January 31, 2012 in Opinion

Romney should be proud

It’s as predictable as vultures at a carcass. When a wealthy Republican is running for office, the press will make his wealth a handicap. Recall that when George H.W. Bush was running in 1988, he was derided as a “preppy.” George W. Bush was the undeserving scion of the ruling class. We were told never mind that he had succeeded in business on his own. Though John McCain had been a fixture on the national stage since 1980, no one had paid much attention to his wealth until he was the Republican nominee, at which point his many houses suddenly became a matter of profound national importance.

Democrats, of course, are permitted to be rich without fear of undue scrutiny. John F. Kennedy was wealthier than Mitt Romney, or would have been had he lived to collect his inheritance. Lyndon B. Johnson was born poor and died very rich. He didn’t earn his money in the private sector. He used political influence to first purchase and then maintain monopolistic radio licenses in his wife’s name.

There wasn’t much fuss about John Kerry’s great wealth in 2004. Kerry didn’t earn his fortune either but secured it through two advantageous marriages. Teresa Heinz Kerry is rumored to be in the billionaires’ club. Good for her. Though, she didn’t earn it either, but rather married the heir of the ketchup fortune. John Kerry was an advocate of raising taxes on the rich, but he, like Warren Buffett, declined to contribute more than required to Uncle Sam. In fact, he was caught mooring his yacht in Rhode Island so as to avoid Massachusetts’ taxes. Oh, and before he married Teresa Heinz, there were a number of years when Sen. Kerry donated nothing at all to charity.

Now it’s Romney’s turn, thanks not just to the press but to Newt Gingrich, who gleefully mouths every left-wing gibe that proves handy. In Florida, he disparaged Romney as a Swiss-bank-account-holding, “automatic $20 million a year” guy. Gingrich, who earned his own not inconsiderable fortune (Tiffany’s account anyone?) by selling influence, is joined in his dismay at Romney’s larger fortune by other exceedingly wealthy men. NBC’s Brian Williams (annual salary: $13 million) shared the news about Romney’s tax returns this way: “He did it to help stop the questions about his wealth, but in releasing his taxes, he reveals what most Americans will regard as unimaginable wealth. …”

Oh, “unimaginable wealth” – how shocking. The amount that Brian Williams contributes to charity is not public knowledge. But Newt Gingrich’s contributions are available. Though his adjusted gross income was $3.1 million in 2010 (is that “imaginable wealth”?), Gingrich donated only $81,133 to charity, or 2.6 percent of his income – below the average rate for his income group.

Gingrich and the liberals seem to think that paying taxes is “patriotism” – to quote Vice President Joe Biden, who gave a whopping $368 annually to charity in the decade before 2008. By their own standard, their patriotism is a little rusty. Treasury Secretary Tim Geithner was only the most prominent – but far from the only – Obama appointee to acknowledge that he hadn’t paid the taxes he owed. And the IRS recently announced that 36 members of President Barack Obama’s executive office staff owe the government $833,970 in back taxes.

Conservatives think people should obey the law, and that includes paying taxes. But we don’t worship the state or its “Greedy Hand” (see Amity Shlaes).

Far from being embarrassed about his wealth, Romney has every reason to be “unimaginably” proud. He didn’t inherit his money (he gave away his inheritance), and he didn’t earn it by parlaying his government post into contracts for services as a “historian.” He earned every penny through his own talents in the private sector. He then paid all the taxes he was required to pay.

Beyond that, Romney’s tax returns reveal the most generous charitable donor in recent history. The Romneys donated about 14 percent to charity in 2010 and about 19 percent in 2011. The average donation for people at the Romneys’ level of income is 6 percent.

Would Romney’s money have done more good if he’d forked those extra millions to the IRS rather than to the Mormon Church and the other charities they selected? Well, that would certainly have provided a few more bucks for Solyndra and the urgently necessary high-speed rail stretch from Fresno to Bakersfield. But, on balance, private charities are probably a better bet for improving the world.

You’d think Gingrich would understand that.

Mona Charen is a columnist for Creators Syndicate.

69 comments on this story so far. Add yours!

