I have a theory why Mitt Romney, unlike his father and most elected leaders, has been unwilling to share all tax returns. My son, Steve, an investor himself, inspired me. We were trading email stories about Romney’s taxes. Steve concluded, “It’s not illegal, the problem is it’s legal!”
I thought about that. Yes, we’re told over and over how our tax system favors the rich. The Occupy Movement proclaims it, and Warren Buffet, the world’s second richest man, announced he paid a lower percent of income in taxes than his secretary. To those of us who believe that a progressive tax system is the most fair and best for our country, that is terrible news.
Then I remembered a personal experience in how the “rich” get favored treatment. Once upon a time, with no planning, my husband and I stumbled a little closer to “rich.” Here’s how: We lived in the ordinary little house we owned on a nice hill in Walnut Creek, Calif. Purchased in 1975, this home became a good rental property when we moved away. We kept it only because we planned to move back one day.
But years passed, and we didn’t move back; we settled in Iowa. So we decided to sell the hillside house – all 1,300 square feet. The renters moved out and we groomed the place for sale. It was a “hot” market in 2001. The little house sold for almost eight times what we’d paid in 1975! Sure there were fix-up expenses, realtors’ fees, etc., so maybe we netted closer to seven times what we’d paid. We learned that’s called CAPITAL GAINS because it was “investment” property. Net sale income was many times over what we totaled each year in “ordinary income” so we would owe a lot of taxes. Right?