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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US Presidential Election 2012

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  • rate this
    -6

    Comment number 265.

    There you go, my comment was removed because i spoke out against the BBC.

    I cannot wait until the licence fee is abolished and YOU BBC will need to find new revenue.

    Or was it that i attacked our American cousins who started off this whole downward spiral of debt in the first place?

    Enjoy my license fee BBC whilst it lasts eh, id rather pay it to the NHS than the BBC.

  • rate this
    -2

    Comment number 264.

    OK Romney is a Millionaire

    Did he make his investments with the special knowledge he had as a senator?
    Then he pay's 13 odd % on money he made from investments that he got information about that for anyone else would be illegal

    I will be happy when Congressional Insiders cannot make investments they have insider knowledge about and disclose all past investments before they run for office again

  • rate this
    -3

    Comment number 263.

    "You americans can talk all you want, this site is paid for with british 'tax-payers' money.
    Yes that is right we have to pay for this."

    WRIONG, i'm An American, and there are ads on this website, the BBC is making money from American's viewing this qwebsite, so Amerivan's have just as much right to comment! get it right. You're tac payer money is not what keeps the BBC afloat, BBc is comerical

  • rate this
    +24

    Comment number 262.

    If you have money, you can live. If you haven't, you can live on the street and starve. The good old American dream.

  • rate this
    +2

    Comment number 261.

    Do YOU KNOW that all the money that Romney had invested in these corporations has ALL READY been taxed at full rate. Now he is gaining return on his investment and these cap gains are taxed at 15%.
    The engine of the economy- investment of your all ready taxed $ in business is encouraged.

  • rate this
    -1

    Comment number 260.

    246. IAbideByTheTruth

    Unless your investment is asset stripping.

  • Comment number 259.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    +1

    Comment number 258.

    This is just the Press. As far as I know, no one in Congress/Senate or running for President is....poor.

    Good thought for the rest of us "they have more to lose than we do financially." Bad thought, voters get to choose a Republican, election is held, someone wins and for them...its business as usual. For us we wait another 4 years (well 2 actually) and it begins again.

    And thats about it.

  • Comment number 257.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    0

    Comment number 256.

    If he was paying 31% tax wouldn`t that make him an idiot,and thus unelectable?Or does everybody pay more tax than the law demands?

  • rate this
    +2

    Comment number 255.

    All animals are equal but some animals are more equal than others.

  • rate this
    0

    Comment number 254.

    @253.petrohwk
    "church, which also happen to have the world's largest and most effective humanitarian aid program"

    Most brits, due to being state-handout-dependant, have no conception of what the church in the USA is for - they immediately think american church goers are a bunch of bible-bashing extremists.

    Truth is they -are- a fundamental provider of social and financial support.

  • rate this
    +2

    Comment number 253.

    Slow down for a second, most americans pay less than 15% tax (I think the average is just above 11%), and Romney's 14-15% is capital gains tax, not earned income tax.

    Also under Gingrich's tax plan Romney would pay 0% tax on capital gains.
    And can I just mention that Romeny also pays 10% to his church, which also happen to have the world's largest and most effective humanitarian aid program

  • rate this
    +1

    Comment number 252.

    224.Pyrogenic

    How about you start with tellling us where the banking crysis started.

    Second also tell us how many lies YOUR previous government told about Iraq and how much our previous government went along with that.
    As for aid we seem to give aid to nations with dictators/corrupt governments which then purchase our weapons.
    Then all they do is skim off the profits as investors simple greed.

  • rate this
    -31

    Comment number 251.

    I have no problem with anyone legally reducing their tax rate from 35% to 15% with a 7 million dollar donation to charity! Go Romney! In fact this gives me greater admiration for a candidate I barely knew. Taxpayers who contribute to charities are rewarded with lower effective tax-rates as they give more. Add Romney's charitable contributions and taxes paid and his "real tax-rate" is MUCH higher!

  • rate this
    +2

    Comment number 250.

    Question the Questioner:
    How do they get the privilege to ask the questions that determine who gets voted for? These aren't the questions the citizens would ask. Boo Chamber of Commerce, Big Business and Old Media.

  • rate this
    +2

    Comment number 249.

    @244.LeftieAgitator
    "An equitable tax system would have Romney on at least 35% and the low paid on no more than 14%."

    While you're right about the potentially damaging effect of Romney's business dealings, I will take you to task on your broken definition of "equitable".

    An equitable tax system would see Romney and the low paid both contributing 14%, or both contributing 35%.

  • rate this
    +2

    Comment number 248.

    You keep believing your right wing myths then IAbide. I prefer to believe all the money went into hedge funds and thus COST jobs rather than created them. You have no more proof of your theory than I have of mine, so each to their own eh?

  • rate this
    0

    Comment number 247.

    @238.farkyss

    Nail on the head. The "good old days" of close-knit communities were a direct result of need. You looked after everyone so they would look after you when you needed it. Today's UK has a Gov't to look after them - whatever they do or don't do - so community is gone. US still has community.

  • rate this
    +2

    Comment number 246.

    @RedRebel54
    If you have $1billion and never invested it, you get $0 return. But if you invest $250 million, that money is used to hire people to work it. Those people, can't tell how many, must have worked hard enough for you to get $42 million return out of that investment. Its a simple business rule, investments creates jobs. No jobs will be created if people put their money in a safe.

 

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