Lottery Mike is down with a 70 percent marginal tax rate

img_2869Ever since the PowerMonsterMegaBall hit $1.6 billion, “Lottery Mike,” a highly fictionalized version of myself who becomes an overnight billionaire, has been a pre-occupation. What would Lottery Mike do with all that money?

Had Lottery Mike hit that number (and the person who did hasn’t cashed it in yet, btw) the cash-out-worst-case-option would have been a check for about $980 million. That’s more money than I could spend in what’s left of my life. That includes all the money I’d spend to extend my life. Lottery Mike could have very well ended up a sentient head in a jar.

This is a fantasy hardwired in many of us, raised on the promise of an America that I’d like to think still exists but have seen little evidence to this point.

So when I heard about a Democratic proposal to establish a new marginal tax rate of 70 percent, my first thought was, “How will this affect Lottery Mike?”

Lottery Mike does not exist. But my instinct was to view this policy through his eyes. Oh my God, Rep. Alexandria Ocasio-Cortez wants to take away 70 percent of Lottery Mike’s winnings. That’s neither true or fair.

I did the math. I did it simply rather than accurately. If I were taxed 70 percent of $1.6 billion (and here’s where the simple/accurate bit comes in: I didn’t account for the first $10 million which would be taxed at a much smaller rate), I’d get a check for $480 million. Again, more money than I could spend in my lifetime.

So I think Lottery Mike would be okay with it. Especially since Lottery Mike doesn’t exist.

But part of what it means to be an American is to believe that Lottery Mike might one day exist.

And it is for that reason that a lot of people who will never, ever be affected by the top marginal rate no matter what percentage it is, are against the idea of a 70 percent tax rate. They got Lottery Mikes too.

You keep Lottery Mike’s hopes and dreams as close to your heart as you keep your own because you don’t want to wake up one day a billionaire and get caught flat footed. So when the real world shows you a scenario in which your wildest daydreams get a 70-percent cut, it feels real. It doesn’t feel hypothetical. But really, you’re just imagining up money. Imagine up a little more.

While you’ve got your imagination caps on, imagine what our society could look like with a fully funded public education system, without young people saddled with a lifetime of student loan debt, with cleaner air and water, with better roads and infrastructure, with funding for arts and humanities. When we had a top marginal rate of more than 80 percent, we went to the moon. We built the interstate highway system.

Pundits and politicians will squeal about it. They’ll complain. They’ll try to make you think you’re going to have to give up 70 percent of your income to the gubmint. They know better. They just can’t sell their greed to the public. That’s why they have to lie to you about it. They want you to pity poor Lottery Mike. They want you to believe you’re just a temporarily embarrassed millionaire who is one Republican vote away from opening up the opportunity that’s going to turn it all around for you.

But in the meantime, you don’t want to change the rules for rich people. — not when you’re so close to being one yourself one day.

Lottery Mike is a fantasy. He’s not a basis for sound economic policy. He’s not a lens through which one can see things as they are. You can’t make policy based on how it will affect Lottery Mike when real-life people are suffering.

So real-life Mike and Lottery Mike both support the idea of a 70 percent top marginal rate for income in excess of $10 million. If that makes you less likely to work hard and earn money then I question your motivations (and your understanding of marginal tax rates). In the meantime, everyone can benefit as we move forward together. We just have to give up worrying about how Lottery Mike is going to get by on $480 million.


Why Mitt Romney’s Taxes Matter

If Mitt Romney released 50 years of tax returns today, I wouldn’t read any of them. Frankly, I wouldn’t be able to make hide nor hair of them because I don’t understand the tax code like he does. Nonetheless, I believe he should release more than two years of his taxes and here is why:

1. Tax returns are factual documents. They are not partisan or propaganda or full of spin. They relate facts about Mitt Romney’s finances. He is legally responsible for ensuring they are complete and accurate. Romney has based his campaign on his reputation as a business leader and successful financier. One of the reasons Romney stated that he doesn’t want to release his tax returns is because he said it would give his opponents more ammunition. But despite what politicians want you to think, facts are not partisan. Releasing the returns offers the public a true glance into Mitt Romney’s financial life.

2. He required candidates on his vice presidential short list to provide him with “a bunch of tax returns.” Evidently, Romney sees the value in having access to his ally’s tax returns. Tim Pawlenty had to turn over “a bunch of tax returns.” Paul Ryan gave the Romney camp “several years” of tax returns. When Romney himself was being vetted by the McCain campaign for the veep spot, he turned over 20 years of returns.

3. Romney has a history of lying about what is in his tax returns. When Romney was running for governor of Massachusetts in 2002, his opponents challenged his eligibility because Massachusetts law says you have to be a resident for the previous seven consecutive years. Romney had been living in Utah when he was running the Olympics there. But Romney argued that he was paying taxes as a Massachusetts resident, so he was a resident of Massachusetts. When asked to release his returns he refused, saying “trust me” and “you’ll have to take my word for it.” When asked if he’d release his returns with everything redacted except the state of residence, he refused. Turns out he was lying. He went back and amended his tax returns retroactively to declare his Massachusetts home his primary residence.

4. Romney has a history of demanding others release their tax returns. When he ran for Senate against Ted Kennedy, he called for Kennedy to release his tax returns. When he ran for governor of Massachusetts against Shannon O’Brien, she released her returns and Romney demanded that her husband  release his returns too, while asking “What is he hiding?”

