Time to move past the Romney tax debate

Mitt Romney last week proved his suspicions were correct and his harshest critics were wrong.

The Republican nominee for president released his income tax returns for 2011 at the same time he was in Las Vegas for a fundraiser and rally. The unfounded assertion of Senate Majority Leader Harry Reid, D-Nev., that Mr. Romney paid no income taxes was false. Mr. Romney and his wife paid nearly $2 million in taxes on investment income of $13.7 million, an effective rate of 14.1 percent. Their tax bill could have been smaller, but they claimed deductions on just $2.25 million of their $4.021 million in charitable contributions.

Of course, the new financial data were not enough for Sen. Reid and others, who demanded that Mr. Romney release returns beyond the past two years. Mr. Romney has refused, saying no pile of tax records would be large enough to satisfy those who are working to defeat him in November’s election. He’s right.

That’s because Mr. Romney is the perfect punching bag in the Democratic Party’s tax-policy campaign of misdirection. Mr. Romney is being hammered as someone who doesn’t pay his “fair share” of taxes. He pays a lower rate because his income is largely from capital gains, which is taxed at a lower rate than traditional, work-derived income. Democrats cynically claim this constitutes a kind of loophole for the super-rich, and that closing it will benefit the middle class.

In fact, it’s no loophole – it’s a lower rate by design. Now more than ever, the United States needs a tax climate that rewards those who are willing to risk their post-tax capital by investing in American businesses. If we give individuals and institutions less incentive to take those risks, we limit job creation and prevent income from rising.

It’s time to move on from the distraction surrounding Mr. Romney’s taxes and focus on policies that will help the U.S. economy grow. Hammering the investor class sure won’t.