Why Mitt Romney's Money Matters

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Does anybody care that Mitt Romney is rich? Or is the real meaning of Mitt's money that it heightens and focuses the debate over taxes, inequality, and shared sacrifice in America?

615 mitt romney sky reuters.jpgReuters

Here's a theory. Americans don't care that Mitt Romney is rich.

Maybe it's hard to consider Mitt's money irrelevant with so many people writing and reading about it. On Wednesday morning, the New York Times and Washington Post both led with the news that Romney's overall tax rate was 15%. Later the same day, news spread that he's got money stocked away in the Cayman Islands. And then there's the tidbit that he's given millions of dollars to the Mormon Church in both personal donations and through his family charity.

This is all salacious stuff in a meager news cycle, but when the thrill of the new fades, we'll all  come to terms with the fact that voters really don't care about money, and they never have. The fact that John Kerry married into a billion-dollar fortune didn't stop 59 million people from showing up at the polls in 2004. The fact that the Bushes have a small family fortune and vacation spot in Kennebuckport didn't stop Bush 41 and Bush 43 from receiving 200 million votes over four elections between 1988 and 2004. The fact that Ross Perot was a mega-millionaire didn't prevent him from getting 19 million votes as an independent. If American voters objected to wealth, there would be no elections. Casting ballots for millionaires is a cherished quadrennial tradition.

Mitt Romney isn't merely rich, you might point out. He is really, really rich. But so what? The most admired men in America are already millionaires or better. In a recent Gallup poll the top five most-admired were: Barack Obama (millionaire), George W. Bush (millionaire), Bill Clinton (millionaire), Rev. Billy Graham (millionaire), and Warren Buffett (billionaire).

America's relationship to Warren Buffett's wealth and politics proves that liberals are always ready to embrace the rich, provided they're liberal. Last August, Buffett, the world's third-richest person, urged Congress to raise taxes on millionaires. The left hailed him for being a brave and outspoken champion of the progressive tax code. When Mitt Romney, who would be one of the richest presidents in U.S. history, put out a proposal that amounted to the Bush tax cuts on steroids, liberals attacked him. Buffett and Romney's wealth isn't the issue. The bottom line -- the only line -- is this: Buffett agrees with the left, and Romney doesn't.

THE QUESTION THAT MATTERS

If voters don't care, then why does Mitt's money matter? The easiest answer is that his net worth matters politically, because it can be weaponized for partisan gain by Democrats to excite other Democrats. Another easy answer is that Mitt's money shouldn't matter at all, period.

But maybe Romney's money matters, not for the net worth tag, but for the way it casts into relief some profound questions about wealth, taxation, and welfare in America. It gives a face and a heightened awareness to the debate that was already churning in election 2012.

Romney pays an effective federal tax rate of 15%. Is that appropriate? Maybe you think there are acceptable reasons to want investment income taxed at a lower percentage. The way I see it, a millionaire being taxed the same effective federal rate as a family making between $50,000 an $75,000 is a fixable failure of progressive tax policy. Either way, Romney's money forces that debate, especially since he's proposed extending the Bush tax cuts for the rich while letting the Obama tax cuts for the low-income expire.

Here's another. Several Republican candidates, and conservative writers like James Pethokoukis, think we should slash investment taxes. That would bring Mitt Romney's effective tax rate to zero -- the same as a family in deep poverty. Is that appropriate? Maybe it's really important for you to encourage investment. The way I see it, a dollar we deprive the Treasury is a dollar we have to cut from public services (likely to impact the poor) or raise in other taxes (likely to impact the poorer), making it really irresponsible to cut investment taxes while reducing help for the middle class. Still, Romney's money focuses that debate.

Will a large swath of the public vote for or against Mitt Romney based on the fact that he's worth more than $200 million? I don't think so. That's not what matters. But does Romney's wealth make it harder for him to make the case for conservatism and lower taxes? I don't know the answer. But I think that's the question that matters.

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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