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Mitt Romney’s Taxes – OpEd

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Mitt Romney’s just-released tax return for 2010 shows he paid $3 million in income taxes on an income of $21.6 million. What should we make of that fact?

People tend to view taxes in one of two ways. One way is to think of taxes as the price we pay for government goods and services. The other is that taxes are a penalty that the government levies on people for earning income or having wealth.

If we take the first view, that taxes are the price we pay for government goods and services, then we should ask whether $3 million is a fair price for Mr. Romney to pay for the government goods and services he receives. It seems like a stretch to argue that Mr. Romney received anything close to $3 million in government goods and services, so taking this line of reasoning it would appear that Mr. Romney pays more than his fair share of taxes.

If we take the second view, that taxes are a penalty the government levies on people for earning income or having wealth, then it is reasonable to ask whether $3 million is an appropriately large penalty to levy on Mr. Romney for making $21.6 million in income in 2010. I don’t have a good answer for that, but lots of commentary suggests that $3 million is an unfairly low tax burden for Mr. Romney. (The median prison sentence for aggravated assault is three years, but I don’t have a good answer for whether that is a fair penalty either.)

Are taxes the price we pay for government goods and services, or are taxes a penalty government levies on people for earning income or having wealth? How we answer that question takes us a long way toward how we should evaluate Mitt Romney’s $3 million income tax payment.

Randall G. Holcombe

Randall G. Holcombe

Randall G. Holcombe is Research Fellow at The Independent Institute, DeVoe Moore Professor of Economics at Florida State University, past President of the Public Choice Society, and past President of the Society for the Development of Austrian Economics. He received his Ph.D. in economics from Virginia Tech, and has taught at Texas A&M University and Auburn University. Dr. Holcombe is also Senior Fellow at the James Madison Institute and was a member of the Florida Governor’s Council of Economic Advisors.

One thought on “Mitt Romney’s Taxes – OpEd

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    January 25, 2012 at 2:43 pm
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    Romney is just someone that does not know the English language well or he would not be there running on the Republican Ticket…
    Tax is handled like the Bill of Right concerning tax says that politicians can tax without regard to the several states or the census.
    Romney is just another man that will end subjecting others to the use of a repeatedly failing economic system so there may be another discussion and election in the future.He is not a man of vision…period. Money does not example wealth, nor has it ever.It is used to trick people into giving up their talents and labor.
    The uS practices something that is archaic upon this Earth…a form of slavery.Politicians are professional beggars.
    Terrible how Romney has to insist he was even very religious…but then look at Obama shock the members of many churches…
    Everyone is waking up…how the uS governs using the homeland security and title acts to financially ruin them.

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