Maybe you missed it but you got a great example of the absolute failure of the transcribers of press releases (formerly known as “journalists”) to do their job– and it was a failure by the vaunted crowd at 60 Minutes.
During Romney’s interview with “60 Minutes”, he was asked why he paid such a low amount of taxes compared to other Americans. His answer:
“It is a low rate, … And one of the reasons why the capital gains tax rate is lower is because capital has already been taxed once at the corporate level, as high as 35 percent….Yeah I think it’s the right way to encourage economic growth, to get people to invest, to start business, to put people to work.”
The idiotic interviewer Scott Pelley, not to mention virtually every journalist in the country, completely whiffed when it came to the answer– because what Romney said was false. Whether he explicitly lied or simply was mistaken is not important. Romney was never taxed at a higher corporate rate, nor was he being double-taxed, a favorite meme used by conservatives to attack the tax system. Rubbish.
The only person who I’ve found pointing out the lie is my colleague Dean Baker, who writes:
The bulk of his income comes from Bain Capital. Bain Capital is organized as a partnership. This means that income is not taxed at the corporate level. It is only taxed when partners like Mitt Romney receive it. So the story of double taxation simply does not fly in Romney’s own case.
Let me explain further. Private equity firms get a special tax break—it’s called “carried interest”. Rather than being taxed at the top rate of 35 percent, private equity fund managers only pay 15 percent through a loophole called “carried interest.” To understand carried interest, you have to first understand how money managers get paid in the yacht-sailing, mansion-buying world of private equity.
First, they receive a fee, which is a percentage of the funds they invest. This fee is usually in the range of two percent, and is taxed like your run-of-the-mill wage income.
Second, and far more lucratively, money managers get a fee based on the performance of their fund—a fee in the range of 20 percent. It’s the second fee that is the so-called “carried interest”—and it’s how the money managers of private equity really rake in the big bucks that pay for their Picassos, yachts and mansions.
Carried interest is taxed as investment income—at the capital gains level of 15 percent (much lower than the top wage income rate), even though most of these managers invest very little, if any, of their own money.
So, a private equity big shot honcho like Romney who is hauling down millions of dollars in “incentive” is taxed at a 15 percent rate, while the receptionist who works in his office, or the police officer who guards the equity baron’s property, probably earn $50,000 or so if they’re lucky—and those average working people pay a 25 percent tax rate on that income (not to mention payroll taxes), a far larger share of their income than the fellow who banks “carried interest.”
Why should we care? The media coverage of the entire interview focused almost entirely on the optics: did Romney get “tough” with Obama? Etc. etc…but the problem is that Pelley, and most of his colleagues, are entirely shallow when it comes to doing their jobs. They don’t understand policy, and certainly not economics, beyond the first question they are prepared to ask.
And because of that professional malpractice we get awful policy– with dire consequences for the country.