Dazzeetrader11 on January 31 at 12:29 a.m.
Oh Mona…do you forget that Newt paid 31% in taxes?
She leaves out the key things in her tirade against money and millionaires. I wonder how much she’s paid in taxes or given in charity money. Truth is..none it matters…it’s a tirade against people who do well financially in life.even John Kerry who marrie dmoney twice. I wonder why she left out the Kennedys or Joh Edwards!!!….Just a fluke I suppose…
Arch_Druid on January 31 at 2:11 a.m.
GW was presented as the guy who failed in his business ventures.
And from what I glanced at, seems Charen was prepared to defend wealth, as long as it has an R after its name.
Jim9876 on January 31 at 5:08 a.m.
I like the idea of a politician having money of his or her own. They are less susceptible to bribes, or at least they were before getting elected became so expensive that even billionaires have to ask for money to buy campaign ads.
gmorton on January 31 at 7:38 a.m.
Mona misses the thread of consistency in the apparent hypocrisy she outlines.
Of course lefties disparage wealth actually earned in the free market, while ignoring wealth gained by marriage, inheritance, or peddling political influence. After all, the first two are just dumb luck, and no one begrudges someone else’s good luck. And the influence peddlers, well, they’re pols – “public servants” who have invested their energies in improving the public welfare. They *should* be rewarded for their selfless devotion to the good of the collective. Think of all those delicious free lunches they’ve handed out!
But the Romney types, who actually earned their money in a successful private business, are mere capitalist pigs who have concerned themselves with nothing but their own prosperity, which they’ve attained by exploiting workers, the poor, and the downtrodden. Off with their heads!
johnclarke on January 31 at 8:09 a.m.
I think the issue is the guy pays 15% in taxes. The “righties” stack the deck to favor “investors” who “create jobs” which we all know is complete nonsense. I don’t really care how Romney earned his money, I just care that he is paying a lower tax rate than me. Before all the “righty” hyberbole starts, it does not matter that “investment dollars are already taxed”. That is a stupid argument. Investment takes NO WORK and in fact, Mr Romney does less than no work, because it’s in a blind trust. He should pay the same tax rate as the people that go to work.
“Of course lefties disparage wealth actually earned in the free market, while ignoring wealth gained by marriage, inheritance, or peddling political influence”
Um, ghypocrite I don’t see “lefties” attacking Romney, I see his own party attacking him most often. Beside, who is against wealth? Wealth is good stuff.
MatthewRoot on January 31 at 9:19 a.m.
“I think the issue is the guy pays 15% in taxes.” Yes, johnclarke, that is the point, which Mona misses entirely in selective use of facts and demonizing of Democratic politicians. (Of course there is more vacuous stereotyping from gmorton as he rails against “lefties.”)
The point is that capital gains are not always double taxed, and the capital gains that I have received have never been double taxed, especially the gains I made in venture capital.
For example, in the mid-1980s, I invested venture capital in a start-up biotech company called Amgen. As part of that, I received stock options at $19/share. Several years later as Amgen successfully brought their products to market and there was a bubble in biotech company stock, the stock was over $120/share. I exercised those options and sold the stock within minutes for over a 500 percent profit.
Those capital gains were in stock price, not from company profits, and were taxed only once when I exercised my options (Amgen was not even profitable at that time and would have paid no corporate income tax).
I don’t care if Mr. Romney makes $20 million/year – good for him, none of my business. But when Mr. Romney advocates increased defense spending with my tax dollars, the capital gains rate is my business.
As Gary Crooks argued last week, an increase to 20 percent is modest, and just might go a little way toward paying down the huge National Debt and help pay the increase in spending for the military and veterans. If Mr. Romney wants to increase spending, he should be willing to pay for it.
(The so-called “decreases” in military spending are not actual decreases, but simply smaller increases than originally planned).
MatthewRoot on January 31 at 9:21 a.m.
Hey Arch_Druid, you are correct about G W Bush. The only time he made money in business was when he was bailed out with tax dollars.
jane on January 31 at 9:32 a.m.
Romney is just a Mexican born capitalist, ant-american that will get into office to raise taxes on everyone before he confiscates your guns and makes you all have more than one wife and steals an additional 10% of your income to give to his church. It is true, I read it on the internet.
johnclarke on January 31 at 10:16 a.m.
