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
    +16

    Comment number 305.

    Im surprised at the level of hostility people have towards the tax the Rich pay be it in America or in the UK. Its not the amount of tax they pay, its the imoral tax evaision and worse criminal tax havens plus the evil ideology of deregulation of markets that causes economic collapse and will ultimately damn them. Tax havens are an affort to christain decency and morality.

  • rate this
    +7

    Comment number 304.

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

    That statement would only be true if money didnt have marginal utility. ie the more you have the less you can do with it. $5 to a starving man is a meal and life, $5 to a man with millions is nothing. so taxing the lower income the same is actually taking more. = not equal

  • rate this
    +21

    Comment number 303.

    :(
    It's a bit depressing to see that one year of the amount he pays in taxes is more than I can earn in my entire lifetime if I don't have to pay for rent/food/any expenses. No wonder he said that $300K is practically nothing. It's also a bit sad that my entire life's work is worth less than the rich 'working' for one month - giving a speech and taking the other 29 days off. Maybe I'm just bitter

  • rate this
    0

    Comment number 302.

    299.
    LimeyLady

    Good luck with that..

    even the BBC can fold under political presure.

  • rate this
    +12

    Comment number 301.

    The tax code definitely needs to be overhauled to be made more fair and to cut out the myriad loopholes. Personally, I'd like to see a smaller income tax supplemented by the creation of a national sales tax (VAT). That at least would give people more control over what they pay. Got the money for a new car? Great, you pay a little more for tax. If you can't afford the car, you don't pay the tax.

  • rate this
    +3

    Comment number 300.

    15% is low for someone making over $20m. True. But that's a taxation problem. In this case, I'd like to know how many give to charity as much as they give in taxes ($3m), like Mr. Romney did. By the way, that doubles what he gives back to society. And that's more than Mr. Gingrich's 26%. Many of us pay higher taxes than Mr. Gingrich on a much smaller income than his.

  • rate this
    +1

    Comment number 299.

    So far Mr. Mardell has covered our politics in a similar manner to the other news sources over here.
    His job is to be non biased and to get to the bottom of issues that effect the voters. If they lie, he should call them out on it because not all voters have the time or resources to watch the candidates or the parties.
    Mr. Mardell needs to hold the politicians accountable for what they say & do

  • rate this
    +47

    Comment number 298.

    Mitt Romney misses the point entirely. It's not about him paying low taxes, it's that it highlights the issues of a system that promotes increasing income disparity. Normal people get taxed about 1/3 of their income,which for them means they can't afford a car, or rent. Romney makes millions, yet pays half the rate, when for him 1/3 taken away means he can still buy every house on my street.

  • rate this
    0

    Comment number 297.

    @293.LouisH
    Rich Americans are far better at philanphropy than the Brits, and you should not be judging them as to how much, to whom, and when they donate - just be glad that they do.
    @292.LimeyLady
    The BBC is renowned for being left-leaning, and for spinning views to appeal to middle englanders. It cannot, however, be seen to be overtly biased to a particular party.

  • rate this
    +5

    Comment number 296.

    lol I broke the House rules AGAIN, im a BAD man
    Well since i pay your wages mr moderator, im still in the debate.

    Limey lady the BBC is biased in many ways in which it protects its own income.
    I really fear the worst of our society here and across the pond, it is that bad we are all really just cash cows for the rich to get richer all on the hard working middle class.

  • rate this
    +1

    Comment number 295.

    What people often don't reconize about capital gains v. earned income are the shenanigans involved in getting income per se classified as capital gains, thus to be taxed at the lower rate. Expect to be hearing a lot about 'carried interest,' 'publicly traded partnerships,' and 'blocker corporations.'

    Looking forward to Obama's SOTU, and the return of the 'Buffet rule.'

  • rate this
    +21

    Comment number 294.

    America preaches a false form of christianity. The perverted ideology of the 'christian right' has absolutely NO foundations in the teachings of our lord Jesus Christ who warned the Rich, spoke about thier deviousness and iniquity and who had a love for the downtrodden and poor. As a christain socialist myself I can see a link between the corruption of dereguated capitalism of the Right and evil

  • rate this
    +1

    Comment number 293.

    Like most self-made rich men Romney seems to do little with his money other than grow his bank balance, grow his influence and sponsor his pet projects. As far as I can see the only real charitable donation he made was to cancer research, a pittance by his standards.
    It seems that, (with some notable exceptions like Bill Gates) the rich oligarchs of America only donate just before they die.

  • rate this
    0

    Comment number 292.

    281.Whenknew : The BBC site is the ONLY non biased platform that is read by people all over the world.
    I would like to influence Mr. Mardell and I will live in the eternal hope that as a newbie to covering US politics he will get into issues that are central to the people that vote.
    Cover congress with an effort to hold them accountable to the voters and hold the candidates to high moral standards

  • rate this
    +3

    Comment number 291.

    @288.LeftieAgitator
    "A pure flat rate tax means no government. All State provided services are privatised. Health, Education, infrastructure, pensions, Postal services. Flat rate tax or democracy"

    Pure unadulterated garbage. A flat rate tax system can have exactly the same scope for low spend/low provision through to high spend/high provision.

  • rate this
    -2

    Comment number 290.

    The taxes in this country need to be more balanced. No one likes to pay taxes and give their hard earned money over to the government, wealthy or not. Though, seeing his tax rate being so low in comparison to what i am paying is disturbing. To me it is not the amount, but the percentage you have to pay. This is really going to hurt his campaign and rightly so.

  • rate this
    -2

    Comment number 289.

    What we stand for is values that are consistent with the strong take care of the poor.Mr.Romney saying not one dollar more shows his insensitivity to voters who are struggling to make payments caused by rampant capitalism.Homeowner have taken a 50% hit on their values yet banks and bankers continue to flourish.I say to Mr Romney not a vote more!

  • rate this
    -2

    Comment number 288.

    #280. A pure flat rate tax means no government. All State provided services are privatised. Health, Education, infrastructure, pensions, Postal services, etc. no indirect taxes all replaced by usage fees to private providers.
    Except possibly Defence and the Justice system, funded by a sales tax.
    Flat rate tax or democracy, you can't have both.

    .

  • Comment number 287.

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

  • rate this
    +1

    Comment number 286.

    The American Law Makers are corrupted by the system that has given Personal freedoms to corporations that get freedom of speech by giving money to the lawmakers to write laws that favor corporations over people?????????
    They use insider knowledge to make investments and write laws to lessen taxes on investment income and make a pledge to NEVER RAISE TAXES
    American Tax laws are a joke.

 

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