5. This speaks directly to his business experience. Mitt Romney sat on the board of Marriott in in 1994 and in fact was head of the corporation’s audit committee. That year, Marriott was one of the corporations caught up in the “Son of Boss” scandal and was fined millions of dollars for hiding $70 million in income from taxes. Did Romney take personal advantage of this tax avoidance scheme while approving it for Marriott? We don’t know, but it shows that he’s willing to play fast and loose with the tax code for businesses he has responsibility over, so what about his personal finances?

6. It is tradition for presidential candidates to be more forthcoming. President Obama released 12 years. President Bush released eight years. President Clinton released eight years. President Bush released three years. President Reagan released six. When George Romney ran for president, he released 12 years of returns saying “just one year could be a fluke, done for show.”

7. His current financial disclosures aren’t transparent. What little we do know about his finances shows he has money stashed in the Cayman Islands, in Swiss bank accounts and in other tax havens around the world. He has been sketchy about reporting them. For example, Vanity Fair reported that Romney set up a company called Sankaty High Yield Asset Investors Ltd. in Bermuda in 1997. The day before he was sworn in as governor in 2003, he transferred the company to his wife. The company doesn’t appear on financial disclosures of the time and didn’t appear on his tax returns until 2010.

8. Did Romney take the Swiss amnesty deal? In 2009, the IRS announced an amnesty for wealthy Americans with Swiss bank accounts. The Swiss government had announced that they would be turning over the names of account holders to the U.S. and the IRS gave these wealthy Americans a chance to avoid prosecution by voluntarily disclosing the account and paying the tax. We know Romney has a Swiss bank account. What we don’t know is if he took the amnesty in 2009. That leaves us two options: 1) he was completely above board and disclosed the account in which case it will show up on returns previous to 2009 or 2) he took the amnesty, which demonstrates that he was willing to commit tax evasion and fraud. While the amnesty clears up any criminal wrongdoing, it would be a disaster for his political career.

I could go on, but I think I made my point. So what are the arguments against releasing the returns?

1. Tax returns are private. Of course they are. If they were public, we wouldn’t be having this discussion. But if you want the top job in this country, you have to earn the trust of the American people. Telling me “trust me, there is nothing there” doesn’t cut it, especially when you’ve been caught lying about it before.

2. It is his money, why should I care what he did with it? Well, for one thing, it bothers me that I pay a higher percentage of what little income I make in taxes than Mitt Romney. The reason for that is the tax code has been gamed to value Romney’s investment income more than my wages. Why is that? Why should Mitt get that advantage? Because Bain Capital hired lobbyists to push through a tax law cutting the rate for investment income. Releasing more returns will most likely illustrate just how stark this contrast is. It should also be noted that Paul Ryan’s budget plan calls for the elimination of all taxes on investment income.

3. It’s just a ploy by Democrats to attack Mitt’s success. Ah, the old “class warfare” canard. I came across this argument recently on Facebook. My response was to point out that it isn’t just Democrats calling for Romney to release his tax returns. This first became an issue during the Republican primary. Newt Gingrich said “Romney owes it to voters” to release his tax returns. Republican strategist Ed Rollins called on Romney to release his returns. Rick Perry did it. Rick Santorum did too. The Republican governor of Alabama has called on him to do it. George Will, Bill KristolRon Paul, Rep. Pete Sessions (head of the GOP campaign committee), Gov. Haley BarbourBrit HumeDavid Frum, and the National Review have all said release the returns if for no other reason than you’ve got nothing to hide. This isn’t the loony left trying to dig dirt, it is everyone wanting to know what’s so terrible that Romney just can’t come clean.

4. It will never be enough. Romney says if he releases another five, ten or 15 years of tax returns, it will just embolden the Democrats to call for more. This is all just a distraction from his campaign of issues and the economy. In response, the Obama campaign made an offer: release five years of returns and they won’t call for any more. Romney refused.

Here’s the thing: if Romney had released five years of returns during the primary, there would have been a big hullaballoo for a few days and it would be old news by now (unless that Swiss bank account amnesty thing drove him out of the race). His recalcitrance on this issue defies logic, so we’re left to conclude there must be something really nasty in there. It isn’t unreasonable to assume the Romney camp has focus grouped the issue and come to the conclusion that whatever is in the returns is bad enough that it is preferable to take the hit for non-disclosure.

Until he does come clean, there will be a dark cloud hanging over his head and unscrupulous Democrats like Sen. Harry Reid will have a free hand to speculate as to what Romney is hiding. As the clock ticks down to election day, you better believe that Romney will be asked about his taxes over and over despite his assurances that everything is above board. He wants us to trust him, but he hasn’t earned our trust. His history of lying about his taxes means we’re not obligated to give him the benefit of the doubt anymore.

My advice to Mitt:

Release five years of returns. Make a big splash. Show the reams of documents. Let this be a teaching moment for the American people. Demonstrate for us how unnecessarily complicated the tax code is and how it is legally possible for some people to manipulate it for personal gain. Let this be the thing that opens a discussion on tax reform. “Yes, I took advantage of every legal tax loophole I could find. The tax code is ridiculous and it doesn’t have to be. Here are my ideas to fix it.” That would at least show that you are engaged on the issue and not trying to hide anything.