Romneys paid $1.94 million federal taxes for 2011

TOM RAUM

Asso­ci­ated Press

WASHINGTON — 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 — 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 and tax 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 — those mak­ing from $50,000 to $75,000 a year — 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 — includ­ing dona­tions of stock hold­ings in Domino’s Pizza, Dunkin Donuts and Warner Chilcott — 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 — by Romney’s long­time physi­cian, Dr. Ran­dall Gaz of Mass­a­chu­setts Gen­eral Hos­pi­tal — 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 1½ 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 tax dead­line. 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 — 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 — 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 — 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 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.

Posted by AP News on Sep 21 2012. You can follow any responses to this entry through the RSS Feed. Comments can be made below.