The Republican Nomination For President: The Race For The Race For The White House

Did it to himself

I don't think that's true. Some time ago, when I read Small Business for Dummies to figure out how to incorporate as a freelance computer programmer, the book specifically warned me against this trick, saying that the IRS would prosecute it as tax fraud. To be sure, Romney's corporation can afford better lawyers than mine can, and I guess it's possible that they pull it off somehow. But I 'm fairly certain that what you say isn't generally true of all corporations.

I wish Obama had read this book...

If that's your point, I'm not arguing with you. But the question we were discussing was whether Romney's point is valid. My answer to that question is that it's valid in principle and may or may not be valid in practice. The truth or falsity of your point doesn't change my conclusion about his.

Actually, what Parados describes is fairly common, although what the IRS reacts to is the proportion of profits which are paid in such salaries--the proportion of the distribution of profits. For most corporate officers in a small corporation, like an S corporation, taking a salary immunizes their income against the vagaries of cash flow. But the IRS needs to be convinced that they actually do something for their pay, and they will look closely at how profits are distributed in those years in which a profit is actually made. Parados' speculation falls down because in large corporations, the corporate officers expect to make much more money than the IRS would consider reasonable compensation for someone who does no more than sit on a corporate board.

In the small businesses for which i worked as a business manager, the accountants always had three criteria to judge this matter--is this person a legitimate employee in terms of contributing to the operations, are the distributions to owners of profits reasonable (no more than 40% in most cases--the IRS expects the remainder to be rolled over to the next fiscal year in anticipation of future costs), and no salaries or distributions exceeding the operating costs in any year in which a profit might otherwise be made. Large corporations, especially those which offer shares for public sale, are a different kettle of fish.

That's true, generally speaking. The owner of a corporation can pay themselves what the corporation earns as profit, and shift the tax liability to the owner as personal income which usually results in higher tax liability.

But that's not the only issue that the owner should look at with all the advantages of charging personal expenses to the corporation before taking that income. Also, the owner must also consider that the corporate profit is after taking depreciation on equipment and facilities. A good accountant can lead the owner in the best way in how to avoid higher taxes.

No it's not. Mitt Romney is not Bain Capital, no matter how much the two may resemble each other.


Your distinction between "law" and "practice" doesn't make any sense, since the practice is dictated by the law. If there were no tax laws, it wouldn't make any difference whether you took the money directly or indirectly, but then we're not dealing with a situation where there are no tax laws.


The notion of "before-tax income" and "after-tax income" is just accounting shorthand. All income is subject to taxation unless it is exempt. Income that ultimately is spent on wages is not tax-exempt. An employer, however, may be entitled to take a credit for wages. That doesn't make its income tax-exempt, it just means that the tax liability is offset by a credit.

Newt Gingrich launches furious attacks against Mitt Romney in Florida speech


MOUNT DORA, Fla. – Newt Gingrich stirred a huge tea party crowd in this central Florida town Thursday by accusing Mitt Romney and the Republican establishment of slinging “mud” and “junk” because “they’re against change in Washington.”

Using the word “stupid” at least a dozen times to describe how Romney views voters, Gingrich said his rival’s negative ads about Gingrich’s consulting work for the mortgage giant Freddie Mac are dishonest and hypocritical — and represent a desperate attempt by the establishment to block Gingrich’s campaign.


Republican presidential candidate Newt Gingrich was heckled Wednesday during a speech in South Florida. One woman yelled out asking the former speaker if he worked for Freddie Mac, or for the people. (Jan. 25)

“Well, I’m here as a citizen, and I frankly don’t care what the Washington establishment thinks of me because I intend to change them,” Gingrich said, prompting cheers and chants of “Newt! Newt! Newt!” from a crowd that the local sheriff’s department estimated at 1,500.

