Mitt Romney’s spectacular fall from the front-runner position in the Republican candidacy following the South Carolina primary election can be attributed to a variety of causes. Arguably, his reluctance to reveal his taxes seems to have been the greatest. Voters seemed to be indignant at the fact Romney would be taxed at a meager 15.4 percent for the 2011 fiscal year despite reported income that would make him eligible for the 35 percent tax bracket.
The reason for this apparent disparity in income and tax rate arises out of the fact that most of Romney’s income comes from capital gains, which are taxed at a lower rate. However, it does not coincide with the current political atmosphere of adamant unemployment, Washington’s financial burden and the Occupy Wall Street movement.
Billionaire Warren Buffett famously peddled what has become known as the ‘Buffett rule’ urging for higher taxation on the United States' wealthiest citizens. And that message seems to have been well-received by the average American. A CBS News/New York Times poll shows that 52 percent of Americans feel capital gains and dividends must be taxed at the same rate as other earnings. This message is likely to become a staple of President Obama’s reelection campaign, as well.
While it may seem like a matter of fairness that the wealthiest people pay their share in taxes, it might have the detrimental effect of dissuading these people from investing as much as they currently do. There exists the possibility that this might slow down economic recovery even more, especially with the risks involved in such investments.
The issue of taxation is one that needs to be fixed and streamlined, but it necessitates the adoption of a pragmatic approach. Glib talk that serves to appease a particular ideology does not promise to usher in any real progress on this issue, and any lasting consensus demands sincere commitment that does not tingle of political rhetoric.
Anurag Mandalika is a graduate research assistant in the Department of Biological Systems Engineering. Please send all feedback to opinion@dailycardinal.com.
