So, yesterday was the day that Republican Presidential hopeful Mitt Romney released his 2010 tax returns. Sure, this sort of thing isn’t a requirement, but it’s one of those things that you do as a candidate, because it’s an indication of trust and openness (“hey, I have nothing to hide!”) and because it gives voters a bit more context about you as a person – lifestyle is, to a large extent, commensurate with income; and it also gives a sense of what you value, via charitable contributions.

Of course, Romney, through his initial reluctance to take part in this rite of electoral passage, has made this a bigger deal than usual. And, you know, it might be, especially given the importance of the economy and class in today’s political climate.

Romney made around $21 million in 2010, virtually all of that from capital gains; that is, dividends on investments. What that means is that although he “made” $21 million, he already had a much larger pile of money sittting there doing nothing but earning interest and dividends. Mitt’s effective tax rate was around 13%.

For comparison, my effective tax rate, based on a much lower income (according to this calculator, Romney made as much as I do in about a day and a half), which came mostly from wages (I made a little over a hundred bucks in dividends from a few stocks I own), was about 16%.

Now, I do pretty well for my community (according to recent statistics, I make a few pennies less than twice the average household income for my congressional district) and I have had the benefits of being able to write off mortgage and student loan interest, and can free up some coin for deductable charitable donations (though not as much as I’d like). This brings my effective tax rate down a bit from the base (last year, my marginal rate was 25%). A lot of people don’t have the means to take advantage of those benefits, many of which require at least some buy-in cost, such as a down payment on a house, which a lot of people simply can’t manage.

But the best kind of advantages go to people who get most of their income from investments and dividends – people like Romney and, say, Paris Hilton. My sixteen percent comes from taking deductions to the marginal tax rate, which is largely based on wages. Romney, had his income been based on wages, would have started at the top bracket of 37% for the bulk of his income, but he really didn’t – the maximum rate for capital gains income in 2010 was 15 percent, then he deducted things like mortgage interest (the guy has more than half a dozen houses) and charitable deductions from his income to get to his even lower actual rate.

I can barely get my mind around the idea of having a net worth of around $20 million; having a net worth so high that your investments can earn that much in a year (especially given the fact that interest rates are so low right now) is a concept beyond my ability to grok. For people at that level, I imagine money ceases to exist as a concept; if Mitt Romney wants something – anything – I’m pretty sure he can just have his people go get it; I have a hard time believing that even the most imaginative, high-maintenance “only the best” person there is would be able to come up with a way to seriously dent that kind of treasure horde. There’s no way that a person with the wealth of Mitt Romney could possibly understand the economic realities of someone like me, let alone someone who’s skating across the poverty line, any more than either of us can really understand his.

But, that’s not really my point. What I really don’t get is some of the stuff I see from my more conservative acquantences on social networking services, immediately leaping in defense to assert the reasonableness of Romney’s tax burden, since so many lower income people (allegedly 47%) “don’t pay taxes at all”.

First of all, the “don’t pay taxes” is flatly wrong; they may not pay “income tax”, but they pay a much greater percentage of their total income to all those other taxes, of which I provide a few examples below:

• the Romney household pays pretty much the same for a gallon of milk in Boston as you would (probably less, as his accountant has probably found a way to deduct the cost of the milk as a business expense) – who do you think feels the 6.25% sales tax that Massachussetts charges more, him or you?
• Romney’s driver pays the same for a gallon of gas as you do at the pump – who feels the cost of the 18.4¢/gallon federal excise tax more?
• Assuming Romney drew a paycheck, he’d pay the same roughly seven percent on Social Security and Medicare. You and I can’t help but see it when when we see all those deductions on our pay stub – would he even notice?

So yeah, even if your income is low enough, or you’re able to claim enough deductions that you effectively pay “no taxes” on income, you’re still hit with all these other taxes; taxes that tend to have a greater impact on people with lower income than on the wealthy.

Yet, people who are truly struggling continue to vote for candidates whose policies continue to reduce the relative burden on the wealthy while increasing it for the rest of us. Why? I think it’s two different things (and a lot of this I swipe liberally from Thomas Frank’s wonderful and insightful book What’s The Matter With Kansas?):

• By paying lip service to (but never actually doing anything about) conservative “values” issues like restricting abortion and gay rights, these candidates are able to shift anger away from economic inequality and toward “liberal elites” who supposedly look down on “Real Americans™”
• Through clever use of salesmanship and the media, politicians who either are, or are backed by wealthy interests, have convinced the low income that although they may not be rich now, they might be someday. This ties in with refrains of “hard work and integrity” and the whole “prosperity gospel” business. It also plays on the common fantasy that playing the lottery is a sound investment strategy.

Here’s the thing: it doesn’t really work that way, at least not when the burden of taxation is getting pushed farther onto the lower and middle classes and off of the upper classes through things like capital gains tax cuts. Conservative economic policy, which was sold by virtue of claiming it would create jobs by spurring investment and business expansion, really hasn’t – it’s kind of stacked the deck in favor of people who already have money getting more, and shifting more of the tax burden to the middle class.

That statement, as well as all of this, really, is a gross simplification, but it’s kind of the way it’s working right now. And I wish more people could see that.

In any case, my point, and I really think I did have one when I started this piece, is that people who are looking to cut Romney slack for paying a “reasonable” amount of taxes (as compared to the rest of us) really need to look a little closer at the way the system works in terms of the way the relative tax burden is distributed, and understand that it’s not in Romney’s best personal interest to change things very much, and that he (or the eventual Republican nominee*, who will, to one degree or another, be of the same economic ilk) will spend a lot of time trying to deflect voters’ attention away from that fact in order to improve their bottom line to the detriment of yours and mine.

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* – yes, yes, “Democrats are the same”, “bought and sold to corporate interests”, etc etc. I know. Nothing’s perfect. Obama could be more progressive economically and otherwise. But then, as they say, the perfect is the enemy of the good, an I’ll wager that the candidate who didn’t grow up as the scion to the fortune that the AMC Gremlin built has a better understanding of how the middle class lives, and will at least factor that understanding in their consideration of economic issues.