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Mitt Romney has plenty of reasons to smile based on the numbers form his 2010 tax return.
After at first refusing to release any tax returns, GOP presidential candidate Mitt Romney finally relented today by making public his 2010 tax return. Romney’s father actually released 12 years of tax returns when he ran for president, and Romney’s opponents are still likely to press for the disclosure of more years in the coming months. Still, one year alone is providing plenty of reading material for reporters and interesting revelations for the public. Below are perhaps the five most stunning facts about Mitt Romney’s taxes.
#1 – Romney made more money in one day than the average American makes in a year, yet paid a lower tax rate than many middle-class Americans
Romney made an income of $21.7 million in 2010. As Bloomberg notes, this means that Romney made more in one day ($59,452) than the average American makes in one year (approximately $35,000). Romney’s income over one week would put him in the top 1% of wage earners in the country.
But alas this fact alone is not that shocking. The real stunner is the fact that Romney paid an effective tax rate of only 13.9% on this tremendous income. Romney’s tax rate is actually below that of many middle-class Americans who make only $50,000 per year. Romney’s chief GOP opponent, Newt Gingrich, made over $3 million in 2010, but paid a tax rate over 30%. President Obama made $1.8 million in 2010, and paid a tax rate of 23%. Both men made less than one-seventh of what Romney made, yet paid a much higher tax rate.
#2 – Romney made no income from "wages" and therefore avoided almost all Social Security and Medicare taxes
Romney low tax rate can be explained in large part by the source of his income. Almost all of Romney’s income was made off of capital gains, or investment income. As Warren Buffet put it, both Romney and he effectively make money by simply pushing their large sums of money around. While teachers, accountants, and construction laborers work 40 hours a day to earn $1,000 per week, Romney can make that sum in just a few hours by clicking some computer keys. In addition, Romney is able to escape a number of taxes because of his source of income. A normal laborer would be taxed for Social Security (12.4%) and Medicare (2.9%) when including the employer contribution. Romney pays none of these taxes simply because the income is from "capital gains" rather than "wages."
#3 – Romney's tax return is 550 pages long and details at least four foreign bank accounts
Needless to say Romney is not using the 1040EZ form to fill out his tax returns. The 2010 return alone is 550 pages long and details accounts that Romney has or once had in Luxembourg, Ireland, Switzerland, and the Cayman Islands. These countries are historically known as "tax shelters" where many Americans put their money to avoid paying higher taxes domestically.
Conservatives like Romney often complain about the complications of the tax code, but the 2010 return shows that Romney and his tax advisors have effectively used the code to lower his tax rate tremendously. Romney takes advantage of a number of very complex deductions, including one which allows him to rollover his investment losses from one year over to later years in order to offset his income.
#4 – Romney donated $7 million over the past two years
The tax return is not all bad for Romney. On average, the richest Americans give less than one-half of one percent of their income to charity. Romney, in contrast, donated over 15% of his income to charity in 2010 and 2011, almost 30 times as much as the average person in his tax bracket. Romney donated a total of $7 million over the last two years, over $4 million of which went to the Mormon Church.
Of course, Romney was able to take advantage of these charitable contributions by using them as deductions on his taxes, but he still certainly gives away much more of his wealth than most of the top 1%.
#5 – Romney would pay a much lower rate under his own tax plan, as well as Newt Gingrich’s tax plan
As low as Romney’s tax rate is, it would actually be lower if he or his Republican rival had their way. Romney has proposed a plan which would lower the top tax rate and also lower corporate income taxes, which tends to benefit wealthy shareholders like himself. Under calculation by the Citizens for Tax Justice, Romney may end up paying less than half of his current rate if his own tax plan is passed.
But the real shocker is Romney’s tax rate under Newt Gingrich’s plan. As Romney noted in last night’s debate, he may very well pay no taxes at all under Gingrich’s plan. Gingrich would altogether eliminate taxes on capital gains, dividends, and interest income, which is how Romney makes almost all of his income.
Credit: , Political Buzz Examiner
#1 – Romney made more money in one day than the average American makes in a year, yet paid a lower tax rate than many middle-class Americans
Romney made an income of $21.7 million in 2010. As Bloomberg notes, this means that Romney made more in one day ($59,452) than the average American makes in one year (approximately $35,000). Romney’s income over one week would put him in the top 1% of wage earners in the country.
But alas this fact alone is not that shocking. The real stunner is the fact that Romney paid an effective tax rate of only 13.9% on this tremendous income. Romney’s tax rate is actually below that of many middle-class Americans who make only $50,000 per year. Romney’s chief GOP opponent, Newt Gingrich, made over $3 million in 2010, but paid a tax rate over 30%. President Obama made $1.8 million in 2010, and paid a tax rate of 23%. Both men made less than one-seventh of what Romney made, yet paid a much higher tax rate.
#2 – Romney made no income from "wages" and therefore avoided almost all Social Security and Medicare taxes
Romney low tax rate can be explained in large part by the source of his income. Almost all of Romney’s income was made off of capital gains, or investment income. As Warren Buffet put it, both Romney and he effectively make money by simply pushing their large sums of money around. While teachers, accountants, and construction laborers work 40 hours a day to earn $1,000 per week, Romney can make that sum in just a few hours by clicking some computer keys. In addition, Romney is able to escape a number of taxes because of his source of income. A normal laborer would be taxed for Social Security (12.4%) and Medicare (2.9%) when including the employer contribution. Romney pays none of these taxes simply because the income is from "capital gains" rather than "wages."
#3 – Romney's tax return is 550 pages long and details at least four foreign bank accounts
Needless to say Romney is not using the 1040EZ form to fill out his tax returns. The 2010 return alone is 550 pages long and details accounts that Romney has or once had in Luxembourg, Ireland, Switzerland, and the Cayman Islands. These countries are historically known as "tax shelters" where many Americans put their money to avoid paying higher taxes domestically.
Conservatives like Romney often complain about the complications of the tax code, but the 2010 return shows that Romney and his tax advisors have effectively used the code to lower his tax rate tremendously. Romney takes advantage of a number of very complex deductions, including one which allows him to rollover his investment losses from one year over to later years in order to offset his income.
#4 – Romney donated $7 million over the past two years
The tax return is not all bad for Romney. On average, the richest Americans give less than one-half of one percent of their income to charity. Romney, in contrast, donated over 15% of his income to charity in 2010 and 2011, almost 30 times as much as the average person in his tax bracket. Romney donated a total of $7 million over the last two years, over $4 million of which went to the Mormon Church.
Of course, Romney was able to take advantage of these charitable contributions by using them as deductions on his taxes, but he still certainly gives away much more of his wealth than most of the top 1%.
#5 – Romney would pay a much lower rate under his own tax plan, as well as Newt Gingrich’s tax plan
As low as Romney’s tax rate is, it would actually be lower if he or his Republican rival had their way. Romney has proposed a plan which would lower the top tax rate and also lower corporate income taxes, which tends to benefit wealthy shareholders like himself. Under calculation by the Citizens for Tax Justice, Romney may end up paying less than half of his current rate if his own tax plan is passed.
But the real shocker is Romney’s tax rate under Newt Gingrich’s plan. As Romney noted in last night’s debate, he may very well pay no taxes at all under Gingrich’s plan. Gingrich would altogether eliminate taxes on capital gains, dividends, and interest income, which is how Romney makes almost all of his income.
Credit: , Political Buzz Examiner
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