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Walter Dalton said his tax rate was 25 percent; it's actually lower

UPDATED: One question caught the candidates for governor off guard at the first statewide televised debate: "Can each of you tell me the approximate tax rate you paid last year?" asked Dave Wagner, an anchor at WCNC-TV in Charlotte.

The subject is ripe given the talk about how Republican Pat McCrory won't release his personal tax returns amid questions about his consulting job at a law firm that lobbies state government and the controversy in the presidential race about Mitt Romney's taxes.

McCrory refused to answer the question about how much he paid in taxes — more on that below.

But Dalton, who released his taxes, was prompted to answer first: "Ah, I'm going to estimate, ah, 25 percent, give or take," he said, stumbling.

Then he caught his breath, and delivered his line: "I will say this ... the people have my tax returns. I think this is like an application for a job. I filled out my application and (McCrory) hasn't."

McCrory's laughed in an aw-shucks tone before dodging the question altogether. "I paid what was required by the IRS and the IRS has never questioned my tax returns the 36 years that I've been gainfully employed in North Carolina," he said. The debate moderator didn't follow up.

We can't look at McCrory's taxes because — unlike Romney and many of the other governors campaigning for him — McCrory is steadfast in his refusal to release the documents and won't even say now much he paid. Romney has done both.

But Dome took Dalton's taxes to two accountants to see how close his estimate was.  It turns out he paid an effective federal tax rate far below his estimate.

Try 13.67 percent. 

But if you look at combined federal and state burden, he was much closer. Dalton paid a 20 percent combined average rate, said Roby Sawyers, a CPA and N.C. State University accounting professor. (So far this year, the political dialogue is just about federal tax rates, given the Romney controversy.)

Dalton's taxable income in 2011 — $102,036 — does put him in the 25 percent federal marginal tax bracket. And Dalton's campaign said Thursday that his answer referred to his marginal tax bracket, not his tax rate, as the question asked.

But as with most people, he pays far less than the rate because of the tiered taxing system, explained Gerald Townsend a CPA with Townsend Asset Management in Raleigh. 

Townsend said the first $17,000 of Dalton's taxable income (as a married joint-filer) was taxed at 10 percent, the next $52,000 at 15 percent and the rest at 25 percent. It resulted in an average federal tax rate of 14 percent on his taxable income.

In 2010, Dalton paid a 15 percent federal average tax rate and a 22 percent combined tax rate, Sawyer said.

An intriguing finding: At the federal level, Dalton's average tax rate ws about the same as Romney. The GOP presidential hopeful estimates he paid about 14 percent in 2011. How can Romney — who made about $21 million last year — have the same average rate as Dalton whose taxable wages were about $105,000? Romney's income is mostly from long-term capital gains and qualified dividends, which is taxed at a much lower rate than wages.

Dalton's his qualified dividends from investments totaled $35,676, which are taxed at a much lower rate than income.

Editor's note: Post updated with more background and information.



Document(s):
Dalton Tax Return Analysis.pdf


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The real issue for the press

The real issue for the press is that how do they take seriously any candidate who says he wants to drastically lower corporate and personal tax rates but will not say how he will pay for it.

Any simpleton can tell you the only way to pay for significant decrease in tax rates is to cut education and medicaid - ie ____ the midle class

This article is a joke

The title of this article is incredibly misleading.  Is that intentional or just bad journalism like previous poster observed?  

Rate

Neither Romney's 14% nor Dalton's 14% is a "rate". It is their total federal INCOME tax burden. The rates are 15%, 25%, or higher depending on the income subject to each rate. In any case if someone is asked their federal tax rate (as opposed to their federal INCOME tax rate) then you have to add the employee paid 7+% social security/Medicare tax to get the correct answer. I find the analysis of both Romney and Dalton's taxes consists of people who don't really understand things confusing their terminology.

Tax Returns

I don't understand the intrigue with what rate they paid.  I care that they paid whatever rate they were legally obligated to pay.  Any person that wishes to pay more certainly has the ability to do so.

It is a little funny, though, that Dalton wants taxes returns to be an issue, and wants to attack, but he grossly overestimates what he has paid.  I guess he has been in government too long and has lost any ability to understand math!

That's just bad journalism

Seriously, John Camp? You, and many other reporters in North Carolina, have given McCrory a free pass on not releasing his taxes and the very real conflicts of interests his business ties may represent -- and now you're actually attackng his opponent for information in his tax returns? Then trying to blame your own failure to properly report on McCrory's stonewalling on a moderator who "did not follow up." 

Wow. 

I just lost a lot of repect for you.

 

So what

At least Dalton has released his tax record.  Who cares what rate it was?  The main thing is who was paying him.  What about you McCrory?

Observation

Looks like John Frank has been trashing Dalton all day.  Must be an attempt to suck up to McCrory since he is the likely winner and the N&O needs to make nice with him during the honeymoon period?????

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