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Romney Campaign Finally Releases His Tax Returns
Originally published on Tue January 24, 2012 10:00 am
DAVID GREENE, HOST:
All right, so Romney has gone on the attack in Florida, and he'll also be answering a lot of questions today about those taxes that he is releasing. As we heard from Mara, it turns out over the last few years, the effective tax rate Romney has paid is just under 15 percent.
Now, Newt Gingrich has been pressing Romney to publicly disclose the documents. And the former House speaker released his own tax returns, to dramatic effect, during a debate last Thursday.
NPR's Tamara Keith has the calculator out, and she's been working it all night. And she joins us to break down the numbers.
Tamara, good morning.
TAMARA KEITH, BYLINE: Good morning.
GREENE: All right. Let's start with these basic numbers for Mitt Romney that will make news today. How much did he pay in taxes?
KEITH: I should start by saying that the campaign has not yet posted his taxes online. They gave a sneak peak to a handful of publications, and so we're working with their numbers. And a warning - there are a lot of numbers here.
GREENE: Consider us warned; we'll bear with you.
KEITH: OK. So in 2010, Romney had just about $22 million in income, and he paid about 3 million in taxes. And then in his estimates for 2011, his income would be 21 million, and is expected to pay 3.2 million in taxes. Average all those things out, and you get an effective tax rate of about 14 and a half percent, which is quite low. The average tax rate paid by people earning more than a million dollars a year is 25 percent. That's according to the Tax Foundation.
So Romney is paying much lower taxes than the average very wealthy person. Also a note: He gave $7 million to charity over those two years. And much of that went to the Mormon Church, where he tithes 10 percent of his income.
GREENE: OK. So Romney paying less in taxes than even most other people who are rich. But what about Newt Gingrich?
KEITH: He released his 2010 returns, and he said that he paid nearly a million dollars on an adjusted gross income of 3.1 million. That works out to just over 30 percent.
GREENE: Well, let's make sure we understand this, because it is a lot of numbers. So Romney's paying an effective tax rate that's like, about half of what Gingrich is paying, I think. How does that happen?
KEITH: Well, it all comes down to earned income versus unearned income. And much of Gingrich's income came either through wages - or he has some S-corporations that pass income through to him. And much of that was taxed at the top individual tax rate, which is 35 percent. Almost all of Romney's money came through capital gain - so returns on investment, dividends, interest. He amassed huge personal wealth when he worked at Bain Capital. And now, that money is basically generating more money. And when that happens, it's taxed at the capital gains rate, which is 15 percent. Here's a little bit more from the debate last night, with Romney talking about his taxes.
(SOUNDBITE OF DEBATE)
MITT ROMNEY: Is it entirely legal and fair? Absolutely. I'm proud of the fact that I pay a lot of taxes.
GREENE: Proud of paying a lot of taxes.
KEITH: Yeah. So what we've learned so far is that Romney pays a lot of taxes because he is extremely wealthy - which is something that we knew already.
GREENE: Well, help us better understand these numbers compared to what most Americans pay in taxes.
KEITH: The average effective tax rate in America is 11 percent - that's according to the Tax Foundation. But then the average American also pays payroll taxes for Social Security and Medicare, and that pushes most people above 15 percent.
GREENE: You know, Tamara, Romney had been so reluctant to release these returns. How is this likely to affect things on the campaign trail?
KEITH: Well, last week in South Carolina, Romney said that he thought he paid about a 15 percent effective tax rate. And immediately, Newt Gingrich started going after him, in sort of a backhanded way. Gingrich has a tax plan, and it has a 15 percent flat tax option. Here he is, talking about that at last night's debate.
(SOUNDBITE OF DEBATE)
NEWT GINGRICH: I'm prepared to describe my 15 percent flat tax as the Mitt Romney flat tax. I'd like to bring everybody else down to Mitt's rate, not try to bring him up to some other rate.
GREENE: Gingrich is going to try to use Romney's taxes for his own purposes.
KEITH: Yeah, he gets to remind everyone that Romney is paying a fairly low tax rate, which could really annoy voters who either pay a lot more or at least, think they do. One note: Under the Gingrich tax plan, Romney would actually pay an effective tax rate of near-zero, because Gingrich proposes eliminating all taxes on capital gains. President Obama and his Democratic allies are not going to want to let this issue go, either. The president has been calling for a surtax on millionaires. He's also been talking about the so-called Buffett rule. And in a race that is likely to include discussions of income inequality, Romney's tax rate plays right into the president's hands.
GREENE: All right. Well, Tamara, don't put the calculator away quite yet.
KEITH: Oh, no.
GREENE: NPR's Tamara Keith. Thank you.
KEITH: You're welcome. Transcript provided by NPR, Copyright National Public Radio.