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Mitt Romney's Income Tax Problem

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Republican front runner Mitt Romney may have cemented his standing as the official foot-in-mouth GOP candidate at the Florence Civic Center in Florence, South Carolina on Tuesday.

It may not have been one of his most gaffetastic moments, like the Nashua, New Hampshire Chamber of Commerce breakfast when he said he liked being able to fire people for bad service. Or the Iowa State Fair speech when he claimed corporations were people.

Or even during his 2008 Fox News interview when he justified strapping the family’s Irish setter Seamus to the station wagon’s roof rack on their 12-hour drive from Boston to Ontario, Canada -- a ride that so stressed the dog, it induced diarrhea. “My guess is he liked it a lot better in his kennel than he would’ve liked it inside,” Romney chuckled.

Nonetheless, while campaigning yesterday ahead of the South Carolina primary race, Romney may have driven the biggest wedge yet between himself and the middle class Americans on whose votes he’s relying to get into office. After defending his record at Bain Capital and being labeled a “vulture capitalist” and jobs destroyer -- despite Bain success stories like Domino’s (DPZ), Staples (SPLS), Sealy (ZZ), Bright Horizons Family Solutions, Brookstone, and The Sports Authority -- Romney was forced to make perhaps the most damning admission yet.

The presidential candidate, with a net worth of $250 million, pays an effective tax rate of 15%.

Skyrocketing above the $375,000 he earned in speaking fees last year, the majority of Romney’s income -- speculated to fall between $10 million and $40 million -- came from long term investment dividends. As such, he (perfectly legally) was able to take advantage of the current tax code that taxes such income at the capital gains tax rate.

In an era when the majority of Americans are against extending the Bush tax cuts for the wealthy and income inequality has possibly never been a hotter button issue, Romney has not only benefited from a tax policy that pushes federal rates on investment income far below the top 35% rate for top income earners, his own tax plan as president maintains the status quo.

In 2010, fellow multimillionaire opponents Newt Gingrich and Barack Obama paid 31% and 26%, respectively.
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