Commentary Magazine


Does Gingrich Think Romney’s Tax Rates Are Too Low?

With time running out before the crucial South Carolina primary, Newt Gingrich is grasping at any issue that he thinks will damage frontrunner Mitt Romney. After the disastrous reaction to his attempt to demonize Romney’s business experience at Bain Capital, the former House speaker has moved on to another topic he hopes will do him so good: Romney’s tax returns. But in doing so, Gingrich has not only once again given Democrats an early start at bashing the most likely Republican nominee, but he has succumbed again to the bizarre temptation of attacking a fellow Republican from the left.

Gingrich may think he has embarrassed Romney by harping on the release of his tax returns since the implication of the demand is that his rival is either hiding something or is not paying his fair share. Since the former is clearly not the case, it is the latter point upon which Democrats have seized today after Romney owned up to having paid a rate in the vicinity of 15 percent of his income. They have gleefully sought to use this revelation as proof of the need to raise taxes on the wealthy. But the question today for Gingrich is why, if Republicans have uniformly opposed raising tax rates, should GOP primary voters think ill of Romney for this reason? If Gingrich is implying via means of this issue that Romney should be paying more, is he telling us he supports raising taxes? If not, what point is he trying to make other than to appeal to South Carolinians to vote against Romney because he’s rich?

The discussion about the rate of tax paid by Romney brings to the fore a crucial question about which the parties have bitterly contended in the past year. Because  most of Romney’s current income derives from investments, the maximum rate he currently pays is 15 percent. That is, according to President Obama, far too low. Playing to the Occupy Wall Street crowd, the Democrats have sought to make the question of hiking taxes on investment and capital gains a major issue. If, as expected, Romney is the nominee, they will try to portray him as the poster child for the wealthy who, as Warren Buffett has said, ought to have more of their money confiscated by the government to do what it likes.

But Republicans believe that taxing investment and capital gains is exactly the opposite of what we should be doing to stimulate growth and revive an economy that has stagnated during the Obama presidency. Indeed, the GOP consensus is that lowering taxes and therefore increasing the incentive to investment is the only path to job creation and growth.

That’s something Republicans must emphasize as they prepare to try to defeat Obama this fall. But by once again posing as a populist who despises wealth, Gingrich isn’t merely egging on Democrats to attack Romney, he’s also undermining the main GOP argument on the most important issue facing the republic: how to balance a federal budget bloated by out-of-control entitlement spending. By playing to the left and making Romney’s taxes an issue, he’s sending a signal about how high tax rates must be that the Democrats have not failed to pick up on.

As it happens, as James Pethokoukis points out today on the Enterprise blog, Romney’s 15 percent tax rate is actually higher than “the 8.2 percent average total effective tax rate (as of 2010) of U.S. households once you factor in various tax credits.”

Gingrich’s tax ploy may be helpful to Democrats seeking to get an early start at chipping away at Romney, but like the attacks on Bain, it will be futile. Whether most Republicans love Romney or not, they do not hold his earned wealth against him. Indeed, by being a success in business, Romney exemplifies the virtues of free enterprise that conservatives are supposed to believe in. Penalizing success is a way to appeal to liberals, not South Carolina Republicans.