“That’s true. We have to ultimately focus on beating Barack Obama, but we’re not going to beat Barack Obama with some guy who has Swiss bank accounts, Cayman Island accounts, owns shares of Goldman Sachs while it forecloses on Florida and is himself a stockholder in Fannie Mae and Freddie Mac while he tries to think the rest of us are too stupid to put the dots together to understand what this is all about.”

In a mocking release, Romney’s campaign labeled Gingrich “Dr. Newt and Mr. Hyde” — the latter, they said, showed up at the Mount Dora event Thursday morning — and accused him of leading an “Occupy Mount Dora” rally against free enterprise. Composed almost entirely of quotes from news accounts of the event and other Gingrich attacks on Romney’s wealth, the release included just one quote from a Romney staffer: “Wow,” said communications director Gail Gitcho.

Gingrich’s tone reflected how high the stakes are in Florida just four days ahead of the Republican primary here. Hoping to ride a wave of momentum from his huge win in South Carolina last weekend, Gingrich echoed the anger and edge that he displayed in the days leading up to the Iowa caucuses in early January, when a pro-Romney group was hammering him with millions of dollars in negative ads — and where he finished a distant fourth.

But if Gingrich’s anger reflected the challenges of a moment when he is again under assault, it also reflected a potential opportunity to — again — turn the story around. In Florida this week, Gingrich has demonstrated a strong network of tea party support, where his efforts to cast Romney as the insider and himself as the insurgent have played well with huge crowds. He will have another moment to do so Thursday in a televised debate in Jacksonville, the final such event before Tuesday’s primary.

The moment is challenging for Romney, too, whose campaign is trying to regain momentum lost in South Carolina and has stepped up the intensity of its attacks on Gingrich’s work as a Washington consultant. Romney has also begun sending out a team of high-profile surrogates to shadow Gingrich at his public events and provide real-time rebuttals to the press.

“It’s laughable for him to cast himself as an outsider,” said U.S. Rep. Jason Chaffetz (R-Utah), who along with fellow Romney supporters Rep. Connie Mack (R-Fla.) and Rep. Mary Bono Mack (R-Calif.) trailed Gingrich across Florida on Thursday. “He could not get elected speaker of the House right now. He is an unreliable leader who was pushed out the door. He has more scandal surrounding his personal life and his professional life than we should have in our nominee.”

There is some danger for Gingrich in his guns-blazing approach, observers said. South Carolina voters appeared to love Gingrich on the attack, but if he overdoes it, Florida voters might come to believe Gingrich is too bombastic and bullying — as Romney supporters have charged — to be a smart choice to take on Obama in the general election.

“He’s got great ideas, but at times he’s erratic. He’s emotional. And he’s flamboyant,” Connie Potter, 72, a retired nurse, said of Gingrich. She voted early for Romney and attended a Jacksonville event for him Thursday. “Flamboyant might be fun and exciting, but it’s not what I’m looking for in a president. Romney will make the same decisions, but will do it in a more stable and mature way.”

Also Thursday, former Rep. Jeb Bradley (N.H.) described how Gingrich worked to persuade him and other Republican congressmen in 2003 to pass a new Medicare prescription drug benefit.

“I didn’t know at the time that he had a stable full of health-care clients — not that that would have mattered. There’s nothing wrong with lobbying. But when you’re running for president of the United States, you’re supposed to be honest and forthright about what you are and what your career is,” Bradley said.

Bradley said it was “pious baloney” — Gingrich’s own now famous phrase about Romney — for Gingrich to suggest he’s not been a lobbyist.

Such critiques don’t seem to be blunting the enthusiasm of tea party-friendly Republicans, who turned out in force Thursday for Gingrich at a lakeside green in Mount Dora after finally committing to rallying around the former House speaker in a conference call Sunday.

Gingrich drew crowds of 2,500 in Sarasota and 5,000 to Naples earlier this week; he also just in the past few days has consolidated the support of 42 different tea party groups across the state — a development that allowed Thursday’s rally, which was still uncertain a few days ago, to proceed.

