It must be nice to be a member of the 1%. Not only did Mitt Romney's tax returns from the past two years show what we already knew about him (in the words of NeNe Leakes, he's rich b!&ch), but it revealed just how rich he is. Mitt Romney is at the upper echelon of the one percent, which in itself is not a problem but what maybe a problem for a lot of people is the fact that he pays taxes at an effective rate of 13.9% which is far less than the average Americans pay. But in all fairness, there is nothing average about the amount of money Mitt makes.
Now, I realize a lot of you are scratching your heads as to why Willard's taxes are so low, but the truth of the matter is the fact that most of his income come from capital gains which only carries a 15% tax rate. This also explains why Warren Buffett pays less taxes than his secretary.
Here's how the media is breaking down the tax returns:
The Romneys gave away $7 million in charitable contributions over the past two years, including at least $4.1 million to the Church of Jesus Christ of Latter-day Saints. Romney’s family has for generations been among the Mormon church’s most prominent members.
The Romneys sent somewhat less to Washington over that period, paying an estimated $6.2 million in federal income taxes. According to his 2010 return, Romney paid about $3 million to the IRS, for an effective tax rate of 13.9 percent.
For 2011, Romney estimates he will pay about $3.2 million, for an effective rate of 15.4 percent. That’s in line with his earlier estimates, but sharply lower than the rates paid by President Obama and Romney’s closest Republican rival, Newt Gingrich.
Among the new details contained in the documents are Romney’s continuing profits from the private equity firm he founded but no longer runs, a Swiss bank account closed just as Romney launched his White House run and new listings of investment funds that were set up in offshore locations from the Caribbean to Ireland and Luxembourg.
Romney’s advisers stressed that he met all his federal tax obligations, provided maximum transparency and did not take advantage of “aggressive” strategies often used by the ultra-rich.
“The average American has a hard time understanding their own two-page tax return let alone Gov. Romney’s 200-page return,” said Joseph Bankman, a Stanford University professor of business and law who has testified to Congress on tax issues. “What would jump out at anyone is the sheer amount of money and low tax rate he pays, as well as the enormous complexity of his financial transactions.”
Romney’s income puts him in the top 0.006 percent of Americans, based on the most recent Internal Revenue Service data, from 2009. That year, only 8,274 filers reported income above $10 million.
He could be worth up to $250 million, based on previously released financial information.
Asked during a round of TV interviews Tuesday about Romney’s tax rate, given that he’s a multimillionaire, White House adviser David Plouffe said: “We need to change our tax system. We need to change our tax code so that everybody is doing their fair share.”
Romney’s GOP rivals had no immediate comment.
House Speaker John Boehner, R-Ohio, defended Romney’s tax rate as being close to what most Americans pay on long-term capital gains from the sale of investments.
“We all know that there’s a reason we have low rates on capital gains,” Boehner told reporters. “That is because it spurs new investment in our economy and allows capital to move more quickly.”
Romney had long refused to disclose any federal tax returns, then hinted he would offer only a single year’s return in April. He released the returns Tuesday after mounting criticism from his rivals and a hard loss in last week’s South Carolina primary.
Romney advisers acknowledged he continues to earn money from investments from Bain Capital, the private equity firm he founded and managed between 1984 and early 1999. Under an agreement when he left, Romney continued to earn “carried interest” on new Bain investments as a former partner even though he no longer ran the operation.
Romney earned $7.5 million in Bain earnings in 2010 and expects to make $5.5 million in 2011, Ginsberg said.
Gingrich released his 2010 returns last Thursday showing he paid almost $1 million in income taxes, a tax rate of about 31 percent.
Romney’s advisers acknowledged Tuesday that Romney and his wife had a bank account in Switzerland as part of her trust. The account in the United Bank of Switzerland was worth $3 million, said R. Bradford Malt, a Boston lawyer who makes investments for the Romneys and oversees their blind trust, which was set up to avoid any conflicts of interest in investments during his presidential run.
Malt said he closed the account in early 2010 for “diversification” and because it “just wasn’t worth it.” He also said it “might or might not be inconsistent with Gov. Romney’s political views.” Malt has sold off other accounts in recent years — including investments in firms that did business with Iran and China — because of possible political inconsistency or embarrassment with Romney’s political positions.
Malt also confirmed that some of Romney’s investments are routed through affiliate funds set up in the Cayman Islands. He said there were no actual offshore accounts, and Romney paid the same amount of U.S. taxes as he would have if those investment funds were set up in the U.S.
Romney’s 2010 return also shows a number of foreign investments, including funds based in Ireland, Switzerland, Germany and Luxembourg. The documents also detailed another investment fund routed through a Bain Capital affiliate set up in Bermuda.
Romney’s charitable giving is above average, even for someone at his income level. In 2009, more than 37 million filers claimed charitable deductions averaging more than $4,000. Among those making more than $10 million, the average charitable deduction was about $1.7 million, according to the IRS.