Opinion

David Cay Johnston

A tale of two healthcare plans

David Cay Johnston
Sep 11, 2012 14:53 UTC

No issue affecting taxes so clearly divides the two parties in the U.S. election as healthcare. The two parties, in their platforms, describe very different approaches to healthcare economics. Both use political plastic surgery to cover up ugly truths.

The stakes are huge. Americans spend $2.64 per person for healthcare for each purchasing power equivalent dollar spent by the 33 other countries that make up the Organization for Economic Cooperation and Development. The OECD data shows the U.S. spends $8,233 per capita compared with an average of $3,118 in the other 33 countries.

A growing share of federal tax dollars, in direct spending and in tax breaks, is going to U.S. healthcare as the population ages, even though about one in six Americans lacks health insurance.

America‘s healthcare system, more accurately described as a non-system sick care system, totaled 17.6 percent of the economy in 2010, compared to an average of 9.2 percent in the other 33 countries, as the OECD data shows.

In the United States, total public and private cost of healthcare is significantly greater than the total of corporate and individual income taxes, as well as payroll taxes. For each dollar paid in all three of those taxes in 2010, healthcare came to $1.29.

Romney and Ryan’s dangerous tax roadmap

David Cay Johnston
Sep 7, 2012 15:41 UTC

Together Mitt Romney and Paul Ryan have put human faces on how the super-rich game the tax system to pay less, pay later and sometimes not pay at all. Both want to expand tax favors for the already rich, like themselves.

Their approach favors dynastic wealth with largely tax-free (Romney) or completely tax-free (Ryan) lifestyles, encouraging future generations of shiftless inheritors. What we need instead is a tax system that encourages strivers in competitive markets, not a perpetual oligarchy.

Romney and Ryan say that lowering tax rates and reducing or eliminating taxes on capital gains and dividends, while letting huge fortunes pass untaxed to heirs, will boost economic growth and mean prosperity for all.

The fortunate 400

David Cay Johnston
Jun 6, 2012 14:33 UTC

Six American families paid no federal income taxes in 2009 while making something on the order of $200 million each. This is one of many stunning revelations in new IRS data that deserves a thorough airing in this year’s election campaign.

The data, posted on the IRS website last week, brings into sharp focus the debate over whether the rich need more tax cuts (Mitt Romney and congressional Republicans) or should pay higher rates (President Obama and most Democrats).

The annual report, which the IRS typically releases with a two-year delay, covers the 400 tax returns reporting the highest incomes in 2009. These families reported an average income of $202.4 million, down for the second year as the Great Recession slashed their capital gains.

Newt and the NEWT Act

David Cay Johnston
Feb 3, 2012 21:41 UTC

Newt Gingrich’s 2010 income tax return inspired a quick response from U.S. congressman Pete Stark.

Twelve days after Gingrich, a Republican presidential hopeful, made his return public, Stark proposed the Narrowing Exceptions for Withholding Taxes (NEWT) Act.

This proposal has an uncertain future in Congress, but it would be a good addition to our tax laws, closing a significant loophole that Gingrich took advantage of.

Romney’s gift from Congress

David Cay Johnston
Jan 31, 2012 16:09 UTC

When the Romney campaign disclosed in December that the couple’s five sons had a $100 million trust fund, I suspected that, in setting up the fund, the Romneys used a tax strategy that allows some very rich people to avoid paying gift taxes. But it was impossible to know if this was the case without seeing their tax returns going back years.

So when Mitt Romney released the family’s 2010 tax return last week, I went looking. I found a hint on pages 132 and 134 of the return. It showed that the value of property placed that year into another family trust, the Ann D. Romney Blind Trust, was, for tax purposes, zero. The Ann Romney trust is not the same trust as the one that holds the Romney sons’ $100 million, but I wondered if the Romneys used the same approach in prior years when it came to valuing property placed into the sons’ trust.

Reuters emailed the Romney campaign spokeswoman to ask how much the Romneys paid in gift taxes on assets put into the sons’ trust over the last 17 years. The spokeswoman, citing Brad Malt, the Romney family tax lawyer, answered: none.

Tax advice for those who want to be like Mitt

David Cay Johnston
Jan 24, 2012 14:50 UTC

What advice do tax lawyers give private equity managers about saving on taxes as they build wealth?

We may get a first glimpse at the answer on Tuesday when, bowing to public pressure, Mitt Romney promises to release his 2010 tax return and a tax estimate for 2011. (See the returns here.)

To get a full picture of Romney’s taxes while he made his multimillion-dollar fortune, we would need to see returns going back to 1984-1999, which is when he ran Bain Capital Management. So far, the Republican presidential candidate has not committed to release those returns.

The burden of Romney’s tax returns

David Cay Johnston
Jan 20, 2012 18:49 UTC

A tax return says a lot about a man, especially one aspiring to be president.

If Mitt Romney makes good on his promise during Thursday night’s Republican candidates’ debate to release “multiple years” of his returns, it will likely stir up rather than calm the political storm unless he makes public all of his returns from 1984 through 1999. Those are the years when he built a fortune of more than $200 million while running Bain Capital Management.

There’s no suspicion that Romney has done anything illegal. But what should be secret about the taxpaying relationship between a presidential hopeful and his government?

Romney himself said late on Thursday: “I’m not going to apologize for being successful.”

  •