July 27, 2021

Romney’s Tax Returns Show How Laws Favor the Wealthy

Yet the hundreds of pages of tax documents released by Mr. Romney’s campaign on Tuesday morning did not readily reveal any elaborate financial legerdemain or exotic tax shelters. What Mr. Romney’s returns illustrated, instead, was the array of perfectly ordinary ways in which the United States tax code confers advantages on the rich, allowing Mr. Romney to amass wealth under rules very different from those faced by most Americans who take home a paycheck.

Those differences leapt to the front of the national debate on Tuesday when President Obama — whose family’s income was less than a tenth of Mr. Romney’s in 2010 but whose effective federal rate was double — called for higher taxes on the wealthy in his State of the Union speech.

Mr. Romney’s tax returns were posted on his campaign’s Web site on Tuesday morning after escalating pressure from the other Republican candidates, Democrats and even supporters, some of whom attributed his loss in South Carolina’s Republican primary last weekend to his shifting and tentative responses to questions about his wealth, tax burden and overseas investments.

The 547 pages of documents included 2010 federal income tax returns for the Romneys, the couple’s estimated 2011 return and returns for their charitable foundation and two blind trusts established in their names, as well as a trust established for their children.

The couple paid about $3 million in federal taxes on an adjusted gross income of $21.6 million, the vast majority of it flowing from myriad of stock holdings, mutual funds and other investments, including profits and investment income from Bain Capital, the private equity firm Mr. Romney retired from in 1999.

The couple reported no wage earnings in 2010. But in a conference call with reporters on Tuesday, Mr. Romney’s campaign counsel, Benjamin L. Ginsberg, said that Mr. Romney and his wife collected more than $7 million worth of Bain profits in 2010.

That money — about a quarter of the couple’s income during the last two years — came in the form of so-called carried interest. It would be taxed not as deferred regular income, but at the lower 15 percent rate normally reserved for long-term capital gains, thanks to federal tax rules that have sparked intense debate in recent years.

Mr. Obama and others have argued that carried interest should be taxed at the rates which normally apply to income earned by people providing services, topping out at 35 percent. If Mr. Romney’s carried interest income in the last two years had been taxed at that higher rate, he would have owed about $4.8 million in federal taxes, roughly $2.6 million more than he would typically be assessed under current rules.

And like most of the wealthy, the Romneys paid only a tiny sliver of their income in payroll taxes, which cut heavily into the weekly paychecks of wage earners but is barely a blip on the returns of the rich. While payroll taxes eat up 6 percent of the income of Americans earning the national median income of $50,221, Mr. Romney and his wife paid just one-tenth of 1 percent of their income in payroll taxes.

Mr. Romney’s 2010 returns also suggest he may have paid far less taxes the previous year. The 2010 return shows the family made estimated tax payments for 2009 of $1,369,095. To avoid penalties, estimated tax payments must be at least 110 percent of the taxes owed the prior year. Assuming that is what he paid, his federal tax bill for 2009 would have been $1,244,632, far less than in 2010.

Mr. Romney and other Republican candidates have not only opposed higher taxes on the wealthy, but also favor maintaining or expanding the relatively low rates for capital gains and investment income, breaks that Republicans and others favor as a way to spur investment and reward risk-taking but which critics say have fed the growing wealth gap.

Floyd Norris, Stephanie Strom and Kevin Roose contributed reporting.

This article has been revised to reflect the following correction:

Correction: January 24, 2012

A previous version of this article misstated the number of I.P.O. shares of Goldman Sachs that the Romneys bought in 1999; it was 7,000 shares, not 6,000. The article also misstated the share price and total when the shares were sold in 2010; the Romneys sold them for $161.45 apiece, or $1,130,123.87.

Article source: http://feeds.nytimes.com/click.phdo?i=5d302537c73ce0407901d1671899563e

Speak Your Mind