Romney gives Dem support for tax deductions claim

TOM RAUM, Associated Press

Sunday, September 23, 2012

WASHINGTON (AP) — Mitt Romney has given Democrats plenty of support for their claim he manipulated his deductions to keep his overall 2011 federal income tax rate above a certain threshold for political purposes.

The Republican presidential nominee, whose wealth is estimated as high as $250 million, seems hemmed in by a comment to reporters in August that he had never paid less than 13 percent in taxes in any single year over the past 10. Had he taken the full charitable deduction last year, it would have pushed his tax liability below 13 percent.

The former Massachusetts governor and his wife, Ann, could have claimed more in deductions, the trustee of Romney's blind trust said when the candidate's 2011 tax returns were released.

But, Brad Malt acknowledged, the couple "limited their deductions 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 10 years."

The tax returns had become a distraction for his campaign, with Democrats and even some fellow Republicans this summer urging Romney, who earlier had released 2010 data and a preliminary 2011 return, to disclose more than two years of information. Senate Majority Leader Harry Reid, D-Nev., had kept the issue alive by making an unsubstantiated and roundly criticized claim that Romney had not paid any taxes for 10 years. Romney's statement about the 13 percent level had come in reaction to Reid's assertion.

Romney probably also will be reminded by the Democrats by something else he said in August. Defending his right to pay no more taxes than he owed, he said, "I don't pay more than are legally due, and frankly if I had paid more than are legally due I don't think I'd be qualified to become president."

The decision of Romney's trustee to limit the use of charitable deductions in 2011 in order to adhere to the candidate's claim raised the eyebrows of several tax law experts. They noted that the trustee's use of numerous tax strategies gives Romney the rare ability to loosen or limit his tax payments at will.

The Romneys donated roughly $4 million to charities last year, but only claimed a deduction of $2.25 million on their tax return, filed with the Internal Revenue Service on Friday.

That information, Reid said, "reveals that Mitt Romney manipulated one of the only two years of tax returns he's seen fit to show the American people - and then only to 'conform' with his public statements. That raises the question: What else in those returns has Romney manipulated?"

Romney made $13.7 million last year and paid $1.94 million in federal income taxes, giving him an effective tax rate of 14.1 percent. That was a bit above the 13.9 percent rate paid on 2010 income.

More precisely, the returns showed that the couple paid $1,935,708 in taxes on income of $13,696,951.

Romney, one of the wealthiest candidates ever to seek the presidency, paid taxes at a rate lower than taxpayers whose income was mostly from wages, which can be taxed at higher rates.

He released his 2010 returns in January, but he continues to decline to disclose returns from previous years — including those while he worked at Bain Capital, the private equity firm he co-founded.

The Obama campaign and other Democrats have pushed for fuller disclosures, reminding the Republican candidate that his father, George Romney, released a dozen years of returns when he ran for president.

Overall, the Romneys' main tax return and separate forms for blind trusts totaled more than 800 pages. The blind-trust income came from hedge funds and other complex investment vehicles. The couple also reported $3.5 million in income "from sources outside the United States," citing "various countries." Their forms included filings on holdings in Switzerland, Ireland, Germany and the Cayman Islands.

The Obama campaign accused Romney anew of profiting from millions invested overseas and "loopholes and tax shelters only available to those at the top."

Apparently hoping to resolve basic questions voters might have, the Romney campaign released a letter from his accountants saying that in the 20 years prior to 2010 the Romneys paid an average annual effective rate of 20.2 percent, never lower than 13.66 percent.

On average, middle-income families — those making from $50,000 to $75,000 a year — pay 12.8 percent of their income in federal taxes, according to Congress' Joint Committee on Taxation. But many pay a higher rate.

Romney is aggressively competing with Obama for the support of middle-class voters.

Obama's tax return for last year showed that he and his wife, Michelle, paid $162,074 in federal taxes on $789,674 in adjusted gross income, an effective tax rate of 20.5 percent. Their income plunged from $1.7 million in 2010, with declining sales of the president's books. In 2009, the Obamas reported income of $5.5 million, fueled by the best-selling books.

