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Update: Mitt Romney publishes tax returns

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24th Jan 2012
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Republican presidential candidate Mitt Romney has finally published his tax returns, which reveal he paid an even lower rate of tax on his multi-million dollar income than was previously thought.

After initially insisting that he would not release his tax returns until April, Romney bowed to increasing pressure prior to losing the South Carolina primary to Republican rival Newt Gingrich.

The former Massachusetts governor, who has a fortune of around $250m, revealed that he and his wife paid $3m tax on an income of $21.7m in 2010 – resulting in a tax rate of just 13.9%.

According to an official estimates, he expects to pay $3.2m on an income of $20.9 million for the last year, resulting in a rate of 15.4%, which was around the figure he gave to reporters last week.

Last night Romney also said during a televised debate in Tampa, “I’m proud of the fact that I pay a lot of taxes.” He added: “I don’t think you want someone as the candidate for president who pays more taxes than he owes.”

Romney pays a lower tax rate than most Americans because his income came largely from returns on investments and capital gains, which is taxed at a flat rate of 15%.

Compare to his rivals, fellow Republican nominee Newt Gingrich paid 31.6% on $3.16m earned with his wife, while President Obama and his wife paid 26% tax on $1.8m last year.

The newly released documents also reveal that over the past two years Romney gave $7m in charitable donations, including $4.1m to the Mormon Church of Jesus Christ of Latter-day Saints. 

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Mitt Romney: I pay 15% tax

19 Jan 2012 - Republican presidential frontrunner Mitt Romney revealed at a press conference in Florence, South Carolina, this week that he pays a tax rate of just 15%, in spite of an estimated wealth of $200m.

In a strange echo of Tony Blair’s tax avoidance strategy that came to light last week, Romney’s accounts are coming under increasing scrutiny as he emerges as the party’s main presidential candidate.

Romney, who has been campaigning in South Carolina ahead of its primary vote on Saturday, told reporters: "What's the effective rate I've been paying? It's probably closer to the 15% rate than anything," confirming that his income came mainly from post-retirement investments, including profits from private equity firm Bain Capital. 

The former governor of Massachusetts has so far resisted revealing details about his financial dealings, but is now bowing to pressure, saying he will wait until April to publish his tax returns. He has previously disclosed that he also earns around $370,000 a year - “not very much" - from speaking engagements.

Sift Media’s US accounting tabloid Going Concern commented that Romney’s “armor started to crack on the tax return question”. His nearest rival, Newt Gingrich, highlighted the tax issue and promised to release his own tax returns later today.

Replies (18)

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By dwgw
20th Jan 2012 11:08

Man of the people

$370,000 a year from speaking engagements = "not very much" means very much out of touch with the vast majority of his country.  Not untypical, sadly.

Pity that candidates' tax affairs and private lives, not to mention teeth, weight and hair, now almost completely obscure any meaningful assessment of their potential worth as national leaders.

I'd say we deserve better but fear we perhaps collude too much in impoverishing our own democracies to justify that statement.

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By Martin Telfer
20th Jan 2012 11:23

Is A/web turning tabloid?

This is the sloppy kind of headline we all have to put up with in the mainstream press, but I would expect an accounting website to recognise that Romney doesn't pay tax at 15% on his $200 million fortune.  I would be surprised if anyone paid that much.  He has a $200 million fortune and claims to pay tax at 15% on his income.

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John Stokdyk, AccountingWEB head of insight
By John Stokdyk
20th Jan 2012 12:08

Well, a bit, perhaps...

Sorry the sloppiness offended you, Martin, but as we found with our Tony Blair story last week, politicians' tax affairs do strike a chord with our members. Romney's finances appear to be a significant factor in the Republican presidential race - a sign of the times, perhaps?

Our US sister site Going Concern takes an unashamedly tabloid approach, and is proving very popular with accountants over there, so when the occasion (and UK libel laws) permit, we thought it appropriate to bring a taste of their coverage to our site.

You have a point about the headline, but perhaps you need to appreciate the constraints under which we operate. To prevent the site being overtaken by never-ending headlines, we try to keep them on one line. So "US candidate Romney confesses to paying 15% tax on as yet undisclosed income" wouldn't make it. We do have to resort to journalistic shorthand, of which this is an example.

You are strictly correct that he doesn't pay the 15% rate on the value of all his assets, and we will take note of your comments and try to be more circumspect in future.

But even if he's earning just 1% interest a year, he'll be on an income of $2m a year. That's a fortune in my book!

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By Martin Telfer
20th Jan 2012 12:39

How about: "Mitt Romney: I pay 15% tax "

... and save yourself some pixels.  The article's not really about his fortune anyway, just his tax bill.