The other thing I just love about “righties” is how they are better human beings because they “give so much to charity”. There is no none nada zip evidence that conservatives somehow give more to charity than anyone else. Also, I notice that they all take the deductions; so rather than allowing that money to go to the government, Romney’s goes to the Mormon Church. Gee, he is so much better than me because he is supporting a cult rather than paying his fair share.
Dazzeetrader11 on January 31 at 10:26 a.m.
It’s fashionable to hate/ hold in disdain people R or D who make a lot of money. Envy along financial lines is where Mona has settled…sorta like the Occupy folks. DIsmal .
Jim..above points out an interesting thing. Find someone who is already independent…like OBama???
Jane and he did produced a birth certificate!!! Clarkie…LDS faith isn’t a cult. Let’s not muddy the waters up with an antireligion sentiment. YOU take all your deductions too don’t you Clarkie?
It’s not the tax rate that should trouble anyone. It’s the volume of tax dollars someone pays. Romney pays more in dollars ( 3 million plus) than most. He donated over 10% of his money ( unlike Obama and Biden). SO what’s the problem??
Dazzeetrader11 on January 31 at 10:30 a.m.
Much more worrisome is the following article. A vote for Obama is a vote against …well America’s solvency. I don’t know about 30% but they’re already on the way up. It’ll be a lot.
http://cnsnews.com/news/article/cbo-taxes-will-shoot-more-30-percent-over-next-2-years
johnclarke on January 31 at 10:40 a.m.
Oh, great the gang’s all here. Yes Daisy, it’s a CULT.
Great article by the way.
“As a percentage of GDP, according to CBO, federal tax revenues were 15.4 percent in fiscal 2011, and will be 16.3 percent in 2012, 18.8 percent in 2013, and 20.0 percent in fiscal 2014.”
So in other words, when the disaster known as the Bush Tax Cuts finally expire, the country will start to balance it’s budget and return to historically successful tax rates. Why would that worry you Daisy? Because you live in opposite world ?
MatthewRoot on January 31 at 10:46 a.m.
President Obama donated 14.2 percent of his income to charity last year - that is the fact, his tax return is available for inspection.
misjustice on January 31 at 11:01 a.m.
@ Jane, your post made me smirk…I wanna see Mitt Robme’s birth certificate! I doubt that he is a “natural born” citizen, since his father is a Mexican.
; )
Meanwhile, the Democratic Party doesn’t have to do a thing (at this point) to disparage the Republican’t candidates; they are doing a great job eating their own.
I am hoping that none of the candidates gets a majority of delegates during the primary process, forcing the Republican’t Party to have a “brokered” convention….fight on Robme and Getrich, fight on! The longer the process drags out, the lower the approval rating of the party sinks!
; )
gmorton on January 31 at 11:19 a.m.
MatthewRoor wrote,
“The point is that capital gains are not always double taxed . . .”
As far ask I can recall, no one has argued that capital gains are double-taxed. Dividends are double-taxed, when corporate income is also taxed.
MatthewRoot on January 31 at 11:28 a.m.
With Mr Romney, the discussion has always been about capital gains. So let’s just stick with the topic.
gmorton on January 31 at 11:58 a.m.
MatthewRoot wrote,
“With Mr Romney, the discussion has always been about capital gains. So let’s just stick with the topic.”
And no one has alleged “double taxation” in connection with that topic (except you).
mikeln on January 31 at 12:04 p.m.
All the money in the world won’t buy you lunch if we keep going the way we are going. No one is worth the kind of money some of these people think they are. The more these kind of people take and hide the less there is for the rest of us to pay the bills with. We can’t fix the problems we have with money, just isn’t going to happen. We had better come together and decide what is more important, food, water, shelter and energy or these peoples personnel fortunes, which do nothing for the bulk of the people.
johnclarke on January 31 at 12:10 p.m.
omg, gmorton. I think everyone knows the standard line from “righties” is invested money is already “taxed once” so therefore we have this special tax rate of 15% for these poor overtaxed people.
Once and for all - the concept that taxes are “paid twice” when a corporation makes money is more of your typical nonsense. In order for that to even make sense, corporations would actually have to pay those taxes. Not just complain and talk about it, but actually do it. I am SO tired of hearing about the “highest corporate tax rates in the world.” The tax rates could be one zillion percent or .05%, but if the taxes are never collected who cares?
Our “righty” leadership have done an excellent job stacking the deck so their corporate masters can avoid paying. Yes, some corporations pay taxes. Yes, Romney pays taxes. The topic is they don’t pay enough.
gmorton on January 31 at 12:30 p.m.
mikeln wrote,
“The more these kind of people take and hide the less there is for the rest of us to pay the bills with.”
