Wealthy Romney reveals 14% taxes

 

Mitt Romney and Newt Gingrich tussled over integrity on Monday night's NBC debate in Florida

US Republican presidential candidate Mitt Romney expects to pay about $6.2m (£4m) in taxes on income of $42.5m in the last two years.

That makes for a tax rate of 13.9% in 2010 and an expected rate of 15.4% in 2011, his campaign said.

His income places him among the top earners in the US, and his tax history has become a campaign issue.

Mr Romney was an early favourite in state primaries but lost the latest, in South Carolina, to rival Newt Gingrich.

Mr Gingrich released his tax figures on Saturday, saying he paid nearly $1m last year, a rate of about 31%.

On the same day he won a striking victory in the South Carolina vote, beating Mr Romney with more 40% of the vote.

President Barack Obama is expected to highlight economic inequality in his annual State of the Union address later on Tuesday.

'Not a dollar more'

Mr Romney is a multi-millionaire businessman and former Massachusetts governor with three homes.

He lives mainly on income derived from his investments, for which only 15% tax is payable. Earned income is taxed at up to 35%.

The reason Mr Romney pays a lower rate than say President Obama (26%) or Newt Gingrich (over 30%) is because there's a different tax rate for income and investments.

That raises a much wider argument, and one that will be central to the election in November. It is precisely why the billionaire investor Warren Buffet said the tax rate was unfair and should be changed because he paid a smaller proportion of his income than his secretary.

Mr Obama has taken up that call with enthusiasm, even naming his proposed rule after Mr Buffet.

It plays in to a national debate on wealth and fairness that could be critical to Mr Obama's re-election or defeat. The president will make the idea of a fairer society, where the rich do more to help the struggling middle classes, a centrepiece of his state of the union speech tonight.

On Monday, before he released his income and tax figures, Mr Romney defended his tax record at a Republican presidential debate in Florida.

"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," Mr Romney said.

On Tuesday, Mr Romney's campaign released his 2010 tax papers and estimates for his 2011 taxes, for which he has not yet filed a return.

He and his wife Ann reported income of $21.6m in 2010 and $20.9m last year, almost all it from investments. There were no declared wages on the 2011 estimate.

They gave $7m to charity in the same period, about half of it to the Mormon Church.

President Barack Obama and his wife Michelle released their 2010 tax return in April last year, showing an income of $1.7m. They paid about $450,000 in federal tax, a rate of about 26%.

Tax debate

Mr Romney had promised to release the figures, saying the question of tax had become a distraction for his campaign, and he wanted to re-focus on the main issues.

However, he had initially refused to release the returns, saying the financial disclosure reports that all federal candidates must provide should be enough.

But the reluctance allowed his Republican rivals and Democratic critics to focus on his record at private equity firm Bain capital, painting him as a wealthy businessman who cut jobs and shut down firms.

Mr Romney's supporters have leapt to his defence, equating attacks on his business practices with criticism of American capitalism itself.

Republican candidates' taxes

  • Mitt Romney (2010). Income $21.6m. Tax paid $3m. Donated to charity $3m.
  • Newt Gingrich (2010). Income $3.1m. Tax paid $0.99m. Donated to charity $81,000.

Source: Washington Post

But the issue has reignited the debate in the US over how investment income - in particular carried interest, the profits that private equity managers make - is taxed.

President Obama has said such income should be taxed at a higher rate, and that wealthy Americans and corporations should pay more tax to help trim the country's deficit.

Republicans are opposed to any tax hikes, saying they would harm the economy.

Gingrich surge

Mr Romney had led the Republican field since November and appeared to have won the first two contests of the campaign, in Iowa and New Hampshire.

But the Iowa caucus result was overturned in a recount which gave a narrow victory to Rick Santorum.

Media reaction

For the Washington Post, the storm that blew up over Mitt Romney's tax returns is a spectacular example of campaign mismanagement, fraught with "political danger" write Chris Cilizza and Aaron Blake.

That storm is not over yet, many commentators predict. "There are certain to be more nuggets of interest revealed - like the fact that he had a Swiss bank account that was closed in 2010," says Dashiell Bennett in the Atlantic Wire.

