The big news from the campaign trail today is a number: Mitt Romney's "effective" tax rate. At an event in South Carolina yesterday, Mitt finally conceded (after weeks of probing) that he pays "probably closer to the 15 per cent rate than anything", putting him firmly in the 1 per cent, and firmly in the sights of people who want to change the tax system.
Mitt's rate is so low because most of his income is from capital gains, which is taxed more generously than other income. A Republican Congress cut the rate from 28 to 20 per cent in 1997, then to 15 per cent in 2001. Thus, the US has a fairly progressive employment tax system, where people pay more as they earn more, but a regressive effective one, where private equity windfalls and stock market profits get special treatment.
Warren Buffett, the legendary "Sage of Omaha", has famously called it iniquitous that he pays less tax, in percentage terms, than his secretary, or, as he wrote in the New York Times last year, the "other 20 people in our office" (whose rates range from 33 to 41 per cent). Barack Obama has tried to promote a "Buffett Rule" - a minimum tax rate for those earning more than $1 million a year. But both have gained little traction outside the progressive press, and the Occupy Wall Street protests. The question now is whether Romney's number will add any grist to the debate.
Commentators yesterday speculated on the timing of Romney's words. The conventional wisdom is that it is better for him to talk about his finances now, while he is doing well in the polls, and the real election is still months away. But it's also possible the admission will plant a seed that will grow and grow under careful cultivation from the Democrats, and sections of the media. Obama is already planning to make inequality a main focus of his rhetoric, hoping to channel some some of the OWS anger. An opponent who pays less tax than most of the population could be a perfect foil.
Ben Schiller is a freelance journalist based in New York.