Er, mike, Mr Romney has not “taken” anyone’s money. He has *earned* it, i.e., each dollar was freely given to him by someone for whom he performed a service, and who thought that service was worth what they were paying for it.
Government “takes” your money, by force. Businessmen don’t.
And, no, that Romney made millions does not mean you have less money with which to pay your bills. If Romney had not created that wealth it would not exist; it would not affect your circumstances in the least. If you need more money to pay your bills, *you* have to earn more, by providing a product or service others deem valuable and for which they are willing to pay you.
Wealth is not manna from heaven, mike. It does not appear by magic, and there is no fixed quantity of it to “distribute.” It is distributed as it is produced, to those who produced it.
gmorton on January 31 at 12:38 p.m.
johnclarke wrote,
“I think everyone knows the standard line from ‘righties is invested money is already ‘taxed once’ so therefore we have this special tax rate of 15% for these poor overtaxed people.”
No, John. That is not a “standard line from righties.” I know of no “righty” (or anyone else, except Matthew) who has claimed it.
Dividends (not capital gains) are double-taxed. The “special rate” for capital gains is rationalized on the grounds that it “encourages investment,” not on the grounds that it is “double-taxed.”
There should be no special rate for capital gains, or credits/deductions for interest, health insurance, “green energy,” or any other loophole. Those all represent political payoffs to various interest groups or gummint efforts to manipulate the economy.
johnclarke on January 31 at 12:53 p.m.
Are you aware of this “righty” ?
http://www.rawstory.com/rawreplay/2011/09/paul-ryan-accuses-of-obama-of-class-warfare-over-millionaire-tax/
Seriously gmorton, don’t act like one of the oldest myths of the right has escaped your hawk-like gaze.
Ok then gmorton, it’s nice to see you support eliminating the tax break for capital gains. We agree on something.
Dazzeetrader11 on January 31 at 12:56 p.m.
From what I can tell, Clarkie thinks a major elevation in taxes is a good thing. Listen up…those Bush tax cuts were across the board..not just for the wealthy Mr Duncecap.
When they go away, YOU will be paying a lot more too. Everyone will…so Obama can expand the government…?
Likely…but I’d like to know where all the savings from his prematured ending of the Iraq war is going?? Trillions……..where are those saving going? Nobody wants to say…it’s hidden just like Obama likes it.
What the writer and the lefties are criticizing is wealthy…right or left…just wealthy. Want to extract more money from the wealthy? It doesn’t matter if they paid 100% in tax. That would only raise enough money to operate the government for 4 days.
Remeber…the Government is spending at a record pace. Millionaires combined are now paying $ 545 Billion . Tax at 100% would yield $1.2 trillion but stop the country in its tracks.. Obama needs an extra $1.7 trillion to manage his expanding debt ( $16.3 trillion at the end of Feb)
Whining about wealthy people tax stucture is just a political tool to get oBama to distract you from reality. DO the math…he’s sinking the country …I think deliberately …too much debt = a takeover to help you…. right?
Oh and the re-analysis of the unemployment rates by CBO clearly shows it’s still 10%. Lies are good until you get caught. Tell Obama.
WillyPeter on January 31 at 1:11 p.m.
Mathew, What military are you talking about?
The defense budget was cut $460 billion in August 2011.The super committee’s inaction and consequential sequester cuts almost $800 billion more.
Not actual decreases?
johnclarke on January 31 at 1:56 p.m.
Dividends (not capital gains) are double-taxed. The “special rate” for capital gains is rationalized on the grounds that it “encourages investment,” not on the grounds that it is “double-taxed.”
Oopsy, snuck that one by me. No g, they are not. They are profit to the stockholder, and should be taxed at the normal rate. Just like capital gains.
MatthewRoot on January 31 at 2:13 p.m.
Gary Crooks wrote in his last editorial, “Ordinary people. Pretty tired of the “double tax” excuse for why capital gains deserve a lower rate.”
I referred to his editorial, as I mentioned in the original post. There are many references to capital gains taxes as double taxation. If you are unaware of those, that is not my problem.
I have no interest in playing your little straw man and word games, gmorton. But glad to see you support an increase in the capital gains tax.
WillyPeter, I think that was a $460 billion decrease over the next ten years, a decrease from the previously projected increase (not sure about the exact numbers, but I will check). There sure as heck was no $460 billion dollar decrease in 2011, that is for sure.
johnclarke on January 31 at 2:18 p.m.
What the hell is the mystery anyway? Taxes need to go back to 20-21% vs. GDP. Every economist knows it and agrees with it. The Republicans would love us all to think there is some magic to all this, but really they are just laughing in our faces. They cut taxes for themselves and yes, Warren Buffett. The fun is now over, and it’s time for the rich to pay the same rates as everyone else.
