- Tax expert Paul Caron: Mitt Romney was thrown on the defensive on his income taxes
- He says Romney had years to prepare for handling the issue
- Caron says Romney could have crafted an ambitious tax cut proposal
- He says a trillion dollars in special tax breaks could be eliminated to lower everyone's rates
One of the lessons of modern American presidential history is that there is nothing more devastating than turning a candidate's supposed strength into a weakness. Karl Rove masterfully made John Kerry's distinguished military service a liability through a series of Swift Boat attacks in the 2004 campaign.
Mitt Romney's fumbling response to questions about his tax returns similarly threatens to destroy the central premise of his candidacy that his business acumen will help him lead the country out of its current economic troubles.
For someone who has been running for president for six years, Romney is surprisingly ill-prepared to discuss his tax returns.
His initial statements that he had no plans to release his returns were met with widespread media derision -- properly so, since all of the major contenders over the past 40 years have done so (the exceptions are folks
who never advanced far enough to have a realistic shot at winning: Jerry Brown, Pat Buchanan, Mike Huckabee, Steve Forbes, Rudy Giuliani, Richard Lugar, Ralph Nader).
Romney's current position, that he will eventually release his returns for an an unspecified number of years, but not until April, is transparently political since, if things continue to go well for him, he presumably would have the Republican nomination wrapped up by then.
All of this raises the question: Why is Romney so defensive about the tax issue? After all, this is the man who told his landscaping company in 2006 that he would have to fire them unless they stopped employing illegal immigrants in order to maintain his future political viability.
Romney surely had his future political viability in mind as he arranged his financial affairs and prepared his tax returns over the past half-dozen years. So why hasn't he led with his chin and gone on offense with his tax returns?
One front could be on the charitable generosity he presumably has exhibited through his Mormon faith. If he and his wife have followed the Mormon practice of tithing 10% of their income to the church, his tax returns would stand in vivid contrast to President Barack Obama and Vice President Joe Biden, who gave meager amounts to charity, especially in the years before they knew they would be making their tax returns public.
For example, in 2000-2004, the Obamas gave 1% of their income to charity ($1,500-$3,500), while the Bidens gave 0.1% of their income to charity ($260-$380). Since 2005, the Obamas have increased
their charitable giving to 10% to 15% of their income, while the Bidens have increased their charitable giving as well, albeit to only 1% of their income.
These facts fit perfectly with the Republican meme of limited government augmented by private charity, with Democrats the party of compassion with other people's money while they personally do little to help the less fortunate.
Romney could open a second front in the tax war by using his tax return to press for tax reform that embraces the capitalist spirit reflected in his work for Bain Capital. Instead, Romney appears defensive about paying only a 15% tax rate since most of his income presumably is in the form of interest, dividends, capital gains, and carried interest. Romney is playing on Obama's turf in his timid proposal to cut taxes but only on those earning less than $200,000 per year.
Romney could contrast himself with Warren Buffett -- Obama's favorite tax adviser -- who publicly calls for higher taxes on the wealthy (while continuing to arrange his own business affairs to pay the lower tax rate enjoyed by Romney).
The Obama-Buffett world view is that you solve the problem of secretaries paying higher tax rates than their millionaire bosses by raising tax rates on the millionaires. The Romney response should be that you solve the problem by lowering tax rates on the secretaries. And he should insist that Buffett follow his lead and release his tax returns as well.
Romney should scrap his 59-point economic plan and mount a full-throttled cry for tax reform that lowers tax rates on everyone to the level reflected in his tax returns.
On Tuesday, the nonpartisan congressional joint committee on taxation released a report showing that so called tax expenditures -- special tax breaks for individuals and businesses -- now total more than $1 trillion per year
. Romney should carry that report with him on the campaign trail and argue that he will take a meat cleaver to the special tax breaks -- primarily enjoyed by the wealthy -- to lower the tax rates paid by all Americans.
If Romney is unable or unwilling to wage this tax war in the relatively friendly trenches of a Republican primary, the party should think twice about whether it wants him as its standard bearer when the front moves to the stiffer territory of the general election.