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April 12, 2012, 9:00 pmTax Face-Off: Romney vs. MeBy TIMOTHY
EGAN<http://opinionator.blogs.nytimes.com/author/timothy-egan/>

Timothy Egan <http://opinionator.blogs.nytimes.com/category/timothy-egan/>on
American politics and life, as seen from the West.
Tags:

mitt romney <http://opinionator.blogs.nytimes.com/tag/mitt-romney/>,
taxes<http://opinionator.blogs.nytimes.com/tag/taxes/>

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.018 <http://www.nytimes.com/>
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