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Romneys paid $1.94 million federal taxes for 2011

By Tom Raum

Associated Press

Published: Friday, Sept. 21 2012 4:01 p.m. MDT

Republican presidential candidate and former Massachusetts Gov. Mitt Romney licks his fingers as he walks back to his seat after making himself a peanut butter and honey sandwich on his campaign plane en route to Las Vegas, Friday, Sept. 21, 2012.

Charles Dharapak, Associated Press

WASHINGTON — Mitt Romney, one of the wealthiest candidates ever to seek the presidency, paid nearly $2 million in federal taxes on the $13.7 million in income reported for himself and his wife last year, his U.S. returns showed Friday. That comes to an effective tax rate of 14.1 percent, lower than millions of middle-income Americans but actually more than he had to pay.

Most of Romney's income was from investment returns. That is why his rate was lower than taxpayers whose income was mostly from wages, which can be taxed at higher rates.

Romney's taxes have emerged as a key issue during the 2012 presidential race with President Barack Obama. Romney 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.

There also has been Democratic criticism of Romney's foreign investments. Several tax law experts said Friday that his newly released tax returns would not be much help in resolving critics' questions about his sprawling 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.

Apparently hoping to resolve basic questions voters might have, the Romney campaign also 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.

The former Massachusetts governor, whose wealth is estimated at perhaps $250 million, is aggressively competing with Obama for the support of middle class voters.

Obama's own 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.

For the year, they claimed a deduction for $2.25 million of their $4.021 million in charitable contributions, said Brad Malt, trustee of the candidate's blind trust. They could have claimed more, Malt said, but the couple "limited their deductions of charitable contributions to conform to the governor's statement (n 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."

Romney seemed to be painted into a corner by that statement, which came in reaction to Democratic Senate Majority Leader Harry Reid's claim to have heard that the Republican had paid no taxes in some years.

Romney will surely be reminded by the Democrats that he also said in August, defending his right to pay no more taxes than he owed: "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."

He appears to be physically qualified by any measure.

The campaign released a separate report Friday — by Romney's longtime physician, Dr. Randall Gaz of Massachusetts General Hospital — that said he is healthy and ready to meet the rigorous demands of the presidency.

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