The Romneys' tax bill could have been lower. They gave $2.6 million in cash to the Church of Jesus Christ of Latter-day Saints, the documents show. They gave just over $2 million in noncash charitable contributions, including donations of stock holdings in Domino's Pizza, Dunkin Donuts and Warner Chilcott, to a family trust.

"It's interesting he didn't take the full charitable deduction," said Victor Fleischer, a University of Colorado law professor who has testified before Congress urging tightened oversight of private equity firms. "You're in a pretty lucky position when you can pay more tax" to get up to a 13 percent rate. Fleischer and several others said it was doubtful Romney could later take any unclaimed deductions in future years.

The Romneys had obtained a filing extension beyond the usual April 15 tax deadline.

Most of their income is from investments held in a blind trust, and campaign aides have stressed that he makes no decisions on how his money is invested. Capital gains and dividend interest is now generally taxed at 15 percent whereas the top marginal rate for income from wages is 35 percent.

The Romneys reported $6.8 million in capital gains, such as from the sale of stocks and other securities, and $6.37 million from dividends and taxable interest.

Several tax law experts said the newly released tax returns would not be much help in resolving critics' questions about his finances: whether he used aggressive tax-deferral strategies, what might be the specifics and tax advantages of his numerous offshore investments, what was the source of his massive retirement account and what are the details behind his now-closed $3 million Swiss bank account.

Analysts said details about his investments could emerge only if Romney provided far more of his tax returns, including files dating back to his years at Bain, the private firm he left in 2001. Romney, who initially refused to disclose any tax returns, has drawn the line at providing those from the past two years.

The Republican vice presidential nominee, Rep. Paul Ryan of Wisconsin, and his wife, Janna, whose returns were also released Friday by the Romney campaign, paid $64,764 in taxes on $323,416 of adjusted gross income in 2011, for an effective rate of 20 percent.

Just over half of their income came from Ryan's congressional salary. Other income flowed from rental real estate and other investments, including a trust inherited by Janna Ryan. They donated $12,991 to charity, including to the Boy Scouts of America

Associated Press writers Stephen Braun, Steve Peoples, Stephen Ohlemacher, Kasie Hunt and Philip Elliott contributed to this report.

More like this story

spelchek 8 months ago

Meanwhile, the mid-east burns, Iran is one day closer to a nuclear weapon, and our POTUS is set to give a speech apologizing to radical Islam because an American citizen exercised their 1st Amendment rights. Romney paid his taxes. Harry Reid is a bonafide liar. Monica Lewinski is set to release a tell all book about the first black president's penchant for 3 way sex. Thanks for nothing AP.

asb 8 months ago

So, um, what does the President's race have to do with sex Spel? Are we waving our little race card again? I'm not sure Harry isn't a liar, after all he's a politician, but until Romoney shows Americans more of his taxes, I don't think you can put Harry in that club alone. Obama is not apologizing to anybody, and isn't supporting the slime that made the movie because it's slime. Oh, and on Iran and the middle east . . . what would you do daddy? what would you do?

asb 8 months ago

Great, Grace now speaks for Spel. The race reference was specifically aimed at Obama. Obama has repeatedly reminded the world that as disgusting and racist as the film was, it is allowed under American principles, how do you keep missing that?

spelchek 8 months ago

Romney has released his taxes which is far more of a response to Obama showing his college transcripts. Harry Reid said Romney hasn't paid any taxes because up to now, he hadn't shown them so therefore Romney must have something to hide. Romney is calling Reid's bluff and exposing Reid as the liar he is. Now, using Reid's logic, Obama must have something to hide because he hasn't show his transcripts. Ball is in Obama's court (no racial pun intended). The Book of Mormon could be considered slime by Romney (he's Mormon) but is he running around calling it offensive and sending brown shirts after it's creators? No. You're either tolerant or you're not. You seem to fall in the latter. Slime (Westboro Church / terrible movie producers on YouTube) is protected by the 1st amendment, you should understand this concept in order to have any skin in the argument.

