Don't miss today's Wall Street Journal editorial explaining why Mitt Romney is actually getting soaked by the Internal Revenue Service. "The White House and its media allies figure they've now got their stereotype of the Monopoly man," the Journal moans, "albeit without his cane and top hat, who they can crush in their planned class-warfare campaign." Well, yeah. He did say his effective tax rate is about 15 percent, thanks to preferential treatment for capital gains and carried interest. "[S]omeone should at least try to introduce a little reality into the debate," the Journal continues, "especially since Mr. Romney seems so unprepared to make the case."
Romney doesn't really pay 15 percent, the Journal explains, because before the poor man even had a chance to pay 15 percent on dividends and capital gains the guv'mint took away 35 percent in corporate tax. "All income from businesses is eventually passed through to the owners," saith the Journal, "so to ignore business taxes creates a statistical illusion that makes it appear that the rich pay less than they really do." Corporations are just an artificial construct, a place where lots of individuals park their money so it can grow. They shouldn't be taxed at all! It's not like they're people or anything. Unless of course they want to exercise their First Amendment rights, whereupon they become ... people. "Corporations are people, my friend," Romney famously said. Except when they aren't.
By the Journal's logic, if I give you a dollar and you have to pay 15 cents of that dollar to the IRS, then your tax rate isn't 15 percent. It's 15 percent of whatever was left after I paid my taxes, and after my friend George, from whom I won five bucks in a poker game, paid his taxes, and after his Aunt Sally, who gave him twenty-five bucks for shoveling her walk, paid her taxes, and after Aunt Sally's customers at the local diner, who gave her fifty bucks in tips the week before, paid their taxes, and ... tra la la. It's a wonder, after all that upstream taxation, that there's any money left at all.