After being grilled in last night’s Republican debate over why he had not released his tax returns, Mitt Romney offered some clues about how much he in fact sends to the IRS each year.
Romney told a group of reporters in South Carolina that his effective tax rate is “probably closer to the 15 per cent rate than anything.” Romney said he pays the relatively low tax rate as most of his income from the last 10 years came from corporate investments. While ordinary income tax rates can range upwards to 35 per cent, income generated from corporate investments is often subject to lower capital gains and dividend tax rates.
Throughout the campaign, Romney has said he is against lowering capital gains taxes for high-income individuals, a group that he is very much a part of. According to financial disclosure documents, Romney’s net worth ranges between $190 and $250 million. On his campaign website, Romney has also called for decreasing corporate tax rates to 25 per cent.
Others, however, like billionaire Warren Buffett, whose tax rate sits at roughly 17 per cent, have criticised the low tax rates placed on corporate investments. In a piece for The New York Times, Buffett demanded that current tax codes be reformed so as to increase taxation on the super wealthy.
Romney’s announcement comes just a day after he spent a good portion of the South Carolina debates answering questions as to why he had yet to release his tax records. Romney fielded barbs from his opponents all night, including Texas governor Rick Perry.
“Mitt, we need for you to release your income tax so that the people of this country can see how you made your money,” Perry said. “As Republicans, we cannot fire our nominee in September. We need to know now.”
Romney’s opponents have questioned the circumstances under which the former governor had paid taxes while CEO of the private equity firm Bain Capital. His critics have asked whether his income was exposed to the proper tax rates.
Romney said last night that he would release his tax records if he becomes the Republican nominee.