I Don’t Blame Romney

A great debate drages during this election cycle about income taxes. Tax laws are scheduled to change at the end of the year. As a country we’re in debt up to our nose. Our economy isn’t running like the juggernaut it used to be. And Mitt Romney is running for President.

As many of you know, Mitt is a millionaire many times over and a big deal has been made about his tax returns. He recently released his tax return for 2011, where he paid 14.1% in income taxes. While I will not get into a debate about his politics, many people seem to be insinuating that Romney has done something illegal, unethical, or morally irresponsible by only paying 14.1%. I have a very hard time understanding this sentiment.

Romney employs several tax saving strategies including being selective about the types of income that he earns and where it comes from. I don’t blame him. I try to keep as much of my income as I legally can out of the federal coffers as well. I’ve seen and prepared thousands of tax returns, but I’ve never had a single person ask how they could pay more or if they were paying a “fair” amount. I don’t personally know anyone that believes that the US government is somehow more efficient, more effective, more qualified or somehow better suited to spend their own money.

In a court case from the 1930s, Judge Learned Hand once said, “Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes.” Essentially, he is saying that no one should pay more taxes than is absolutely required. I completely agree. (However, in a vacuum, that could lead to abuse so there are some measures built into the tax law to prevent gross abuse.)

There are no indications that Romney has done anything contrary to prevailing tax law. In fact, as a former PriceWaterhouse employee, I’m sure the tax guys at PwC were probably very cautious in their approach, knowing that this would probably be the most scrutinized tax return in US history. According to one of Romney’s trust managers, Romney could have paid even less in tax this year, but decided not to claim all of the available deductions in order to fulfill a promise he made earlier this year that “he paid at least 13% in income taxes in each of the last 10 years.” Not claiming deductions… ridiculous, but that is the state of the debate in America right now.

If you think that Romney should have paid more, that’s a valid argument. I don’t want to debate what a fair percentage would be as I’m sure every person would have a different opinion. But I think getting outraged at Romney is a bit like getting angry at someone for driving in the HOV lane. He didn’t put the lane there or set the speed limit. He just made sure he had a friend in the car when the time came. You can debate if there should be an HOV lane in the first place, but you can’t really get mad at the people that use it legally.

Anything you’d like to add to continue the discussion, let me know in the comments. I would like to remind you that the comments are heavily moderated and any comments outside the scope of this article will not be posted. Keep it civil and on topic. Thanks.