MatthewRoot on January 31 at 2:44 p.m.
“As far ask I can recall, no one has argued that capital gains are double-taxed.” gmorton
Guess your recollection is fairly limited. But your lack of recollection does not negate anything that I, or Gary Crooks, wrote.
“Capital gains and dividend taxes amount to a double-taxation on individuals who choose to invest.” John Huntsman, Republican Presidential Candidate
“One other peculiar aspect of the capital gains tax has made many economists conclude that it is economically inefficient: it is a form of double taxation” “Capital Gains Taxes” by Stephen Moore
“This double taxation causes capital gains tax rates to exceed ordinary income tax rates.” The Heritage Foundation
There are hundreds (or thousands) more, but a single instance demonstrates the point.
johnclarke on January 31 at 3:20 p.m.
MatthewRoot on January 31 at 2:44 p.m.
oh, snap.
Dazzeetrader11 on January 31 at 3:56 p.m.
http://www.zerohedge.com/news/latest-congressional-budget-outlook-2012-2022-released
WHS on January 31 at 4:03 p.m.
johnclarke on January 31 at 3:20 p.m.
MatthewRoot on January 31 at 2:44 p.m.
oh, snap.
oh, double snap.
greenlibertarian on January 31 at 4:29 p.m.
Conservatives think people should obey the law, and that includes paying taxes.
Someone should introduce Moana to the most popular conservative in northern Idaho, tax scofflaw Phil Hart.
One can see from the desperation of Moana’s arguments the right-bleaters are getting rather frightened, as well they should. They’ve got nothing but junk so sell.
GWB failed in every business proposition he tried, even with the all the connections in the world, he couldn’t make money in the oil biz in Texas nor in the Middle East! Fail!
GWB only made money after conning the taxpayers into building new luxury box laden stadium for the Texas Rangers, then GWB used quasi eminent domain proceedings to confiscate properties near the stadium for pennies on the dollars to the original owners and changing big bucks for the new “redeveloped” properties.
Quite the scam on the taxpayers if you can get it.
detroitdude on January 31 at 5:08 p.m.
I just read the article and wonder why Charen is paying any mind to these retards in the very first place…
Of course they’re rich! Of course they’re white! Of course they promote failed economic theory! Of course they support all the wrong sh*t in America today!
Yet, you keep writing about them, paying them mind when they deserve none.
detroitdude on January 31 at 5:13 p.m.
“Listen up…those Bush tax cuts were across the board..not just for the wealthy Mr Duncecap.
When they go away, YOU will be paying a lot more too. Everyone will…”
Yup, you are right. The people making a huge stink about “unfair taxes” make exponentially more than I do. I don’t mind a tax hike, so wtf is their problem?
greenlibertarian on January 31 at 6:07 p.m.
Taxes need to be raised in the fashion of how Reagan did it.
Close a bunch of loopholes.
Keep the 10% bracket and expand it slightly downward.
Rest of the rates, for EVERYONE, go back to the Clinton levels.
Capital Gains rate back to 20%, minimum, with lower brackets exempted.
Spending must also be held to close to 20% GDP.
SMARTGUY on January 31 at 6:23 p.m.
Is there any such thing as a poor republican candidate, just saying…
gmorton on January 31 at 6:34 p.m.
johnclarke wrote,
“Are you aware of this ‘righty’”?
MatthewRoot wrote,
“’Capital gains and dividend taxes amount to a double-taxation on individuals who choose to invest.’ John Huntsman, Republican Presidential Candidate.”
You both got me on that one. I was not aware anyone had made such a silly claim.
There is no “double taxation” on capital gains, i.e., appreciation in the value of an asset. The increase in value is new money not previously taxed. There *is* a double taxation on dividends, since the corporation paying them has already paid income tax on the same money.
The problem may be that sometimes the term “capital gains” is used to refer to any investment income, not just dividends.
http://www.investopedia.com/terms/c/capitalgain.asp#axzz1l5rIze3D
Two points for each of you.
gmorton on January 31 at 6:40 p.m.
Ooops, ” …sometimes the term ‘capital gains’ is used to refer to any investment income, not just dividends” should have ended with, “not just appreciation gains.”
MatthewRoot on January 31 at 6:41 p.m.
I use “capital gains” as the way defined by the IRS
JBlim on January 31 at 6:42 p.m.
Yeah, we’re all so proud of you, Mitt. He’ll apparently tell us anything to get elected. He must not think much of us.
johnclarke on January 31 at 7:12 p.m.
well well, unsnap.
Everything you buy, you are using funds that have been “taxed once” .You continue to pay many forms of taxes on both new and used goods.
This concept of taxing capital gains of any form at 15% is simply class warfare. Thems that have vs. thems that pay their fair share - like me.
gmorton on January 31 at 9:34 p.m.
johnclarke wrote,
“Everything you buy, you are using funds that have been ‘taxed once’”
