Governor Romney needs to release his tax returns. It is becoming a distraction, and every day he spends responding to the constant calls for release is a day he does not focus the bright light on President Obama’s dismal economic record. But, he should accompany that release with a completely unapologetic endorsement of our wonderful and productive free enterprise system. He might say something like this:
Ladies and gentlemen, tonight I am releasing five years of tax returns. It was not my preference to do so, because my opponent’s people have distorted my record disgracefully with the information they had and I was reluctant to give them more. Nevertheless, I understand the public interest in my returns, so here they are.
One thing people will quickly note is that I have investments in many countries, including some countries known as tax shelters. I want to emphasize two points about these investments. First, my opponent likes to infer that there is something wrong with this. That is false, and the President knows this. All my investments are perfectly legal, and US taxes will be paid in full on every dime I make from them. Highly-paid White House staffers have investments in the same countries, and that doesn’t seem to bother anybody. Secondly, I did not make these investments – they were made by independent managers that I have hired. They made these investments because they were viewed to be in the best interest of me and my family, their clients. Indeed, if they declined to make what they thought were the best investments, they could go to jail for failing in their fiduciary duty to their client.
One of the reasons they made these investments might be tax treatment. This is consequence more than anything else of our complex and unproductive tax code. If you elect me President, I will strive to simplify and streamline this monstrosity, and I will be happy to see my investments come home as a consequence.
You will also note that I pay a low marginal rate of tax, something again my opponent will make a great noise about. There is nothing remotely unfair about this, despite what my opponents may say. When all the tax credits and deductions are considered, a middle-class taxpayer in the US pays about a 10% all-in tax rate. The top bracket of taxpayers pays more than twice that. We have the most progressive tax system in the world. In my own case I also donate considerable sums to my church and other charities. No honest person looking at my returns could argue that I do not pay my share.
The low rate of tax is because my income comes from investments, and again there’s nothing wrong with that. It has been approved by Congresses of both parties for decades, and here’s why: one hundred years ago, nearly a third of all US workers worked on farms. Today, a handful of highly efficient farmers can feed a small city. What made the difference? Productivity. Productivity that comes from investment in efficiency, like the marvelous equipment made by companies like John Deere. Investment in productivity is essential to rising living standards, and that’s why we all benefit from investment and why investment income is favored by the tax system.
Every time in the last seventy years that we lowered the rate on capital gains – under Presidents Kennedy, Reagan, Clinton, and Bush – the economy grew. Every time we raised those rates, the economy slowed. President Obama doesn’t care. In the 2008 campaign, he said he would raise capital gains taxes even if it meant less growth and less revenue to the government “for reasons of fairness.” In his own words, he admitted that a tax rate he considers “fair” is more important than economic growth, jobs, and revenue to the government.
President Obama also wants to raise taxes on the most successful, people he calls “the most fortunate among us.” He thinks it’s luck. Indeed, the other day, he said if you have a successful business, “you didn’t build that.” He knows nothing about the entrepreneur who mortgaged his house, borrowed from family and friends to bring a dream to life. He knows nothing about the 70-hour weeks, the sleepless nights worrying about how to make payroll, the anxiety and preparation before the presentation to the first big client.
I know. I’ve built a company, and that company helped many others achieve their dreams.
My record at Bain Capital has been grossly distorted – they point to job losses at companies we invested in. Here’s something else the President doesn’t seem to understand: tens of millions of jobs are destroyed in this economy every year. And every year tens of millions of new jobs are created. It’s part of the constant, fertile cycle of renewal in our amazing economy.
In a healthy economy, the new jobs outnumber the lost jobs by about four or five million each year. Under President Obama, it has been half that pace.
Mr. President, you tout the four-plus million jobs that have been created in the last two and a half years. That record is pathetic. It isn’t even enough to keep up with population growth. And yet you say the “private sector is doing fine.”
Yes, some Bain companies trimmed their workforces. A company that doesn’t eliminate jobs that aren’t necessary is doing nobody any favors. The global economy is too competitive for that. That company will ultimately fail, and then everybody is out of a job. I’ve seen that happen, too, and I hate it.
Besides, if the President wants to point to jobs lost from Bain investments, he should include jobs at competitors to companies that Bain helped make successful, such as Staples. Plenty of expensive business suppliers went out of business because of Staples’ efficient model. But to be fair – something the President ostensibly cares about – he must also acknowledge the jobs created not just at Bain companies, but at the millions of small businesses that were able to thrive because companies like Staples helped them keep their costs down.
That’s how it works. Efficient companies succeed, and by offering value for money, help other companies and individuals succeed. Inefficient companies struggle, shed jobs, and ultimately fail. But the President doesn’t get it. He thinks the private sector is an enormous milk cow that will give up its riches without complaining so he can pay for his spending and entitlements, and that won’t react while he shapes it with rules and regulations into his transformative vision.
Well, the private sector does react, and right now it’s reacting by holding back. President Obama’s policies make it harder for entrepreneurial ventures to succeed, so fewer people are taking the plunge.
The President not only doesn’t understand business, he positively dislikes it. In his autobiography, he says that the one job he had with a for-profit company made him feel like he was, and I quote, “behind enemy lines.” Ponder that for a moment, ladies and gentlemen. In his own words, the President of the United States says to have a job in private enterprise is to be working behind enemy lines. I won’t elaborate on that point, I’ll just pause a moment to let that sink in.
(Laughter, hoots, and scattered boos from the audience.)
This President doesn’t get it. And we won’t have healthy job growth until we get a president who does get it. Businesses need low and simplified taxes, effective but light regulation, and most of all, predictability. That’s what we will see in a Romney presidency.
I get it.