Romney family releases 2010 tax returns

Romney's Taxes: Legally Sound Perhaps But Politically Tricky
January 24, 2012
by Frank James - NPR

Mitt Romney greets audience members at the National Gypsum Co. in Tampa, Fla., Tuesday, Jan. 24, 2012.

The income fairness debate has just gotten a lot more interesting. And it's taking place in anything but Mitt Romney's "quiet rooms."

Romney's release of his federal tax details for 2010 and 2011 came the morning that President Obama was preparing to deliver his State of the Union address, a speech in which he was expected to make the increasing gap between the superwealthy and everyone else a major topic of the evening.

Obama even planned to have a prop. To underscore a point constantly made by Warren Buffett that he and other members of the top .01 percent pay federal taxes at a much lower rate than the billionaire investor's secretary, the White House has invited that secretary to sit in the First Lady Michelle Obama's box Tuesday evening.

Meanwhile Romney, who recently indicated his discomfort with public and boisterous debates about the ways government policies have contributed to the super rich controlling an ever larger portion of the nation's income, was forced on the defensive.

Romney's personal lawyers and tax specialists explained to reporters on a conference call that, yes, Romney and his wife Ann made a tremendous sum from investments in 2010 and 2011, $21.7 million and $20.9 million, respectively.

But even though they paid taxes at a relatively low rates, 13.9 percent in 2010 and an estimated 15.4 percent for 2011 which hasn't yet been filed with the IRS, they paid all that was legally required, $6.2 million for the two years, Romney's team said.

And they made $3 million in charitable donations in 2010 and $4 million in 2011, giving more than 16 percent of their income to charity, much of that in the form of tithes, a commitment to give 10 percent of income, to the church, in the Romneys' case, the Mormon church.

While Romney's surrogates on the tax-return conference call with reporters may be right that he did all he was legally require to do, that doesn't mean he doesn't have a political problem.

First, it will be a tall order for Romney, whose net worth has been estimated at between $190 million and $250 million, to defend paying federal taxes at an effective rate that's so much lower than those paid by million of Americans of far more modest means. That likely explains in part Romney's reluctance in the first place to release his returns.

Even rich politicians like Obama and Newt Gingrich, Romney's GOP challenger, paid their 2010 federal taxes at significantly higher rates, 26 percent and 31.5 percent, respectively.

With Obama making economic fairness for the middle class an overarching campaign theme, Romney gives the president an ample target to attack.

Two, Romney's tax information reinforces perceptions that for all his attempts to appeal to average voters, he's a full member of the nation's financial aristocracy, with concerns far removed from the typical voter's.

For instance, until 2010 his trustee kept a Swiss bank account for Romney which at one point held $3 million before the trustee closed it. Asked if it was closed because it was bad optics politically as some had reported, Brad Malt, the trustee said:

"... I decided that this account wasn't serving any particular purpose. It might or might not be consistent with Governor Romney's political views, you know again, the taxes were all fully paid etc. But, it just wasn't worth it, and I closed the account."

Swiss bank accounts are just something that even a lot of wealthy Americans don't have, let alone middle-income Americans.

Romney may continue to try to neutralize those who question how it came to be that the rich are snaring an ever greater share of the nation's overall income. On the Today Show recently with Matt Lauer, he accused them of engaging in the "politics of envy."

But that may not go over so well with voters, a majority of whom are, convinced that the wealthy aren't paying their fair share of taxes which just so happens to be the case Obama will make Tuesday evening all the way to Election Day.

Mitt Romney's Tax Returns Show $43 Million Income In Past Two Years
January 24, 2012
by Eyder Peralta - NPR

Republican presidential candidate Mitt Romney, seen at a weekend campaign event in Ormond Beach, Fla., released 2010 tax returns showing he is among the top 1 percent of taxpayers.

In releasing details of his tax burden for the past two years, Mitt Romney offered a small window into a vast wealth. The tax records show that the former Massachusetts governor made $42.6 million over the past two years and because most of it came from capital gains, he paid $6.2 million in taxes.

That means that in 2010, his tax rate was 13.9 percent, and in 2011, it's expected to be 15.4 percent, lower than many Americans who pay taxes on wages.

