CARRIED INTERESTJanuary 27, 2012

I went to an auto-supply store yesterday looking for valve caps for my tires and got a lesson in politics. A woman in her mid-forties approached me with two different cans of motor oil. “Which would you get?” she asked. I suggested she check with a sales associate. She held one aloft. “I suppose this is as good as any.”

The woman had the day off and was now changing her car’s oil to save a few bucks. “It’s all I can do to make ends meet.” She gave me a studied glance. “My mother’s watching the kids.”

I noticed a Gingrich for President button on her jacket. “What?” she asked. “You think everyone in San Francisco is a Democrat?” I shook my head. “But Republicans can be hard to come by,” I offered. “So do you think Newt can beat Romney?” Her eyes narrowed. “Romney’s a fraud. Did you see what he paid in taxes for 2010?” I nodded. Romney’s returns have been all over the media. “About three million,” she said, rolling here eyes. “On over twenty-one million in income. Typical rich man. You know what his effective federal tax rate was? Fourteen percent.”

“Sounds about right,” I answered. “Of course, it’s all legal. He had lots of capital gains. And carried interest. Those rates are fifteen percent.” She cocked her head. “Isn’t that how all these private equity guys get away with not paying the rate middle-class people pay?” I nodded again. “Well,” I said, “they definitely have their own special tax break.”

“That’s why I’m for Newt,” the woman proclaimed. “He made, what? A little north of three million last year? Nothing like Romney. And his taxes came to almost a million. Obama talks about how Americans should pay their fair share. Newt does. He’s one of the people, not one of those Washington insiders.”

I took a set of valve caps from the display. A buck-thirty-nine for four seemed like a good deal. “Newt paid thirty percent of his income in taxes,” I agreed, “but being one of the people, I’m not sure. I don’t know anyone personally who makes three million a year. And as for being an outsider, Newt’s taking on the establishment, but he was Speaker of the House. You can’t get much more inside the Beltway than that.”

“All I know,” said the woman, “is that Mitt Romney games the system. A multi-millionaire paying a lower tax rate than me? That’s criminal.” I shrugged. “Maybe we should change the tax code,” I suggested. “Like the President said Tuesday night, everyone who earns more than a million a year should pay at least thirty percent in taxes.” I tapped my head. “Almost forgot. I saw on the news last night that Newt wants to lower the capital gains rate to zero. That lets Romney off the hook, I guess. And Newt’s mad as hell at Wall Street but against regulating it.”

The woman stared at me as if I carried Bubonic Plague. “I bet you’re voting for Obama in November,” she hissed. “You people just don’t get it.”

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