Stubbornly, perversely, stupidly, I insist on doing my own taxes every year. I don’t cut my own hair. I don’t pickle backyard cabbage or home-school my kids. But I plow ahead with this most direct act of citizenship for one reason: if you want to understand power and influence in this country, you have to be familiar with the tax code.
My friends say I’m a moron, missing out on key loopholes. They invoke the old saying that he who has himself for a lawyer (or accountant) has a fool for a client. Stipulated. On to the returns:
This year, I did my 1040 and its attendant nightmare forms while comparing my family’s financial documents with those of Willard M. Romney’s [ http://www.mittromney.com/learn/mitt/tax-return/2010/wmr-adr-return ]. He paid 13.9 percent in taxes on income of $21.7 million for 2010 and about the same rate for the not fully completed 2011 returns.
I’m going to pay double Romney’s rate on a mere fraction of his income. But you won’t get any class-war envy from me about a man worth upward of $250 million paying the same rate as someone earning, say, $55,000 a year. Nope. There’s a larger point here than the inequality one, compelling though it is.
Remember: The tax return is a blueprint for how to earn and spend money. It encourages us to do some things and discourages us from doing others.
One disincentive, comparing Romney’s taxes to mine: don’t work. The tax code discourages work, certainly for the rich. And Romney’s plan for the future would further discourage work for poor households with children or those paying for their kids to go to college.
Take a look at Line 7 of the 1040, the one where you report wages, salaries and tips — work. It’s from your W2. Romney, of course, had no wages, salaries or tips, which can be taxed at up to 35 percent. His biggest disclosure is Line 13, capital gain — paper profits — where he weighs in with $12,573,249 from 2010. On that, he pays a mere 15 percent.
The other place to report money earned by doing actual work is on Schedule C. That’s where I put income from books, talks, pamphleteering. And so does Romney. Under the profession category, he doesn’t report himself as a businessman or a politician. He’s listed as “independent artists, writers or performers” — just like a mime, or Carrot Top.
In 2010, Romney’s take from this dodge we share, mostly speeches for his part, was $528,871, a mere 2.5 percent of his income. Were he to get serious about being a hardworking indie performer, he might earn millions. But again, even if he were able to take a deduction for that car elevator he’s putting into his remodeled manse in California, his earnings from his speaking business would be taxed at up to 35 percent.
Better to do no work and pay taxes at a far lower rate on capital gains or a category Romney shares with certain hedge fund managers: compensation from his Bain Capital days also taxed at 15 percent called carried interest.
Another disincentive, as mentioned: don’t send your kids to college. Currently, I can apply for the American Opportunity Tax Credit, which gives families paying tuition a cut of up to $2,500 on taxes owed — a meaningful break.
Romney knows something about college. He has two degrees from Harvard. Three of his five sons — Tagg, Matt and Josh — have M.B.A.’s from Harvard, giving the family a coxed scull of Crimson-red advanced degrees. It’ll cost you about $84,000 a year to attend Harvard Business School, with tuition, housing and related expenses.
But don’t try getting a tax credit for that under a President Romney: his plan calls for eliminating this college incentive, along with doing away with an expanded credit for working families with children at home.
What else? Home mortgage. The government encourages you to load up on home debt and, in that sense, certainly pushed unqualified people into carrying oversize loans, which fed the housing collapse. That, and those tax-rewarded hedge fund managers making risky bets, helped to bring the world economy to it knees. Your tax code at work!
I’m not fluent enough in Internal Revenue Service argot to understand why I probably should have stashed some money overseas. But with a Swiss bank account and holdings in Bermuda and the Cayman Islands, Romney by example demonstrated another kind of incentive — invest in foreign countries while paying the absolute minimum in taxes to your own nation.
“I pay all the taxes that are legally required and not a dollar more,” Romney said earlier this year.
That’s the key thing: legal, always the greater scandal. I’ve been audited twice; once, I prevailed, another time my math was off. But Romney and the one-in-four millionaires who pay a lower tax rate than most middle-class Americans glide along on audit-tested breaks, courtesy of a lobbying army working night and day to preserve the absurdity of the tax code.
So, taking my cue from the social engineers who’ve manipulated the code, I’m looking to follow Romney’s example next year: work less, stash money overseas, certainly don’t pay for junior year in college. And, of course, complain about my burden.
