The Secret is Out: Romney Tax Returns Released
by Terri Eyden on
By Teresa Ambord
The long awaited secret is out. The Romney campaign posted his full 2011 tax return September 21, along with a summary of taxes paid all the way back to 1990. Tax data from the earlier years took the form of a notarized letter from Romney's tax preparer providing a "summary of tax rates from the Romney's tax returns since 1990." The anticipation of these tax returns was strong, demonstrated by the fact that more than 105 individuals in Chicago were on the Romney website watching as the records rolled out, according to Romney spokeswoman Andrea Saul.
What had Romney said about his tax returns?
During a January primary debate, Romney said he paid "all the taxes that are legally required and not a dollar more."
Later he stated that he had gone back and taken a look at the previous twenty years of tax returns and found that at no time had he ever paid less than 13 percent.
In July, as the demand to see how much he'd paid in taxes, he told ABC news that voters expected candidates to pay "only what the tax code requires." And, "I don't think you want someone as the candidate for president who pays more taxes than he owes."
What about Paul Ryan's Taxes?
Ryan's taxes hold much less intrigue, evidently.
- His 2011 taxes, filed jointly with his wife, were also released September 21.
- The couple reported earnings of $323,416 from a combination of Ryan's congressional salary and rental income.
- They paid federal taxes of $64,764, which is an effective rate of 20 percent.
- They also paid state and local taxes amounting to $21,904 and gave nearly $13,000 to charity in 2011.
What was the opposition saying about Romney's tax returns?
Among other things, opponents suggested Romney lacked transparency concerning his income from Bain Capital, the payment of foreign income tax, and the possibility of offshore investments. Perhaps the most vocal critic has been Senate Majority Leader Harry Reid (D-Nev) who claims to have an anonymous informant, a former Bain Capital investor, who said Romney "didn't pay any taxes for ten years."
Now that the returns are out, what do they reveal?
For 2011, the Romneys paid $1.94 million in taxes on $13.7 million, mostly investment income. That equals an effective tax rate of 14.1 percent. They also donated to charity more than $4 million, though they took a deduction for $2.25 million.
The data released by the campaign showed that the Romneys did indeed pay state and federal taxes in each of the last twenty years, with the lowest effective annual rate being 13.66 percent, though the actual rate for each year wasn't revealed. The campaign also showed that the average effective federal rate over these twenty years was 20.2 percent, with an average of 13.45 percent given to charity.
Why didn't the Romneys take full advantage of the charitable deduction to which they were entitled?
Romney trustee Brad Malt explained why: "The Romneys' generous charitable donations in 2011 would have significantly reduced their tax obligation for the year. The Romneys thus limited their deduction of charitable contributions to conform to the governor's statement in August, based on the January estimate of income, that he paid at least 13 percent in income taxes in each of the last ten years."
Not taking the full deduction meant that the Romneys paid a quarter million more in federal taxes than they owed.
Will the release of the returns satisfy the political opposition?
Not likely. Even as the returns were rolled out, the Obama campaign was ready with more questions. The same day, they circulated a memo demanding to know whether Romney paid foreign income taxes, owned a shell corporation in Bermuda, and continues to receive income from Bain Capital.
Obama spokesman Danny Kanner wrote in the e-mail memo, "How can we believe that Romney paid the rates asserted in the summary when he refuses to release the returns themselves? If the data used to compile the summary is derived from all of Governor. Romney's tax returns from 1990-2009, why provide average calculations instead of simply providing the voters with the tax returns themselves?"
The Romney Response?
In anticipation of continued criticism from opponents, the Romney campaign also issued a statement from former IRS Commissioner Fred Goldberg. Goldberg wrote, "These returns reflect the complexity of our tax laws and the types of investment activity that I would anticipate for persons in their circumstances. There is no indication or suggestion of any tax-motivated or aggressive tax planning activities. In my judgment, they have fully satisfied their responsibilities as taxpayers."
What does the law say about forcing the release of tax returns?
After Harry Reid's assertion that the Romneys paid no taxes for ten years (per his anonymous source), the Huffington Post reported: "According to Title 26 of US Code Section 6103, the treasury secretary can disclose any personal tax return to the president 'or to such employee or employees of the White House Office as the President may designate.'"
In addition, the law permits that certain members of Congress who submit written requests to Geithner can also access Romeny's earlier returns. Specifically, the Senate Finance Committee, the House Ways and Means Committee, and the Joint Committee on Taxation are among those who can access individual tax returns, said the Huffington Post. "A request by anyone except a tax-writing committee has to be accompanied by a Senate or House resolution," Rebecca Wilkins, senior tax counsel at Citizens for Tax Justice.
In other words, tax returns may be personal and confidential, but with enough political leverage, nothing is sacred.
You may like these other stories...
By Deanna C. WhitePresident Barack Obama has won his reelection bid, handily defeating former Massachusetts Governor Mitt Romney in the Electoral College and winning the popular vote as well. But with Congress...
While there may be mixed views of the US economic outlook by the two presidential candidates, three quarters of America's corporate financial executives are relatively bullish about the economy and expect it will stay...
By Teresa AmbordJust when you thought American politics couldn't get any more bizarre or sink any lower . . . it did. If the claims can be believed, information thieves have penetrated the walls of accounting giant...
Upcoming CPE Webinars
In this session Excel expert David Ringstrom helps beginners get up to speed in Microsoft Excel. However, even experienced Excel users will learn some new tricks, particularly when David discusses under-utilized aspects of Excel.
FRF for SMEs Series--Measurement and Disclosure Principles for various Consolidations and Business Combinations, Part 4B
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.
In this session we'll review best practices for how to generate interest in your firm’s services.
Meet budgets and client expectations using project management skills geared toward the unique challenges faced by CPAs. Kristen Rampe will share how knowing the keys to structuring and executing a successful project can make the difference between success and repeated failures.