittromney.com/blogs/mitts-view/2011/09/believe-america-mitt-romneys-plan-jobs-and-economic-growth. Unfortunately, Ms. Schmitt didn’t provide any links to the specific figures she cited. Below Ms. Schmitt appears to indicate her data came from the Tax Policy Center (TPC), but I couldn’t find any of her figures in the 1/5/12 TPC review of Mr. Romney’s proposed tax plan. The TPC is a product of two left-leaning “think tanks,” the Urban Institute and the Brookings Institution, so skepticism about information from ideological source applies here. Complicating the analysis is the TPC review includes “additional information about details of the plan from campaign policy advisors” not in Mr. Romney’s published plan and not detailed in the TPC review. Another complicating factor is the TPC review covers all federal taxes (estate, income, Medicare, Socialist Security, and perhaps others). This tactic is problematic because the Medicare and Socialist Security taxes apply only to wage income.

“Although Romney refuses to show us his tax return, everyone knows he is an extremely wealthy man, enriched by millions in investment income alone. And after every deduction a rich man can take, his tax rate ends up at a measley [sic] 14 or 15 percent. Dont [sic] take my word on this, check with the Tax Policy Center.”

[RWC] Let’s look at IRS data instead of the TPC. As noted above, the average tax rate for the top 1% is 24%, not the “measley [sic] 14 or 15 percent” Ms. Schmitt claims. That’s over 13 times the rate of the bottom 50%. Of course, some of the top 1% will pay less than 24% and some will pay more plus the effective rate can vary from year to year for every taxpayer.

“Every deduction a rich man can take” is available to everyone. In fact, many deductions have upper limits on what a taxpayer can claim which would tend to favor lower-income taxpayers.

What’s wrong with “investment income” (capital gains, dividends, interest)? I could be wrong but I believe most income for the retired is “investment income” from pensions, IRAs, 401(k)s, CDs, et cetera.

“While what Romney pays in taxes compared to you and me is not illegal, it sure exemplifies how the deck is stacked against the middle class by a financial elitist. Fortunately, President Obama’s tax plan eliminates such disparity and requires the 1 percent to pay their fair share of taxes just like everyone else. It’s not ‘class warfare’ either, its [sic] simple math.”

[RWC] I don’t know her financial status, but I’ll go out on a limb and guess “what Romney pays in taxes” regardless of his tax rate is many, many times more than what Ms. Schmitt pays.

Throughout her letter Ms. Schmitt refers to “the middle class,” Mr. Romney’s wealth, “the poorest Americans,” “the richest Americans,” and she wants us to believe “it’s not ‘class warfare’” or envy?

Though she refers to it, Ms. Schmitt didn’t provide any details of “President Obama’s tax plan.” Why?

If the top one percent paying 37% of total income tax revenue isn’t enough, how much more is the top one percent’s “fair share” in Ms. Schmitt’s opinion?