Romney's 15%

Romney's 15% average income taxation charge per unit of measurement is all over the intelligence , amongst the park "tax the rich" outrage.

Romney pays fiddling income taxation because , concur on...Romney has fiddling income. The guy doesn't work. He lives on his investments as well as campaigns for President. If I took a twelvemonth off of instruction to become on a round-the-world gliding tour , I wouldn't lead maintain much income either , as well as would pay fiddling income tax.

(We're all guessing hither , of degree -- perhaps it's all crafty shelters. But who cares virtually Romney anyway; the number at stake is whether the the States should substantially heighten rates on everyone else's involvement , dividends , working capital missive of the alphabet gains , or wealth itself , inward improver to estate as well as holding taxes.)

Yes , from an economical perspective , involvement , dividends as well as working capital missive of the alphabet gains are non "income." Romney should pay taxes , as well as at to the lowest degree at the same charge per unit of measurement as everyone else. He should pay taxes on his consumption , non the returns on his investments. 

Influenza A virus subtype H5N1 fundamental suggestion inward the economic science of optimal taxation is that the taxation charge per unit of measurement on working capital missive of the alphabet should live null or unopen to it. Like anything else inward economic science , in that place is a huge literature of ifs ands as well as buts , even thus the number seems fairly robust.  (Google "optimal taxation of capital." This is non a political contestation , in that place are thousands of pages of equations behind it. There is a course "optimal taxation" literature on "optimal redistribution ," amongst some as surprising results that I'll write virtually another day.)

Intuitively , this is related to the theorem that yous shouldn't taxation intermediate goods , or lead maintain tariffs for moving goods some the country.  Romney's income was taxed 1 time , when he made it. It's non efficient to taxation it 1 time again , because he chose to salve it rather than pass it at 1 time on an orgy of houses , someone jets , as well as a big opor-garai for his extended family.

If yous made coin inward dollars , paid taxes , as well as thus went to Canada as well as got $1.20 Canadian , it would brand no feel to say "you made xx cents of income , we'll taxation it." It makes no to a greater extent than feel to pay taxes 1 time again on coin that is moved over time. We decry that Americans don't salve plenty , the Chinese , the merchandise deficit as well as thus on. Well , if yous desire people to salve to a greater extent than , halt taxing it.

For this argue , the United States of America Tax code has been slow reducing the taxation of rates of return. Capital gains as well as dividends are at nowadays taxed less than ordinary income. IRAs , 401(k) , 526 , as well as a welter of other devices allow people to salve as well as invest without paying taxes on the rates of return. (It would live much simpler to simply eliminate taxes on rates of furnish , but as well as thus the lawyers as well as accountants would lead maintain cypher to do.) Dividends are lastly taxed at the same charge per unit of measurement as working capital missive of the alphabet gains. Estate taxes lead maintain been slow as well as chaotically lowered.

Taxes on working capital missive of the alphabet as well as wealth also are singularly unproductive of income , as well as really productive of taxation shelters.

It's been a irksome as well as painful process. And at nowadays , virtually to live undone , for no skillful economical reason.

Obviously , economists postulate to communicate better. Economists inward full general postulate to proceed reminding everyone to await at taxation rates , distortions as well as incentives get-go as well as firstly , non taxes. Opinion writiers similar Paul Krugman's post service on the dependent champaign don't practise the basis a favor past times deliberately forgetting this basic regulation when it is politically convenient.