Saturday, September 22, 2012

Harry Reid: Romney Hasn't Settled Tax Question


Yesterday Mitt Romney finally released one complete tax return from 2011, and an affidavit stating the supposed tax situation for the past 20 years. But was it enough to settle questions about his tax liability?

Not according to Harry Reid:

From the Las Vegas Sun
The Nevada Democrat continued to hammer on the Republican presidential nominee, who is slated to speak in Las Vegas this afternoon, dismissing the summary of tax information Romney released Friday.

“It’s rich to hear Mitt Romney complain about people not paying income taxes,” Reid said on a conference call with reporters, referring to Romney’s secretly recorded comments about the 47 percent of people who don’t pay federal income taxes. “An outline by some accountant about his blind trust? That’s not going to do it.”

Later he said: “He’s hiding something. He’s hiding something! It is so evident he’s hiding something!”

From the same article, a quote from the Obama camp:

Ben Labolt, national press secretary for Obama’s campaign, said the summary demonstrates that Romney has the ability to release the returns.

“It’s clear that Romney has 20 years worth of returns prepared, ready to release to the public,” Labolt said on the call. “Instead of providing the rate on tax returns each year, they blended it together over 20 years...I think that’s telling.”

Indeed! And Obama has a shiny new ad based on the Romney tax documents:

View Tax Document Here: New York Daily News

From Bloomberg
Romney and his wife, Ann, have paid 100 percent of the taxes they owe, Brad Malt, a partner at the law firm of Ropes & Gray LLP in Boston who manages the Romneys’ investments, wrote in a blog post on the campaign’s website.

Romney makes most of his income from investing an estimated $250 million fortune, and much of that income is taxed at a top rate of 15 percent, rather than the top rate of 35 percent that applies to wages. Romney, 65, is a former Massachusetts governor and co-founder of Bain Capital LLC, the Boston-based private equity firm.

. . . The campaign said it will release a letter from PricewaterhouseCoopers LLP, which prepares Romney’s returns, summarizing his filings for the past 20 years.

More From Ezra Klein's Wonk Blog on Washington Post
In 2011, Romney earned $14 million, mostly from investments that are taxed at a lower, preferential rate. He also gave a very large amount of money to charity—more than $4 million. So, thanks to the charitable deduction in the tax code, he was technically allowed to reduce the amount of income subject to the income tax even further.

The trouble is, if Romney did that, he would have ended up paying less than 13 percent of his income in federal taxes (back-of-the-envelope calculations suggest the amount would have likely been somewhere around 11 percent). That would have conflicted with his statement in August that he has paid at least 13 percent the past ten years. So Romney opted to limit his charitable deduction to just $2.25 million, essentially agreeing to pay the government more in taxes than he needed to. In the end, Romney had an effective federal tax rate of 14.1 percent.

There’s nothing wrong with voluntarily donating a bit more to reduce the federal deficit. Although there is this awkward quote from Romney during a primary debate in January: “I pay all the taxes that are legally required and not a dollar more,” he said. “I don’t think you want someone as the candidate for president who pays more taxes than he owes.”

BuzzFeed got more clarification on the overpayment
An email to the Romney campaign account dedicated to responding to questions about tax returns,, produced this response:
He has been clear that no American need pay more than he or she owes under the law. At the same time, he was in the unique position of having made a commitment to the public that his tax rate would be above 13%. In order to be consistent with that statement, the Romneys limited their deduction of charitable contributions.

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