But not the same tax on the same money by the same jurisdiction on the same taxpayer. *A tax on a corporation is a tax on its owners*, they being one and the same.
JBlim on January 31 at 10:22 p.m.
gmorton says: “A tax on a corporation is a tax on its owners*, they being one and the same.”
No, gmorton. A corporation and its owners are separate entities. For example, the shareholders are not responsible for the corporation’s liabilities.
Arch_Druid on January 31 at 11:36 p.m.
Thanks, jblim, since I happen to be a shareholder in the national chain company that I work for. In effect, “part owner.”
I tend to skip over GMorton’s same ol’ same ol’ posts when his arguments become highly ignorant.
CougarGold on February 01 at 8:20 a.m.
JBlim -
No, gmorton. A corporation and its owners are separate entities. For example, the shareholders are not responsible for the corporation’s liabilities.”
That’s not entirely correct; only in the case of publicly traded C-Corps where you purchase stock in the open market is this true. In the vase majority of small to medium sized businesses that retain C-Class, the owners are also generally personally liable for the corporation’s debts. It’s also true of S-Corps but the company itself isn’t liable for income taxes and the owners have to pay at personal income rates.
Much of the confusion here is in mixing true capital gains such as buying a stock (or a house, whatever) for X and selling for Y with the difference being a capital gain. Corporate dividends are a distribution of previously taxed profits or a return of capital, if not funded by profits, that may not be subject to capital gains tax. The bottom line is we have a very convoluted and confusing tax code that is screaming for simplification, including the elimination of most, if not all, exemptions.
MatthewRoot on February 01 at 8:32 a.m.
CougarGold, I agree with your general statements about the tax code.
re: personal liability” “It’s also true of S-Corps”
As the owner and President of an S-Corp, I can say that is not true. I have a very limited personal liability in the decisions I make as a the president of an S-Corporation and have no liability in corporate debt (though the corporation has no debt or outstanding liabilities).
gmorton on February 01 at 8:40 a.m.
JBlim wrote,
” … the shareholders are not responsible for the corporation’s liabilities.”
Yes they are, JB, to the extent of their investments. Also see Cougar’s comment.
CougarGold on February 01 at 1:07 p.m.
MatthewRoot:
“re: personal liability” “It’s also true of S-Corps”
As the owner and President of an S-Corp, I can say that is not true. I have a very limited personal liability in the decisions I make as a the president of an S-Corporation and have no liability in corporate debt (though the corporation has no debt or outstanding liabilities).”
You’re lucky, then. As a former owner and CEO of a S-Corp. I did, and still carry liability. I no longer have the debt liability as there no longer is any debt but before we sold, I definitely had debt and personal liability through personal guarantees to both banks and vendors. As we sold through an asset sale, I also carried product liability for three years after the extinction of the transition company we set up to sell the assets. While the S.O.L. has theoretically run out on the product liability, if something were to go wrong, I wouldn’t be at all surprised if I were personally named in a lawsuit. Doesn’t mean I wouldn’t prevail, base on WA law with the S.O.L. but I’d still have to defend myself.
JBlim on February 01 at 6:06 p.m.
gmorton says “Yes they are, JB, to the extent of their investments. Also see Cougar’s comment.”
No, gmorton, that is utter nonsense. Why do you pretend to be an expert on things you know absolutely nothing about?
gmorton on February 01 at 6:38 p.m.
JBlim wrote,
“No, gmorton, that is utter nonsense.”
Heh.
Really? Perhaps you can explain how it is in error.
JBlim on February 01 at 6:46 p.m.
Shareholders are not responsible for the debts of a corporation. Period.
gmorton on February 01 at 7:17 p.m.
JBlim wrote,
“Shareholders are not responsible for the debts of a corporation. Period.”
“Limited liability is a concept whereby a person’s financial liability is limited to a fixed sum, most commonly the value of a person’s investment in a company or partnership with limited liability. If a company with limited liability is sued, then the plaintiffs are suing the company, not its owners or investors. A shareholder in a limited company is not personally liable for any of the debts of the company, other than for the value of their investment in that company.”
http://en.wikipedia.org/wiki/Limited_liability
If a limited liability company is sued and cannot pay the judgment from its capital reserves, it will be forced into bankruptcy, liquidated, and the proceeds distributed to the plaintiffs and creditors. Stockholders lose their investment.
“Before opening mouth, be sure brain is engaged.”
JBlim on February 01 at 7:54 p.m.
gmorton, you apparently can’t read either. You are confusing one’s investment in a company with liability for a corporation’s debts:
“Section 10.01 Generally