Romney was pushed into releasing his tax returns this week by a relentless attack from his fellow Republicans. Former House speaker and presidential hopeful Newt Gingrich led the charge by saying that Republican primary voters should have a chance to look at the documents to see if they had a flawed candidate. At first, Romney said he would not release his tax records at all, but after a bruising loss in South Carolina in which questions about his wealth and his company Bain Capital dominated, Romney relented.

The Washington Post, which received a copy of the tax returns early, reports on some of the details:

"The couple gave away $7 million in charitable contributions over the past two years, including at least $4.1 million to the Church of Jesus Christ of Latter-day Saints. Romney's family has for generations been among the Mormon Church's most prominent members.

"The Romneys sent somewhat less to Washington over that period, paying an estimated $6.2 million in federal income taxes. According to his 2010 return, Romney paid about $3 million to the IRS, for an effective tax rate of 13.9 percent.

"For 2011, Romney estimates that he will pay about $3.2 million, for an effective rate of 15.4 percent. That's in line with his earlier estimates, but sharply lower than the rates paid by President Obama and Romney's closest Republican rival, Newt Gingrich."

Obama paid a 25 percent tax rate, while Gingrich paid 31 percent in 2010.

Reuters reports that Romney's tax records also show that an undisclosed amount of his money is in the Grand Cayman Islands and other places overseas.

"Romney advisers stressed that the holdings in the Caymans — along with those in a Swiss bank account that was closed in 2010 after an investment adviser decided it could be politically embarrassing to Romney — were reported on tax returns and were not vehicles to avoid taxes," Reuters adds.

Over the past couple of weeks, Romney has defended his wealth and his tax rate, saying that he would "not apologize for being successful." During last night's debate, Romney added that his tax bill is "entirely legal and entirely fair."

"You'll see my income, how much taxes I've paid, how much I've paid to charity," Romney said. "I pay all the taxes that are legally required and not a dollar more. I don't think you want someone as the candidate for president who pays more taxes than he owes."

There were more than 500 pages of records released early this morning. So we'll update this story as we find more.

Update at 11:26 a.m. ET. How Much Do Millionaires Usually Pay?

It's worth noting that Romney not only pays an effective tax rate that is lower than some middle-class Americans but he also pays a lower effective tax rate than most of his fellow millionaires.

The Tax Foundation reports:

"By contrast, millionaires pay an average rate of 25 percent. Although taxpayers earning between $2 million and $5 million pay an average tax rate of 26 percent, while those earning more than $10 million pay an average of 22 percent. We can speculate that one of the reasons for this is that much of their overall income comes from capital gains, which is taxed at 15 percent (only 20 percent of the total AGI for these $10 million-plus taxpayers is from salaries). However, even with this "preferential" tax rate on capital gains, the data clearly shows that their overall average tax rate is at least twice that of the nation as a whole."

Update at 10:56 a.m. ET. The 0.006 Percent:

The New York Times' Caucus blog is doing a stellar job of sifting through the data. They pick up on the 1 percent string. Romney's income puts him concretely into the upper crust of Americans. But how deep in?

Here's The New York Times:

"According to the Internal Revenue Service's most recent available statistics of income, for 2009, there were 8,274 taxpayers with an adjusted gross income of $10 million or more, out of more than 140 million total returns filed. So anyone who makes more than $10 million would be in the top 0.006 percent of taxpayers.

"With an adjusted income of more than twice that - $21 million - in 2010, Mr. Romney would be even higher in the income strata."

Update at 7:35 p.m. ET. Average Tax Rate Is 11 Percent:

NPR's Tamara Keith explained on Morning Edition that the average taxpayer pays an effective tax rate of 11 percent. That calculation takes into account deductions and adjustments to gross income. Add to that the payroll tax and Medicare tax and it pushes it above Romney's rate of 15 percent.

So how did Romney's rates stay so low? As we alluded to earlier, it has to do with the fact that taxes on capital gains — or money that comes from stock dividends, investments and interest — is paid at a 15 percent rate.

Tamara explained that Romney amassed great wealth during his time at Bain Capital "and now that money is generating more money and it's taxed at 15 percent."