Written by Walter Hecht   

Beware of Greeks bearing gifts; beware of politicians quoting percentages. The use of percentages is a good way to conceal something that someone does not want to reveal. Case in point is Mitt Romney's use of percentages to obfuscate his intent on taxes. Only he and Paul Ryan and a few billionaire supporters probably know his true intent on Federal taxes, but let me give an example of what he may really mean. I am going to assume a few round numbers to make my point. I will use averages of real numbers, not percentages. Whenever a politician uses percentages, you should ask for real numbers of dollars or other real things.

For want of better numbers from Mitt, I am going to assume a $100 billion tax decrease shared among 100 million taxpayers. That is an average tax savings of $1000 per taxpayer. However, as Mitt pointed out last night, the top 5% pay 60+% of the taxes. If the top 5% share 60% of the tax reduction, they will each average a tax savings of $12,000 while the remaining 95% of tax payers will each share a tax reduction of $420. Of course, these are only averages, but they are real numbers and real dollars. Mitt's numbers would be different, but the results would be similar. If Mitt neither raises nor lowers rates for the wealthy, their share of the taxes and the tax savings would remain the same on a percentage basis, but would change when stated in real numbers.

And we may be missing the real point. Mitt may be focusing our attention on tax rates to distract us from his real mission, eliminating taxes on capital gains and the estate tax which affects only a few very wealthy people. If Mitt is successful in eliminating the capital gains tax and the estate tax both, then his taxes will fall to nearly zero and he will be able to pass his wealth intact to his heirs. It is my understanding that currently Mitt has used tax gimmicks in the current law to design his estate to pass most of his wealth to his heirs tax-free. If the estate tax is abolished, he will not need to rely on those gimmicks any longer