As a general rule, shareholders are not personally liable for the
debts of their corporations. Shlim v. CML, Inc., 112 Or App 597, 829 P2d 1012, review denied, 313 Or 627, 835 P2d 916 (1992); Carlson v. Crater Lake Lumber Co., 103 Or App 190 (1990), opinion adhered to and modified on reconsideration in part, 105 Or App 314, 804 P2d 511 (1991); Miller Lumber Corp. v. Miller, 225 Or 427, 357 P2d 503 (1961); Fields v. Synthetic Ropes, Inc., 215 A2d 427 (Del 1965).
Although it has not always been the case (See: Chapter One of this book), the limited liability of shareholders has been one of the
cornerstones of corporation law for more than a century. Today, ORS 60.151(1) continues this policy by limiting a shareholder’s liability to any unpaid consideration owed to the corporation for its shares.
Throughout history, creditors have tried to circumvent this strong policy. In doing so, they have urged courts to disregard the corporation and instead impose liability directly on its shareholders and on others who control the corporation.”
http://www.law7555.com/books/or_corp_law/Chap10ShareholderLiability.pdf
gmorton on February 01 at 8:44 p.m.
JBlim wrote,
“You are confusing one’s investment in a company with liability for a corporation’s debts . . .”
No, no confusion. The shareholder is liable to the extent of his investment.
” … you apparently can’t read either.”
You can’t read your own link: “Today, ORS 60.151(1) continues this policy by limiting a shareholder’s liability to any unpaid consideration owed to the corporation for its shares.”
Shareholders in a corporation have *limited* liability, the limit being the value of their shares. “Limited liability” does not mean “No liability.”
JBlim on February 01 at 9:27 p.m.
gmorton quotes “limiting a shareholder’s liability to any unpaid consideration owed to the corporation for its shares”
Well I assume that means what it says, that a shareholder is liable to the corporation he is a shareholder in to pay for shares he purchased.
But under your ridiculous interpretation you are saying than if I bought 100,000 shares of Ford Motors at $10 per share, and Ford didn’t pay a creditor for whatever reason, that creditor could sue and get a judgment against me PERSONALLY for $1,000,000? Really, gmorton? You actually think that?
gmorton on February 01 at 10:22 p.m.
JBlim wrote,
” … that creditor could sue and get a judgment against me PERSONALLY for $1,000,000?”
No. As I explained above, he would force the company into bankruptcy, liquidate it, pay off the creditors and the judgment, and you would lose your $1 million investment, or most of it. Moreover, if you had not yet actually paid for your stock, you’d be liable for any balance due the company on the agreed purchase price.
JBlim on February 01 at 10:37 p.m.
(Well, duh, you’d lose your whole investment if the company went broke. That’s a separate matter)
gmorton said “A tax on a corporation is a tax on its owners*, they being one and the same.”
You admit, then, after all this, that shareholders are not personally liable for corporate debts. As I said originally, a corporation and its owners are separate entities. Corporations and their owners (shareholders) are not one and the same. For example, the shareholders are not responsible for the corporation’s liabilities.
woamike on February 01 at 10:45 p.m.
JBlim,
Do you enjoy debating exactly how many fairies can dance on the head of pin? Spitting in the wind?
MatthewRoot on February 02 at 9:07 a.m.
“I definitely had debt and personal liability through personal guarantees to both banks and vendors.” CougarGold.
That is too bad. I have no such guarantees.
gmorton on February 02 at 10:27 a.m.
JBlim wrote,
“You admit, then, after all this, that shareholders are not personally liable for corporate debts.”
No, JB. I “admit” what I said above. Shareholders are not liable for a corporation’s debts beyond the value of their investments. Shareholders are *exposed* to liability to the extent they are invested in the company. As a shareholder you own a portion of the company’s assets. If those assets must be liquidated to pay a judgment, you lose your share.
” … you’d lose your whole investment if the company went broke. That’s a separate matter.”
No, it is not a separate matter, if the bankruptcy is forced by a judgment.
gmorton on February 02 at 10:45 a.m.
JUBlim wrote,
“Corporations and their owners (shareholders) are not one and the same. For example, the shareholders are not responsible for the corporation’s liabilities.”
Limited liability has no bearing on that question. Single individuals may form LLCs:
“Owners of an LLC are called members. Since most states do not restrict ownership, members may include individuals, corporations, other LLCs and foreign entities. There is no maximum number of members. Most states also permit ‘single member’ LLCs, those having only one owner.”
http://www.irs.gov/businesses/small/article/0,,id=98277,00.html
CougarGold on February 02 at 2:01 p.m.
matthewroot -
““I definitely had debt and personal liability through personal guarantees to both banks and vendors.” CougarGold.
