Mitt Romney paid $3 million in federal taxes on $21.7 million income in 2010
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TAMPA, Fla. - Republican presidential candidate Mitt Romney paid about $3 million in federal income taxes in 2010, having earned more than seven times that from his investments. Those earnings, $21.7 million, put him among the wealthiest of American taxpayers. Romney's campaign said Tuesday he followed all tax laws.
At the same time, Romney gave nearly $3 million to charity - about half of that amount to the Mormon Church - which helped lower his effective tax rate to a modest 14 percent, according to records his campaign released early Tuesday.
Romney campaign advisers said Tuesday that the release of more than 500 pages of returns, schedules and worksheets was in "full compliance" with U.S. tax laws and was an effort to provide maximum transparency to the American public.
Romney had refused until recently to disclose any federal tax returns then hinted he would only offer a single year's return in April. But mounting criticism from his rivals and a hard loss in last week's South Carolina primary forced his hand.
For 2011, Romney will pay about $3.2 million with an effective tax rate of about 15.4 percent, the campaign said. Those returns haven't yet been filed yet with the Internal Revenue Service. In total, he would pay more than $6.2 million in taxes over the past two years, his campaign said.
"Gov. Romney has paid 100 percent of what he owes," said Benjamin Ginsberg, a legal adviser to the Romney campaign. Ginsberg and other advisers insisted Romney did not use any aggressive tax strategies to help reduce or defer his tax income.
The advisers acknowledged that Romney continues to earn money from investments from Bain Capital, the Boston-based private equity firm the candidate founded and managed between 1984 and early 1999. Under an agreement with the firm when he left, Romney continued to earn "carried interest" on new Bain investments as a former partner in the firm even though he no longer ran the operation.
Romney earned $7.5 million in Bain earnings in 2010 and expects to make $5.5 million in 2010, Ginsberg said.
The former Massachusetts governor had been cast by his GOP opponents as a wealthy businessman who earned lucrative payouts from his investments while Bain slashed jobs in the private sector. Rival Newt Gingrich made public his 2010 returns on last Thursday, showing he paid almost $1 million in income taxes - a tax rate of about 31 percent.
Romney's advisers acknowledged Tuesday that Romney and his wife, Ann, had a bank account in Switzerland as part of her trust. The account was worth $3 million and was held in the United Bank of Switzerland, said R. Bradford Malt, a Boston lawyer who makes investments for the Romneys and oversees their blind trust, which was set up to avoid any conflicts of interest in investments during his run for the presidency.
In 2009, UBS admitted assisting U.S. citizens in evading taxes, and agreed to pay a $780 billion penalty as part of a deferred prosecution agreement with the U.S. Justice Department.
Malt said the account was closed for "diversification" in early 2010. He said he made the decision to close the Swiss account because it "just wasn't worth it." Malt sidestepped a question about whether he closed the account because it could be a political liability, saying it "might or might not be inconsistent with Gov. Romney's political views." Malt has sold off other accounts in recent years - including investments in firms that did business with Iran and China - because of possible political inconsistency or embarrassment with Romney's political positions.
Malt also confirmed that some of Romney's investments are routed through affiliate funds set up in the Cayman Islands. But he insisted there were no actual offshore accounts, and added that Romney paid the same amount of U.S. taxes using the Cayman affiliates as he would have if the investment funds were set up in the U.S.
Romney's campaign confirmed the details of his tax information after several news organizations saw a preview of the documents. He had said he planned to release his returns in full Tuesday morning, and campaign officials would be prepared to discuss them in detail with reporters.
"You'll see my income, how much taxes I've paid, how much I've paid to charity," Romney said during Monday night's debate in Tampa. "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."
Romney's 2010 returns show the candidate is among the top 1 percent of taxpayers. The returns showed about $4.5 million in itemized deductions, including $1.5 million to the Church of Jesus Christ of Latter-Day Saints.
Before the tax records were released, Romney's old investments in two government-backed housing lenders stirred up new questions at the same time his campaign targeted Gingrich for his work for Freddie Mac.
Gingrich earned $1.6 million in consulting fees from Freddie Mac. Romney has as much as $500,000 invested in the U.S.-backed lender and its sister entity, Fannie Mae.
The fight over releasing the tax information highlighted an argument that Democrats are already starting to use against Romney - that he is out-of-touch with normal Americans. And it probably hurt him in the South Carolina primary, where he lost by 12 percentage points to Gingrich after spending several days resisting calls to release the returns.
In Monday's debate, Romney would not answer questions from moderator Brian Williams of NBC about just what pieces of his tax returns could cause political headaches. But they will shine the spotlight on a fortune estimated at between $190 million and $250 million, and could raise questions about where he keeps his money and how he earns it.
But it's clear that Romney's campaign is bracing for an onslaught of criticism of his personal fortune. His wife, Ann, has started talking about the returns during campaign appearances. She told supporters at a Florida rally Sunday: "I want to remind you where we know our riches are. Our riches are with our families."
Most of Romney's vast fortune is held in a blind trust that he doesn't control. A portion is held in a retirement account.
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Braun and Associated Press writers Jack Gillum and Stephen Ohlemacher reported from Washington.
Comments
What is $21M?
The headline for one of the front page articles on January 25th on Mitt Romney reads, “Romney in top .01% with $20M income”. I look at these rhyming large numbers of million, billion and trillion and wonder how we can understand these figures. These may rhyme, but what is represented by a trillion is nowhere near the equivalent of a million. We are considering here a number "only" in the millions. How does one relate to a $21M annual income? The article states that Mitt Romney declared an income of $21M, which is the equivalent of about $39.95 every minute of the year, waking or sleeping, working or playing.
As a comparison, a person in Massachusetts working fulltime for minimum wage earns $8.00 per hour or $16,640 per year. Spread out over every minute of every year that equals less than $0.03 per minute. From another angle, it essentially takes a little less than seven hours for someone with an income of $21M to reach that $16,640.
Comparing this $21M to other income levels, it takes the equivalent of a little less than 42 hours to reach $100,000. I have not found a solid figure for what income level constitutes the cutoff for the top 1% of incomes in the US. However, an article by Kay Bell at Bankrate.com last year tries to tackle this question using IRS income tax return data. She comes up with $343,927 as the income that identifies tax filers (individual or joint returns not differentiated) as being in the 1% category. That means that one out of every hundred of us who file taxes brings in that amount of income or more. At $21M it takes the equivalent of a less than a week (144 out of 168 hours in a week) to reach that level.
An individual or couple that declares an income of $343,927 may feel poor next to Mitt Romney. That, however, is nothing compared to the person making minimum wage. What does it mean that one person or couple accumulates in seven hours what it takes another person a whole year of fulltime work to accumulate? I see in letters to the editor and editorials that there are strongly held opposing opinions on this. Some find it unconscionable. Others believe that this is a fair and just distribution of income. When I read these opinions I wonder if we really have the same understanding of the numbers and whether we are trying our best to listen to and understand each other's point of view.