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AS THE RACE for the Republican nomination hots up, new disclosures that Mitt Romney paid less than 14 per cent tax on his income over the past two years are likely to bring his wealth into sharp focus ahead of the crucial Florida primary next week.
Details of the former Massachusetts governor’s federal tax returns were released this morning following much pressure on him to do so. They show that he will pay $6.2 million (€4.7m) in taxes on $45 million (€34.5m) in income over the two tax years of 2010 and 2011.
This amounts to an effective tax rate of 13.9 per cent which, as the Guardian points out, is a rate lower than the average American who would pay 35 per cent on regular income over $379,000.
But as the primary source of Romney’s income is from an array of investments they are subject to a much lower tax rate of 15 per cent under a reform introduced by former president George W Bush.
The Telegraph explains that Romney, who has a fortune of $250 million, paid $3 million (€2.3m) tax on income of $21.7 million (€16.6m) in 2010 which amounts to a rate of 13.9 per cent.
His income for 2011 is expected to fall but he will actually pay more tax for last year, according to the documentation which shows that $3.2 million (€2.45 million) will be taken by the taxman on income of $20.9 million (€16m) – a rate of 15.4 per cent.
Romney had been under pressure in recent weeks to release his tax returns. His opponents vying for the Republican nomination had cast him as a wealthy businessman who slashed jobs in the private sector when he worked for the Bain Capital management consulting firm that he helped set up.
Former House Speaker Newt Gingrich, who caused an upset when he won the South Carolina primary on Saturday, made public his returns last weekend, showing he paid almost $1 million in income taxes — a tax rate of about 31 per cent.
Meanwhile, the White House imcumbent Barack Obama, who Romney and Gingrich are battling to face in the autumn, had a joint income with his wife Michelle of $1.7 million (€1.3m) in 2010 on which they paid 26 per cent in tax.
Prior to the release of his own documentation this morning, Romney said in the first pre-Florida primary debates in Tampa last night that he done everything by the book.
“I pay all the taxes that are legally required and not a dollar more,” he said. “I don’t think you want someone as the candidate for president who pays more taxes than he owes.”
YouTube: buzzfeed
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I can’t stand Romney, but in fairness this article leaves out a fairly important point. Romney’s income is from investments and shares. He doesn’t actually pay income tax, he pays capital gains tax, hence the lower rate.
The same thing applies here. If your salary is 1 million, you pay income tax on it. But if it’s earned from investments, or the sale of a house, you pay capital gains (which, off the top of my head, is somewhere around 20%).
Curiously, Capital gains tax in the states in only 15% compared to 20% Here for capital gains and Dirt tax at 30% (I don’t think there is a US equivalent for dirt)
Also not to be all crazy about Mitt (I’m not) but he did also declare payments to charities (albeit mostly Mormon) of around $7 million for the last 2 years. Added to his 6.2 mil that he paid in taxes for the years 2010-2011.
@John
I see what you are saying but that headline ” $6.2 million (€4.7m) in taxes on $45 million (€34.5m) in income over the two tax years of 2010 and 2011″ really puts the lie to the Republican claims that Obama has created some kind of high taxation socialist state in his first term.
People like Romney are going to have to pay more taxes if the US is to close the budget deficit, as well as cutting spending of course. Repealing the Bush tax cuts on the rich is a big thing that Obama can run on.
CGT in Ireland is 25%
The article does say that, in the fourth paragraph. Though perhaps it has been edited since you commented…
John,
The article does state this in the fourth paragraph: “But as the primary source of Romney’s income is from an array of investments they are subject to a much lower tax rate of 15 per cent under a reform introduced by former president George W Bush.”
Hugh
Hi random,
The article has not be edited since it was posted this morning it always stated that Romney was subject to a lower tax rate on his investment returns.
Hugh
Apologies yeah I meant to say 25% CGT.
At least he’s got plenty of money to fund his campaign, if the guy in this video is telling the truth then its nuts what’s going on over there!
A Romney “Volunteer” reveals he’s paid for his support! :: http://www.youtube.com/watch?v=yFczAKYHRM8
@Eamonom, of course he donated to the Mormons, it’s a requirement of his religion to donate a certain percentage of his income to Mormon institutions. There’s similar rules in Islam, Judaism and Christianity.
It’s not of his own volition, it’s a religious obligation.
$45mln in two years… jesus….no one will tell me he’s in politics to make his country better…
In fairness, at least he’s probably not in it for the money :)
Danny, when a guy is that wealthy he isn’t in it for the money. If you knew Romney’s life story you’ll see it’s about him facing challenges to better himself. After college he spent two years as a missionary in France trying to convince them to give up wine and cigarettes to become Mormons! His efforts were futile… But the guy has depth and I do believe he is involved in politics to make America a better place.
Seems to me to be a thoroughly decent man, who would be a fair president. He´s having to say some awful stuff to get through the Republican primaries though, of course.
Winston, I cracked up laughing when I heard of missionary’s to France to wean them off the juice and fags. Thanks for that. Mormons rock.
It’s interesting that the candidates regard those couples earning below $200,000 as ‘middle-income’ Americans!
Is he breaking the law???
No. He’s fully tax compliant.
I hate Romney just as much as I hate Obama. But in Romney’s defence – that tax is not on income, that tax is on yield on investment. If a company goes out of business then the worker simply looses his income but the shareholders don’t just loose their income they also loose their investment. Plus, if it is so easy to be a big bad capitalist pig and pay all those “super low” taxes then why don’t all of you do-gooders form a company and become insanely rich? And you might also want to ask – how many jobs has an average American created and how many jobs has Romney created?
Ron Paul 2012!
Just as an aside here dave, its quite difficult to advance oneself to certain levels in society due to the makeup of an effective cast system. Its not what you know its mostly who you know. There are very very few people who have not come from wealth that have gone on to advance in business to the scale of these people. Its not as easy as what your saying.
Ever here the saying wealth creates wealth. Its a nepotic cycle.
Sorry James, That’s a complete cop out. And more than a little patronising. This “cast” (sic) system you describe is simply the social darwinism. How would you describe it in a country like Ireland that had no class system (or at least outside the cities) that individuals through a combination of luck and hard work can consolidate their assets and insure a solid financial footing for their families. Even the vanderbelts and Guggenheim’s had to start somewhere. But to say that because you don’t come from that class you shouldn’t rationally aspire to success. Sure the odds may be against. But you’re already building in an argument to fail
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