And that continuing debate does not bode well for Romney, Paul Blumenthal in the Huffington Post agrees. "It isn't as though Romney is the first very wealthy man to run for president, but he has a way of highlighting his wealth in a way that brings to mind the famous quip by the former Texas Gov Ann Richards about President George HW Bush: 'He was born with a silver foot in his mouth.'"

For Bloomberg's David J Lynch and Steven Sloan, the issue has ignited a debate over the fairness of "so-called carried interest provision, which provides a relative handful of investment executives with preferential tax rates".

They expect the Democrats to seize on the issue, perhaps as soon as President Obama's State of the Union address on Tuesday, which is expected to revolve around a theme of "economic fairness".

Mr Gingrich, who polled poorly in both Iowa and New Hampshire, won a convincing victory over Mr Romney in South Carolina after attacking Mr Romney over his business and tax records.

Mr Romney has called on Mr Gingrich to release documents related to his involvement with mortgage giant Freddie Mac.

Freddie Mac, a federally backed mortgage guarantor, required millions in government aid after in 2008 financial crisis.

In latest debate, Mr Romney said Mr Gingrich was doing business with Washington's "chief lobbyists".

Mr Gingrich said he served as a historian and consultant for the company, not a lobbyist.

Earlier on Monday, Mr Gingrich released his 2006 contract with Freddie Mac, but the document did not cover most of his multiple-year working relationship with the company.

The candidates are now campaigning in Florida, which holds its primary on 31 January. The state is seen as a major battleground in the US general election, with a diverse electorate and and a cash-hungry advertising market.

Primaries and caucuses will be held in every US state over the next few months to pick a Republican nominee to take on Democratic President Barack Obama in November.

The eventual winner will be anointed at the party convention in August.

Presidents' incomes comparison
 

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  • rate this
    0

    Comment number 245.

    'And iniquity shall abound in high places'. Its True. We here about corruption more and more in so called 'advanced civilized' countries in the West in the same way we here it from the Third world. Yet what is both astonishing and sickening is the media who present such people as 'upright moral citizens'. Wrong. Tax evaision and tax havens have wrecked enonomies along with deregulation.

  • rate this
    -2

    Comment number 244.

    What the Romney tax information does is undermine the Republican low tax, trickle down, encourage the job creator agenda.
    Romney made his money from his private equity business, which driven purely by profit, made him a multi-millionaire and cost thousands their jobs.
    An equitable tax system would have Romney on at least 35% and the low paid on no more than 14%.

  • rate this
    +5

    Comment number 243.

    Living in Canada, I cannot fathom 15% tax rate but I surely envy it secretely!

  • rate this
    +25

    Comment number 242.

    All the GOP candidates have a bad smell about them of one sort or another - and most appear to be barking mad to boot. I thought Bush was the absolute bottom of the barrle, but this lost are even worse.

  • rate this
    +1

    Comment number 241.

    And its so easy to say he paid little amount of taxes but people need to realize the effect of raising investment taxes, people will invest less and job creation will suffer. Retirement funds will diminish and people will get less for their retirements. The list goes on and on. Its a shame that some republicans are going against their own principles.

  • rate this
    -3

    Comment number 240.

    233.IAbideByTheTruth
    The fact that he earned $42 million profit shows how many jobs his investments have created
    ==
    Interesting argument. But how?? How does the fact the he "earned" $42M profit show how many jobs his investment has "created". Give me a figure. How many jobs does $42M profit for him create?

  • rate this
    -1

    Comment number 239.

    Mr. Romney and the Republican Party believes that the wealth should trickle down from the top.It's no surprise why they want less government and no taxes!!!

  • rate this
    +1

    Comment number 238.

    @231.Peter Hodge
    You could similarly characterise the UK as "If you work you get screwed, sit at home and make babies, you get paid for the pleasure".

    My experience in USA was that people are considerably MORE caring than the UK and it is precisely because the the state DOES-NOT provide all the welfare.

    There is good and bad in both systems, spin is neither accurate nor helpful.

  • rate this
    +3

    Comment number 237.

