As promised, Mitt Romney released his tax returns to certain media outlets this morning.So let’s be real about our expectations — No one really expected Romney’s tax rate would be anywhere near 35%, but Reuters reports that in 2010 the candidate paid an effective rate of 13.9% on $42 million of taxable income. and this tax season he will pay at a 15.4% rate.
That Romney’s rate it’s a tad lower than expectations is more than enough for the Gingrich campaign to have a field day in Florida (the Florida primary is on January 31).
Remember: Most of Romney’s money comes from capital gains investments, which are taxed at a maximum 15% rate for individuals. That means that he doesn’t end up paying what a wage earner would pay for Social Security and Medicare (12.4% and 2.4% respectively), and since he isn’t an employer anymore he doesn’t pay their rate for those benefits (6.2% and 1.4% respectively) either.
Romney said he paid ‘about’ 15% in a debate earlier this month, so 13.9% isn’t that far off, but again, this race is just as much about appearances as it is about facts. Here’s one the Gingrich campaign could have fun with (from Bloomberg):
Romney’s income puts him near the very top of U.S. taxpayers. In 2008, according to the Internal Revenue Service, the median adjusted gross income was $33,048, which Romney made in less than a day. Reaching the top 1 per cent of taxpayers required $380,354 in adjusted gross income, about Romney’s earnings in a week.
This probably makes Gingrich smile too. From Reuters:
Romney’s campaign officials stressed that his tax rate is based mostly on income from investments that are held in a blind trust. Romney’s holdings include an undisclosed amount in funds based in the Grand Cayman Islands and other overseas entities.
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.
They also stressed that Romney, whose holdings are in three blind trusts, makes no decisions as to how his money is invested.
There were more than 500 documents in the Romney return, which means there may be more details to come. In the meantime, it should be noted that Romney gave around 15% of his income to charity, which is about 30x the amount the average person in his tax bracket donates. Moreover, if Newt Gingrich’s tax plan were enacted, Romney might not pay any taxes at all, as Gigrich wants to eliminate capital gains taxes entirely.