10 Things You Should Know About Hitler: Predictions From 1932
AP IMAGES
Based on a reading of Mein Kampf, an Atlantic author imagines what Germany might become should the aspiring dictator "succeed in gaining control of the German government."
By Brian Resnick Apr 20 2012, 11:50 AM ET
In 1932, Hitler had not yet taken power in Germany. But he was close.
What would happen to Germany if the Nazis were to rule? That was a question that had a surprisingly easy answer. In the March issue of The Atlantic, Nicolas Fairweather wrote "Hitler and Hitlerism: A Man of Destiny [ http://www.theatlantic.com/magazine/archive/1932/03/hitler-and-hitlerism-a-man-of-destiny/8960/ ]." In it, he analyzed Hitler and his philosophy, as derived from a reading of Mein Kampf, "to foreshadow, from [Hitler's] own statements, some of the things he would like to accomplish." Journalists, at times, can be horrible predictors of the future. But in this case, Fairweather's assessment was a sound alarm. He summarizes Hitler in 10 points:
1. His violent racial nationalism, which springs from his conviction that the Aryan stocks in general, and the Germans in particular, are a chosen people in whose victorious survival the divine purposes are bound up.
2. His violent animosity to Marxian Socialism as in essence opposed to his ideal of a nationally minded people and a racial state. ...
3. His violent hatred of the Jews as the racial enemies of all Aryans, the subtle corrupters of pure Aryan states. These parasites, says Hitler, have made Marxian Socialism, which they invented, the principal tool by which they insinuate themselves into healthy, pure blooded, racial states in order to debase simultaneously the national ideals and the national blood. Destroyers of Aryan civilizations, they remain impotent to create a civilization of their own.
4. His concern for social betterment ('true Socialism') as a necessary prerequisite to the acceptance of his ideals by the masses.
5. His contempt for the intelligence of the ordinary man and for a democracy based on faith in his development to higher levels.
6. His contempt for parliamentary institutions as the organs of such a democracy, which substitutes for the decision of a competent leader the majority vote of the incompetent. A parliament, moreover, says Hitler, is the natural field of operations for the Jewish Socialist enemy.
7. His insistence on the power of personality and on the entire concentration of authority in the hands of one leader (up to now, himself).
8. His economic nationalism, with its distrust of international capital and its preference for small, locally controlled business organizations. Hitler fears the banks and all newfangled ideas for controlling credit. He objects to stock companies and stresses the value of personal ownership. In short, he believes in the ruthless subordination of economic interests and economic leaders to racial and national considerations.
9. His insistence that Germany must acquire more land in Europe as a vital requirement for national expansion and progress (after the present corruption of the national blood and the national ideals has been stopped).
10. His insistence that France is the archenemy. France, he urges, must be broken before Germany can undertake to conquer land from Russia (the only possible source).
Fairweather assesses Hitler as a man completely obsessed with the idea of German purity and domination. Hitler ignores "the unwholesome after-effects of a diet of lies" and "is deliberately building upon the weakness of the mass mind." Fairweather calls the aspiring dictator "a genuine demagogue -- honest, no doubt, in believing that what he does is for the general good, but a demagogue just the same."
In the next month's issue of Atlantic, Fairweather continued his prognostication [ http://www.theatlantic.com/magazine/archive/1932/04/hitler-and-hitlerism-germany-under-the-nazis/8961/ ] about a possible Nazi Germany, explaining how Hitler would instill his personal beliefs into the society and government. He foreshadows Hitler's social engineering program, writing of the looming Third Reich, "The state is not an end in itself; it is only a means to an end." In this essay as well, he includes numbered predictions -- in this case, about national pride, racial purity, social sacrifice, the glorification of leaders, and the destruction of anyone perceived as an enemy.
Three years later in the February 1935 issue of The Atlantic, author Barbara Spofford Morgan reported on the early days of the Third Reich after these plans began to be implemented. In a piece titled "Swastika [ http://www.theatlantic.com/magazine/archive/1935/02/swastika/8959/ ]," she found a country readily adopting Hitler's ideas, but with a trace of discomfort. "Germany at the moment is full of contradictions," she writes. "Heads are carried high and the clear blue eyes of young men have a look of burning enthusiasm; at the same time, no one dare speak his mind except in strictest privacy." The Nazi movement had already transcended politics: "National Socialism is a crusade, a religion, and it is applied as has happened before with brutality, sometimes savagery."
In the weeks to come, we'll post more World War II-era archives from The Atlantic.
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