asb 8 months ago

I understand the 1st amendment perfectly, even as I exercise it, and the President has made it clear to the world repeatedly. Comparing Innocense to the Book of Mormon is weird, keep helping eh. All Romoney has shown is the final version of the draft tax return for '11 that he'd already discussed. Until he shows the rest, Reid may or may not be right, we just don't really know. No racial pun intended, yet you point to it, good job.

spelchek 8 months ago

What's up with "Romoney"? What does your employer pay you with? Do you barter to make ends meet? Is working hard and succeeding taboo for you? If not for "Romoney", $4,000,000 would have never made it to charity in 2011. What do you have against charity?

asb 8 months ago

If I have to explain the moniker Romoney, you're in the wrong thread. I work for and earn money of course, and respect success. Romoney wouldn't have given a dime to charity but for the tax deduction. It's appropriate for Grace to speak for you Spel, but it smells funny when you speak for me.

spelchek 8 months ago

"Romoney wouldn't have given a dime to charity but for the tax deduction." -- LOL!!! Now you read minds AND know how to spend Romney's money better than he does. You must be rich!!!

asb 8 months ago

There are no rich people in these forums. If they say they are, they're lying.

newone 8 months ago

Romney knew he was going to be running for president this year, he "gave" to charity to make himself look good because he had no intention of ever releasing any tax returns beyond the past two years because he was making them look "good" for the public, let’s look at his past 10 years and see how generous he was then, oh wait we can't because he refuses to show us!

spelchek 8 months ago

" let’s look at his past 10 years and see how generous he was then," -- Are you a full time philanthropist? What is your experience in giving millions of your money away to charity? How much income should one give to charity to satisfy newone's quota? Enlighten us.

RobHunterJohnson 8 months ago

Lets take a look? I think he is hiding something? Rob

asb 8 months ago

Hey, his own accountant says that he DIDN'T take the full amount of deductions he had available, just so his taxes would go up to 13%. Show us the TaxFax please Mittens!

RobHunterJohnson 8 months ago

1.9 million in tax liabilty, if you think he got your interest at heart, you better think again! Rob

LuckNLove 8 months ago

Romney did release his tax returns. ;P

thedailybeast.com/articles/2012/09/21/romney-drops-his-tax-returns.html

csmonitor.com/USA/DC-Decoder/2012/0922/Romney-tax-returns-What-s-missing-in-his-report

huffingtonpost.com/2012/09/25/mitt-romney-tax-returns-2011_n_1913754.html?utm_hp_ref=elections-2012

npr.org/blogs/itsallpolitics/2012/09/21/161588138/romneys-tax-release-gives-more-fodder-to-critics-who-already-had-surplus

newone 8 months ago

lol...coming from someone someone who criticized Obama from day one about not being an American citizen when they had NO eveidence to back it. You are very funny Graceful. Romney is far from a "decent" man, he is a lier and a cheat and he scr*wed the government out of a lot of money, he is not releasing his other tax returns because he knows it's true and if he does release them, then all of America will know it's true as well.

clingingredneck 8 months ago

Oh, but our ambassador and those marines were just "bumps in the road", Obama's words, not mine. The AP is despicable for this hit piece, just like all the others they have done. I don't know why they are so far in Obama's back pocket, but it's disgusting. Obama has cheapened the office of president and continues to astound me day after day with his new ways to degrade America. If these id iots vote for him in November then they deserve the civil war that is coming.

asb 8 months ago

Civil war? With what? TeaParty rhetoric and brains? Christian Ident armies? You're killing me here, I'm bustin a gut. Your people don't have the brains, the skills, the weapons, or the actual motives for anything more than terrorist acts against innocent people, you know, like the Taliban and al Quaida. And, there's no reason for even that, just your baseless hatred of Obama.

asb 8 months ago

Obama has stood up for American principles just fine. There are no states planning to withold their responsibilities, this civil war talk is only coming from the WingNuts who don't realize they have no means to do so. And now you're speaking for the RedNeck? Well that makes some sense I guess.

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