    Republicans are a funny bunch. Whenever the demos say they want to raise taxes on the rich, republicans go nuts and say demos are communists/socialists, but now they are turning against one of their own for being rich and paying lower taxes. So republicans, will you be voting for Obama in the next elections?

  • rate this
    +4

    Comment number 236.

    Ruper: Romney's people will never need Medicare

    He was talking about Medicare D

    This is HUGE!

    Medicare D increased the price of Medicare by billions

    Due to Medicare D, 60% of what is paid for prescription meds
    is DIRECT PROFIT for pharmaceutical companies

    Gingrich was being paid by health industry as 'consultant'
    while at same time
    He supported Medicare D bill in Congress

  • rate this
    +3

    Comment number 235.

    81.Bauer
    He pays more tax in one year than most of us here will pay in our entire lives. I don't really see the problem.

    It is not the amount of tax he has paid that is the problem, it is the % of tax that he and others like him ought to be paying. Although his 15% is legal, it is morally obscene when people earning a considerably lower wage are paying a much higher % in tax.

  • rate this
    0

    Comment number 234.

    http://www.nationalreview.com/corner/289054/key-test-romney-campaign-john-hood

    Apparently that is only the personal federal income tax rate on the investment income and does not include the corporate texa rate or the state income tax he would have paid.
    If true - this is very misleading by the media.

  • rate this
    -21

    Comment number 233.

    Its so easy to forget what we stand for. Mitt Romney is a typical example of American values. He worked hard to make his money and instead of locking his $250 million in a safe somewhere in his home, he put that money to work by investing it in right places to create jobs and earn him some profit. The fact that he earned $42 million profit shows how many jobs his investments have created.

  • rate this
    +1

    Comment number 232.

    @139 Alan T: " getting elected as US president is a rich man's game its a self perpetuating thing and that distant sound I can hear must be the founding fathers doing very high RPM in their graves!"

    The founding fathers limited suffrage to a small group of wealthy male landowners. They didn't want the unwashed, illiterate masses making decisions for the nation. Contrast with Jacksonian Democracy.

  • rate this
    +3

    Comment number 231.

    Her is the major problem with the USA. Sheer, rampant greed from the right rich, In a recent lengthy discussion with a 'friend' over there I was left with the impression that if you 'have it. keep it. If you haven't got it. tough luck. Our system may not be perfect, but compared to the USA we are a caring country.That we can get ripped off is a risk we have to take.

  • rate this
    +1

    Comment number 230.

    @ Jaf, #211;

    "he pays 35% on earned income, and 15% on unearned income, and this averages out at 13.9% how exactly?"

    It doesn't; the vast majority of his income is unearned, and therefore taxed at 13.9% in the 2010 tax year, and is expected to be 15.4% in the 2011 tax year if his earnings keep him in the same bracket.

    Where on earth did you get "averaging out between 35% and 19%" from?

  • rate this
    0

    Comment number 229.

    As James says:

    "The shocker is not so much that he only pays 15%, but more the fact that that is all he is meant to pay!!!

    No wonder america invests more (than the UK) in start-ups when they only have to pay 15% tax on the returns."

    I suppose you think the government should get it and then hope they invest in "start-ups".

    BTW, he did give 7M to charity as well.

  • rate this
    +1

    Comment number 228.

    He's right, he pays what he's got to pay, at least according to the law. But, is he really sharing the burden in the right proportion?

  • rate this
    -2

    Comment number 227.

    The tax issue is moot

    What matters is who is going to make USA the most successful-
    that person is Mitt Romney!!!

    Romney's answers last night truly gave me hope

    If Romney is elected he is going to do everything in his power to create jobs+save USA

    All this talk of trying to portray Romney as a bad millionaire b/c hes rich is
    a farce

    Romney has a heart of gold

  • rate this
    +1

    Comment number 226.

    @144.ElvenBookwyrm
    I have to say, I'm shocked Romney thinks that saying he pays minimum taxes will win him votes.
    ----
    Remember the Boston Tea Party? That pretty much created the independent country of the USA and it was triggered by too high taxes by the English. From that point, people in the US were keen to keep their taxes under control and its ingrained into their culture now.

 

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