Romney Releases His Tax Returns
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We know far more today than we did yesterday about Mitt Romney's money. After much prodding on the campaign trail, Romney released his 2010 tax returns and estimates for 2011. There were few surprises. It's well-known that before he was Massachusetts' governor, Romney made a fortune in the private equity business.
BLOCK: What we didn't know is exactly how much money that fortune continues to earn Romney in interest and dividends, or how much tax he pays on it. The answer, he brought in about $21 million a year and his effective tax rate is just under 15 percent. NPR's Tamara Keith reports.
TAMARA KEITH, BYLINE: All of the tax experts we spoke with say Romney's returns follow the letter of the law. They aren't something you can throw together in a few hours on TurboTax. In fact, his family hires the heavy-hitting firm PricewaterhouseCoopers. Thomas Cooke is a professor of law at Georgetown's Business School.
THOMAS COOKE: As a tax professor, it's the type of tax return I rarely get a chance to show to my students.
KEITH: The Romney campaign released about 500 pages of tax documents this morning, and Cooke says there are no major surprises.
COOKE: It's an example of how one can be extremely wealthy, be in 100 percent compliance with the law, take advantage of every aspect of the tax law that's out there and wind up paying a very, very low effective tax rate.
KEITH: Romney's effective tax rate at just below 15 percent is far lower than Newt Gingrich's at 31 percent, and President Obama's at around 25 percent. That's because both Gingrich and Mr. Obama get their most of their income from wages and other sources taxed at a marginal rate of up to 35 percent. Mitt Romney gets almost all of his money from investments, interest and dividends, taxed at the lower 15 percent capital gains rate.
LARRY ZELENAK: All you have to do is be, you know, fabulously wealthy, and those are the rules that apply to you.
KEITH: Larry Zelenak is a professor at Duke Law School. What stands out to him about the Romney taxes is...
ZELENAK: That it's kind of remarkable under current law that an extremely wealthy couple like the Romneys don't have to do anything very aggressive at all in order to get their average tax rate down to around 15 percent.
KEITH: There are no special tax tricks or dodges here. The tax code simply favors Romney's kind of income. Roberton Williams is a senior fellow at the nonpartisan Tax Policy Center.
ROBERTON WILLIAMS: If we choose to tax investment income at 15 percent, then we're going to have situations like the Romney case where his overall income tax rate is relatively low.
KEITH: The economic theory being that investment helps boost the economy and should be rewarded with a lower tax rate. Williams says Romney pays a much lower tax rate than your average wealthy person and about the same as your average middle-income American because they're also hit with payroll taxes for Social Security and Medicare. But there are some items in the Romney taxes that you won't find in most Americans' tax returns, including the Cayman Islands investments in a Romney family trust and a Swiss bank account. Both places are known as tax havens and Romney's legal team went to great lengths this morning to explain them away as perfectly normal.
Romney's trustee says he closed the Swiss bank account in 2010 because, quote, "it just wasn't worth it." Georgetown's Cooke says he can see why.
COOKE: At the end the day, he probably felt they did not pass the smell test even though they may have been perfectly legitimate investments. And according to all accounts, he accounted for the gain on those accounts through his tax return.
KEITH: If nothing else, these returns provide a window into the tax lives of the extremely wealthy who are able to make money largely because they already have so much. Tamara Keith, NPR News.
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