Romney paid excess taxes in 2011. Patriotic or dumb?
Mitt Romney paid $1.9 million in federal taxes on $13.7 million in income. But he could have paid less federal taxes had he claimed a full deduction on $4 million in charitable giving.
Mitt¬†Romney, one of the wealthiest candidates ever to seek the presidency, paid nearly $2 million in federal¬†taxes¬†on $13.7 million in income that he and his wife reported last year, his U.S. returns showed Friday. That came to an effective¬†tax¬†rate of 14.1 percent, lower than millions of middle-income Americans but actually more than he had to pay.
Most of¬†Romney's¬†income was from investment returns. That is why his rate was lower than taxpayers whose income was mostly from wages, which can be¬†taxed¬†at higher rates.
Romney's¬†taxes¬†have emerged as a key issue during the 2012 presidential race with President Barack Obama.Romney¬†released his 2010 returns in January, but he continues to decline to disclose returns from previous years ‚ÄĒ including those while he worked at Bain Capital, the private equity firm he co-founded.
The Obama campaign and other Democrats have pushed for fuller disclosures, reminding the Republican candidate that his father, George¬†Romney, released a dozen years of returns when he ran for president.
Overall, the¬†Romneys' main¬†tax¬†return and separate forms for blind trusts totaled over 800 pages. The blind-trust income came from hedge funds and other complex investment vehicles. The couple also reported $3.5 million in income "from sources outside the United States," citing "various countries." Their forms included filings on holdings in Switzerland, Ireland, Germany and the Cayman Islands.
The Obama campaign accused¬†Romney¬†anew of profiting from millions invested overseas and "loopholes andtax¬†shelters only available to those at the top."
Apparently hoping to resolve basic questions voters might have, the¬†Romney¬†campaign also released a letter from his accountants saying that in the 20 years prior to 2010 the¬†Romneys¬†paid an average annual effective rate of 20.2 percent, never lower than 13.66 percent. On average, middle-income families ‚ÄĒ those making from $50,000 to $75,000 a year ‚ÄĒ pay 12.8 percent of their income in federal¬†taxes, according to Congress' Joint Committee on Taxation. But many pay a higher rate.
The former Massachusetts governor, whose wealth is estimated at perhaps $250 million, is aggressively competing with Obama for the support of middle class voters.
Obama's own¬†tax¬†return for last year showed that he and his wife, Michelle, paid $162,074 in federal¬†taxes¬†on $789,674 in adjusted gross income, an effective¬†tax¬†rate of 20.5 percent. Their income plunged from $1.7 million in 2010, with declining sales of the president's books. In 2009, the Obamas reported income of $5.5 million, fueled by the best-selling books.
The¬†Romneys'¬†tax¬†bill could have been lower.
For the year, they claimed a deduction for $2.25 million of their $4.021 million in charitable contributions, said Brad Malt, trustee of the candidate's blind trust.
The¬†Romneys¬†gave $2.6 million in cash to the Church of Jesus Christ of Latter-day Saints, the documents show. They gave just over $2 million in non-cash charitable contributions ‚ÄĒ including donations of stock holdings in Domino's Pizza, Dunkin Donuts and Warner Chilcott ‚ÄĒ to a family trust.
They could have claimed more in deductions, Malt said, but the couple "limited their deductions of charitable contributions to conform to the governor's statement (n August, based on the January estimate of income, that he paid at least 13 percent in income¬†taxes¬†in each of the last 10 years."
Romney¬†seemed to be painted into a corner by that statement, which came in reaction to Democratic Senate Majority Leader Harry Reid's claim to have heard that the Republican had paid no¬†taxes¬†in some years.
Romney¬†will surely be reminded by the Democrats that he also said in August, defending his right to pay no more¬†taxes¬†than he owed: "I don't pay more than are legally due, and frankly if I had paid more than are legally due I don't think I'd be qualified to become president."
He appears to be physically qualified by any measure.
