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Income Tax Inequality, Government Workers, and Romney’s 15% Tax Rate!

Conservative Pretender?I am saddened that virtually the entire GOP Presidential field appears to be poised to jump on Mitt Romney because he “only” paid 15% federal income taxes on his investment income in 2010.

I only hope that Mitt finds the words and the logical argument to expose these fakers (as well as the media and most democrats) for misleading the American people about perhaps the key pillar of economic growth – risk capital.

Where Does America’s Innovation Come From?

Like Romney, my only income comes from my investments, so I understand this issue at a very visceral level. The reason America is the greatest economic engine on earth is because we “grow and fund entrepreneurs” better than anyone else.

It’s hard to put your finger on exactly what America does to grow entrepreneurs, it just happens. Clearly, it’s not because we have the top math and science education system in the world; in fact we’ve recently slipped to 25^th in Math and 17^th in science among the top 30 industrial nations. One thing is clear, contrary to what Obama and the liberals tell us, there does not appear to be a strong linkage between academic performance in math & science and business innovation in America.

When it comes to funding entrepreneurs however, America stands alone. No, I’m not talking about crony capitalism like Obama’s thinly veiled campaign donation kick-backs to democrat party hack George Kaiser that was laundered through now bankrupt Solyndra. I’m talking about our national tradition of taxing long term capital gains at a rate that inspires risk taking – currently 15%, the rate Mitt Romney pays.

All Income Is Not Equal – Neither Should Tax Rates

I don’t know the history of Mitt Romney’s risk capital, but I do my own. Let me begin by saying that all of my capital was “self-made.” Although my father was a successful private sector worker, he left a modest estate that God willing will survive my dear mother’s extended lifespan. I have not inherited one penny of my wealth.

Like most American entrepreneurs, I made my risk capital the good old-fashioned way – I earned it. Not only did I earn it, but I earned it while working in California before the so-called Bush Tax cuts. Which means that I paid about 50% in state and federal taxes, before I started investing.

So, after handing half of my hard earned money over to the government to squander, I then took what was left and put it at risk to fund entrepreneurs who had new ideas to create new products and businesses.

I did make several good investments along the way; companies like Apple, eBay, Amazon, Google, and the company I worked for – Aspect Development.

At the same time, I invested in far too many “dogs’ to keep track of. I do recall “eToys, that once had a greater market cap than “Toys Are Us,” but eToys and 95% of the other companies I put my money behind went out of business when the Internet bubble burst. I lost 100% of the money I put in those companies.

When we talk about the 15% federal tax rate that Mitt Romney (or Dave Horne) pay on their risk capital investments, we’re ignoring the 50% tax rate that was paid when the capital was initially earned and we’re ignoring the 100% that was lost in all the little “ugly ducklings” that failed.

In fact, if one had taken the same amount of money I risked and put it in a mattress back in 2007, rather than investing it building companies like I did, they’d have far more cash today than I do. They would have taken no risk, funded no new jobs, and oh yeah – they would have paid zero taxes, not 15%!

Public Sector Worker Income Tax Inequality

While we’re on the topic of tax rate fairness, it’s worth taking a moment to consider the stark difference between private sector wage income and that of the public sector.

Like most of my private sector brethren, I had to save money for retirement after I paid 50% in state and local taxes. Many (most) public sector workers have no such tax burden. They have sweet pensions that they “earn” tax free by virtue of their job tenure.

As we withdraw the money we put away to fund my own retirement, we will pay federal income taxes again on any return that capital earned.

Unlike private sector workers, public sector workers seldom have to worry about having their income stream interrupted by losing their job. In the rare cases where public sector workers do get laid off, they collect unemployment benefits and are quickly hired back when then improve.

When a private sector worker is laid off, they almost never get hired back.

By the way, the wages earned by public sector are far higher than the wages earned by private sector workers for the same job.

Finally, the ultimate “kick in the pants” to the private sector worker who pays the wages and benefits of public sector worker is the dirty little secret called “retirement with disability.”

You see, if you work for the government and somehow get “disabled” in your final year of employment, your entire million dollar plus pension benefit will come to you tax free!

I’m not just talking about cops and firefighters; I’m talking about everyone who works for the government.

Let me ask you a question; how many private sector workers do you know who have been stricken by a severe work related disability at the age of 64? For me, the answer is none. If it’s 1% of workers I’d be shocked.

Not so for the public sector. A recent study in Massachusetts revealed that 31% of firefighters, 35% of policemen, and a whopping 34% of all other government workers miraculously encountered a debilitating injury in their final year of employment and were rewarded with a 30-40 year tax free pension.Imagine that, a DMV worker just has to claim they "pulled a muscle" picking up a box and voila -- no more taxes for the rest of your life. Talk about organized crime!

But this flagrant abuse pales when compared to the New York Rail Worker union members who had a mindboggling 97% disability rate in their final year of employment.

Where is the outrage?

Back to the so-called conservative “pretenders” like Gingrich, Perry, and Santorum who are trying to “make hay” by denigrating the 15% tax rate that Mitt paid after “risking it all” by investing in American industry in this lousy economy -- they couldn’t be more out of line.

My question is, where is the outrage for the wholesale larceny by public sector union bosses, politicians, and greedy lying government workers who fleece the American workers for fat wages and pensions then fake some injury get out of paying any taxes at all?

Gotta go; I’m getting ill…

Dave

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Income Tax Inequality, Government Workers, and Romney’s 15% Tax Rate!
Wednesday, 18 January 2012

Who Stole My Career?

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