“Remember: The Republican establishment is just as much as an establishment as the Democratic establishment, and they are just as determined to stop us,” Gingrich said at Thursday’s rally, again prompting cheers and hollers from a crowd dotted with slogans such as “Don’t Tread on Me” and “No-Bama.”

“Make no bones about it,” Gingrich continued. “This is a campaign for the very nature of the Republican Party and the very opportunity for a citizen conservatism to defeat the power of money and to prove that people matter more than Wall Street and that people matter more than all the big companies that are pouring the cash in to run the ads that are false.”

Jose Mallea, Gingrich’s Florida director and the former campaign manager for one of the tea party’s earliest stars, Florida Sen. Marco Rubio, said Texas Gov. Rick Perry’s departure from the race and Santorum’s poor showing in South Carolina contributed to their decision.

“The tea party was still fractured last week,” Mallea said. “Some of them were with Perry, some of them were with Santorum. Not many of them were with Romney, but they weren’t sure where they were going to go.”

Rubio has remained neutral in the race, but his many of his supporters have joined Gingrich. Rubio was not happy with an advertisement Gingrich has been running against Romney in which he characterizes the former Massachusetts governor as “anti-immigrant.”

But sources close to both Rubio and Gingrich said the two had a long and amicable conversation Wednesday. In addition, a source with knowledge of both operations said Rubio has been inundated with calls from grass-roots supporters who weren’t happy that he appeared to be criticizing Gingrich.

I would say Romney's point is not valid for the same reason that the local yard equipment rental place down the street must pay taxes. I earn my money and pay taxes so it is taxed once. When I rent some yard equipment should they have to pay taxes since my money was already taxed? Romney is being paid by Bain for services rendered, in this case the loan of his money. Romney is just like that rental place, loaning out an asset and expecting payment in return. How Bain got their money to pay for his service to them is not really significant to the question of whether Romney should pay taxes. I also seriously doubt that Bain paid the 35% maximum corporate rate, but that is something I can't prove one way or the other.

From money.cnn:

I confess to being amazed that the interest earned from investments is taxed at a lower rate than any other form of income - it is not the case here and from a distance it seems an odd ruling - and one made for people who can afford decent lobbyists.

Let me rephrase my point then: Your wage is not part of your employer's income, and hence not subject to his taxation. This is so by definition. Your employer's income is sales minus cost of products sold. Your salary, in turn, is part of your employer's cost of products sold. Therefore, unlike dividends paid to owners, wages paid to workers are not part of the corporation's income. They are not part of what the government charges corporate taxes on. To the contrary: your wage enters as a negative into your employer's taxable income. Other things being equal, your employer's income declines when your employer gives you a raise, and his corporate tax burden eases.

Consequently, your wage is taxed only once: as income tax on your income. Your employer's profits, by contrast, are taxed twice: the first time as corporate tax on the corporation's profit, the second time as income tax on its owner's income. I'm not saying this is wrong, but this is what it is.

What does little liberal Timothy Geithner have to say about Romney and the taxes he has paid?

Most canny r your powers of analysis, Thomas.





David

Re: Tomas' claim about taxes. That's not true; employee wages also have employer taxes that must be paid, including unemployment insurance, FICA, and state disability insurance/taxes.

Maybe, but those are different taxes. Joefromchicago and I were specifically disagreeing about the corporate tax, and about the question what income is subject to it. While it is true that corporations pay taxes other than the corporate tax, those other taxes were not what we were discussing. (At least I wasn't.)

No. Its either part of the cost of doing business, or
it is due to be paid by the employee. U did not understand him accurately.





David

Not the first time.

You might as well say that my wages are taxed hundreds of times, because every time a dollar is paid to someone, it's subject to tax. From the individual's perspective, however, it's only taxed once. And that's true whether you're some mope earning a wage or Mitt Romney living off investment income.

Is anyone following the Republican debate, or is this thread now all about tax policy?