The campaign released a separate report Friday ‚ÄĒ by¬†Romney's¬†longtime physician, Dr. Randall Gaz of Massachusetts General Hospital ‚ÄĒ that said he is healthy and ready to meet the rigorous demands of the presidency.
The report said¬†Romney's¬†heart appears healthy, and he takes a baby aspirin and medicine to treat high cholesterol to help keep it that way. He doesn't smoke or drink. And his resting heart rate is a low 40 beats per minute, in the range of well-trained athletes and reminiscent of President George W. Bush, who also had a low resting rate.
Romney¬†is 6 feet 1¬Ĺ inches tall and weighs 184 pounds.
As for his¬†taxes, the¬†Romneys' 2011 rate was slightly above the 13.9 percent effective rate they paid for 2010 when their federal¬†tax¬†bill was about $3 million.
They paid federal¬†taxes¬†of $1,935,708 on income of $13,696.951 for last year, according to the returns filed Friday with the Internal Revenue Service. They had obtained a filing extension beyond the usual April 15¬†taxdeadline. His campaign earlier estimated that he would pay about $3.2 million in¬†taxes¬†for the year, well above the $1.9 million actually paid.
Most of¬†Romney's¬†income is from investments held in a blind trust, and campaign aides have stressed that he makes no decisions on how his money is invested.
Most of the income for the year came from investments, which are now generally¬†taxed¬†at 15 percent whereas the top marginal rate for income from wages is 35 percent.
The¬†Romneys¬†reported $6.8 million in capital gains, such as from the sale of stocks and other securities, and $6.37 million from dividends and taxable interest.
Romney's¬†vast fortune and his long association with Bain Capital have been much discussed this year.
Several¬†tax¬†law experts said Friday that his newly released¬†tax¬†returns would not be much help in resolving critics' questions about his sprawling finances ‚ÄĒ whether he used aggressive tax-deferral strategies, what might be the specifics and¬†tax¬†advantages of his numerous offshore investments, what was the source of his massive retirement account and what are the details behind his now-closed $3 million Swiss bank account.
Analysts said details about his investments could emerge only if¬†Romney¬†provided far more of his¬†tax¬†returns ‚ÄĒ including files dating back to his years at Bain, the private firm he left in 2001.¬†Romney, who initially refused to disclose any¬†tax¬†returns, has drawn the line at providing those from the past two years.
"All the important compliance and policy questions relating to¬†Romney's¬†personal¬†tax¬†matters relate to the past," said Edward D. Kleinbard, a law professor at the University of Southern California and former chief of staff of Congress' Joint Committee on Taxation. "The issue has never been¬†Romney's¬†2011¬†tax¬†return ‚ÄĒ in fact, it is a distraction to the real issues."
Only multiple returns would provide details about¬†Romney's¬†$100 million retirement account and how it grew, Kleinbard said. He also said earlier returns would be crucial in knowing how often he paid gift¬†tax¬†on family trusts.
Joseph Bankman, a Stanford University law school professor and expert on¬†tax¬†law, said, "It's the Bain years we'd really need to know to have a full assessment of his¬†tax¬†strategies." Bankman said that the 2010 and 2011 returns "only raised these questions, but they can't provide real answers."
The¬†Romneys¬†applied a $1.5 million¬†tax¬†refund to their 2012 estimated¬†tax¬†payments.
The couple reported $190,350 in book royalties and speaking fees. And¬†Romney¬†also reported $260,390 in income last year from serving on various boards of directors.
Republican vice presidential nominee Rep. Paul Ryan of Wisconsin and his wife Janna, whose returns were also released Friday by the¬†Romney¬†campaign, paid $64,764 in¬†taxes¬†on $323,416 of adjusted gross income in 2011, for an effective rate of 20 percent.
Just over half of their income came from Ryan's congressional salary. Other income flowed from rental real estate and other investments, including a trust inherited by Janna Ryan. They donated $12,991 to charity, including to the Boy Scouts of America
Associated Press writers Stephen Braun, Stephen Ohlemacher, Kasie Hunt and Philip Elliott contributed.