Don't get me wrong.  I'm pleased to see the article and I'd be very interested to see how Romney manages to get his tax rate down to 15%.  I'd just prefer it if articles, including their headlines, were - I think this is the word - correct. 

 

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By MartinLevin
20th Jan 2012 13:04

Buying your way into Power in Politics

Maybe it's not just the amount of tax that anyone pays that is the question - although it must stick in the claw of the vast majority of taxpayers throughout the world.  Instead why doesn't the media focus on the huge amounts of money paid by candidates in trying to get themselves elected?  Wake up, world, you've always been taken for a ride by political parties, who are financed by those that want to enrich themselves.

http://www.martinlevinabc.co.uk/Election2010.htm

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By chatman
20th Jan 2012 13:42

What rate of tax does the average US citizen pay?

What rate of tax does the average US citizen pay?

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By lizzit
20th Jan 2012 14:32

rate of tax

The average rate in America is 18%.  Almost 50% of American pay no tax whatsoever.  The top band is 35% on income.  The top band on capital gains and dividends is a mere 15%.  The bulk of Romney's income is from carried interest (taxed at cap gains rates) in Cayman hedge structures aquired as part of employee benefits working at Bain.  None of the articles mention the state taxes, which in MA are 5%, so his real effective rate is 20%.

I want a smart president. His management of the taxation aspects of his wealth certainly indicate that not only is he smart, but that he'll understand tax law when it's up for a vote and not vote for stupid tax laws (unlike certain four-letter presidents).

 

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Replying to charliecarne:
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By chatman
20th Jan 2012 17:10

Romney smart?

lizzit wrote:
His management of the taxation aspects of his wealth certainly indicate that not only is he smart, but that he'll understand tax law when it's up for a vote and not vote for stupid tax laws (unlike certain four-letter presidents).

I would say it indicates that his accountant is competent but it gives no indication of his intelligence at all. Some of the things he says give an indication of his intelligence, but not in a good way.

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By carnmores
24th Jan 2012 16:06

John havent you hears of the

Speech Act

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John Stokdyk, AccountingWEB head of insight
By John Stokdyk
24th Jan 2012 17:04

Actually I hadn't!

@chatman - Just looked it up on Wikipedia, and it will certainly encourage us to be a little bolder about scurrilous material we bring over from Going Concern (not sure that Martin Telfer will be pleased about that).

But we'll still be wary of publishing similar things about people in the UK, who could sue us for publishing untrue allegations that might "lower their estimation" in the eyes of right-thinking members of society or disparage them in their trade, business or profession.

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By carnmores
24th Jan 2012 18:04

and you keep confusing me with CHATMAN

flattering as it is ..

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Replying to lionofludesch:
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By chatman
24th Jan 2012 22:10

Flattered

carnmores wrote:
flattering as it is ..

I'm flattered too.

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David Winch
By David Winch
25th Jan 2012 11:57

SPEECH Act

My understanding is that the SPEECH Act has the effect of protecting a US based journalist from a libel award made by a UK (or other non-US) court which might have the effect of limiting the freedom of speech of the US journalist.

But I don't think it would protect a UK based journalist from being sued by a US based 'victim' of libel in the UK courts for something published in the UK.

So keep on worrying, John!

David

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John Stokdyk, AccountingWEB head of insight
By John Stokdyk
25th Jan 2012 15:13

Careful you two!

@chatman @carnmores - I have enough trouble as it is telling you apart, for which many apologies.

You will also have to forgive me for forming a mental image of the two of you sitting in a theatre box to my left, casting loud and regular comments about the quality of my performance.

@DavidWinch - as always, thanks for your legal insights. From a quick whiz through Wikipedia, I had assumed that it applied the same criteria as the US First Amendment to foreign publications; with reflection on your advice, I'll rein in the AccountingWEB door-steppers and phone hackers. 

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Replying to juwet:
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By chatman
25th Jan 2012 17:03

Nice cultural reference

John Stokdyk wrote:
You will also have to forgive me for forming a mental image of the two of you sitting in a theatre box to my left, casting loud and regular comments about the quality of my performance.

LOL. The performance is always great. Keep it up.

Waldorf.

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By carnmores
25th Jan 2012 17:16

ROTF

brilliant John

David i suppose  we all be extradited now as well....;-)

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By chatman
26th Jan 2012 00:30

@John

To help you tell us apart in future John, just remember that anything that makes you feel insulted or criticised came from carnmores; anything that makes you feel happy, grateful or enlightened came from me.

I am glad I have been able to clear up that unfortunate confusion.

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By carnmores
26th Jan 2012 17:27

thats a cracker

lol very loud

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