That is too bad. I have no such guarantees.”
Different businesses, different circumstances. No longer the case for me as I’ve sold the business and the SOL has run out. However, like I mentioned, that wouldn’t stop someone from suing if something were to happen in the future. It only gives me a strong position from which to defend myself. As for it being too bad, I’m absolutely not complaining. It worked out well for me in the long run.
JBlim on February 02 at 5:37 p.m.
gmorton says: “Single individuals may form LLCs”
Why are you talking about limited liability companies all of a sudden? They aren’t corporations. You really are confused, gmorton. Give it up.
gmorton on February 02 at 8:54 p.m.
JBlim wrote,
“Why are you talking about limited liability companies all of a sudden?”
Because the limited liability laws apply in the same way to both.
JBlim on February 02 at 10:30 p.m.
But shareholders are not the same as corporations and members of LLC’s are not the same as LLC’s because LLC’s and corporations are liable for the entity’s debts and the shareholders or members of the entity aren’t. How can they be the same?
gmorton on February 03 at 8:28 a.m.
JBlim wrote,
“But shareholders are not the same as corporations and members of LLC’s are not the same as LLC’s because LLC’s and corporations are liable for the entity’s debts and the shareholders or members of the entity aren’t. How can they be the same?”
You’re having a very hard time with this, aren’t you?
They are liable for the corporation’s debts to the extent they are invested in the corporation (or LLC). The corporation (or LLC) is liable to the extent of its assets. Those assets are the property of the shareholders. The sum of the shareholders’ assets = the total assets of the corporation. The extent of liability of the corporation and the total liability of shareholders are one and the same.
JBlim on February 03 at 8:01 p.m.
gmorton says “They are liable for the corporation’s debts to the extent they are invested in the corporation (or LLC).”
No, shareholders are not “liable.” You can’t just make up new meanings for words. We are using standard English here. You are confusing investment “at risk” with legal liability. But don’t take my word for it:
“3. What are the Advantages of incorporation?
The most important advantage of incorporation is that it gives its stockholders limited liability. Since the corporation is a separate legal entity, its stockholders are protected from the debts and liabilities of the corporation.”
http://www.form-a-corp.com/form-a-corp_QA.php
“Advantages of forming a corporation
1. Owners have limited Liability. A corporation is considered by law as a separate and distinct legal entity. Thus, owners of corporation or shareholders are only indebted to the extent of their interest in the corporation. Corporations have limited liability. This means that their creditors can only run after the assets of the corporation and not the on the personal assets of the stockholders in the settlement of the corporation’s debts or liabilities.”
http://businesstips.ph/advantages-and-disadvantages-of-forming-a-corporation/
“What are the benefits of a Corporation?
There may be many advantages to using a corporation to carry on business depending on your circumstances. Some of the main advantages of using a corporation to conduct business include the following:
Limited Liability: The owners, or shareholders, of a corporation are not liable for the debts and obligations of a corporation. This means that, as normal rule, creditors of a corporation can not hold the shareholders responsible for the debts of the corporation. If the corporation can not pay its creditors, then the creditors have no right to claim payment from the shareholders. There are exceptions to this general rule either by statute or because of some act done by the shareholders to make them personally liable. . If you concerns about these exceptions, you should seek legal advise.”
http://www.e-law.bc.ca/art_corpstructure.html
gmorton on February 03 at 9:48 p.m.
JBlim wrote (quoting),
“Thus, owners of corporation or shareholders are only indebted to the extent of their interest in the corporation.”
I think that is exactly what I said (several times). Are you now agreeing with me?
“You are confusing investment ‘at risk’ with legal liability.”
No, JB, there is no confusion. Legal liability is merely one of the risks inherent in an investment. If a corporation is found legally liable for damages and must pay a judgment, it will come out of your (the investor’s) pocket (but not for more than you invested).
JBlim on February 04 at 7:13 a.m.
gmorton says: “If a corporation is found legally liable for damages and must pay a judgment, it will come out of your (the investor’s) pocket (but not for more than you invested).”
No, if a big, prosperous corporation has a small judgment against it for $2000 from someone slipping on a banana peel in one of their stores and you invested $1000, you don’t lose $1000 and the person with the judgment can’t collect it from you. That’s because the corporation is liable for it, not you, the shareholder.