Republican presidential candidate Mitt Romney on Friday released income tax returns showing that he and wife, Ann, paid an effective tax rate of 14.1 percent last year.
The Romneys, who filed their 2011 taxes Friday, paid $1.9 million in taxes on $13.7 million in income, most of it from investments. They donated $4 million to charity, about 30 percent of their income, but deducted only $2.25 million of it from their taxable income in order to keep their tax bill above 13 percent, as Romney had promised during his campaign.
Romney’s campaign also released a notarized summary from PricewaterhouseCoopers, LLP, the family’s tax preparer, declaring that the former Massachusetts governor and business executive paid taxes every year between 1990 and 2009 and saying the average tax rate was 20.2 percent. It said he paid an effective tax rate of at least 13.66 percent every year.
That countered unsubstantiated charges from Senate Majority Leader Harry Reid, D-Nev., that Romney hadn’t paid taxes in 10 years. Reid said he was told that by an unidentified investor at Bain Capital, the firm that Romney co-founded.
The ongoing furor over Romney’s taxes had prompted other Democrats and several Republicans to demand that he provide more tax information than the 2010 records and 2011 estimates he released earlier this year. Romney had said earlier he would release the 2011 data when it became available, but he has consistently argued that giving more tax details would only give President Barack Obama’s campaign more ammunition.
Friday’s release did nothing to satisfy Obama’s campaign, Democrats, and other Romney critics.
“Today’s release of Mitt Romney’s 2011 tax returns confirms what we already knew – that people like Mitt Romney pay a lower tax rate than many middle-class families because of a set of complex loopholes and tax shelters only available to those at the top,” said Stephanie Cutter, Obama’s deputy campaign manager. “While the tax return for the one year released today continues to mask Romney’s true wealth and income from Bain Capital, leaving the American people in the dark about critical details about his finances, it does confirm that he continues to profit from millions of dollars invested overseas.”
Reid on Friday criticized Romney’s move to pay higher taxes this year. “The information released today 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,” Reid said. “That raises the question: What else in those returns has Romney manipulated?"
But Fred Goldberg, a former Internal Revenue Service commissioner, said in a statement released by Romney’s campaign that the Romneys “have fully satisfied their responsibilities as taxpayers.”
“These returns reflect the complexity of our tax laws and the types of investment activity that I would anticipate for persons in their circumstances,” Goldberg said in the statement. “There is no indication or suggestion of any tax-motivated or aggressive tax planning activities.”
Romney makes most of his money now from investments, which are taxed at a lower rate than a salary. Earlier his year he defended his 2010 tax return, noting that he took all of the deductions allowed by law.
“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 told ABC News. “I’d think people would want me to follow the law and pay only what the tax code requires.”
Since then, however, he decided not to deduct all of his charitable contributions from his taxable income in 2011 because that would have reduced his tax bill below 13 percent of his total income, aides said. He had said in the campaign that he never paid less than that.
In 2011, the Romney’s charitable cash contributions included $1.115 million to the Mormon church and $214,516 to the Tyler Foundation. The foundation serves families whose children are undergoing treatment at Children’s Hospital Boston and UMass Memorial Children’s Medical Center. The Romneys also claimed a deduction of $920,573 for non-cash contributions that were not spelled out in a statement accompanying the return.
The campaign released no other returns but did attempt to explain 20 years of Romney taxes, from 1990 to 2009, in the tax preparers’ letter.
It said the couple owed both state and federal income taxes each year, and the average annual effective federal tax rate was 20.20 percent.
That figure appeared to represent an average of Romney’s tax rates, not the total of taxes paid for the total income over 20 years. It covers years when his salary accounted for a much higher percentage of his income and was taxed at a higher rate than his investment income that mushroomed in later years.
The accounting firm said the Romneys paid an effective tax rate of at least 13.66 percent every year. They gave an average of 13.45 percent to charity over the two decades.
A good portion of the Romney fortune has been invested abroad, managed by a blind trust that is out of his control.
The blind trust as of Dec. 31, 2011, held shares of Germany-based sporting goods company adidas, Chinese oil company CNOOC, Russian natural gas powerhouse Gazprom, Japanese carmaker Toyota, German auto giant Volkswagen and foreign banks including Germany’s Deutsche Bank, Brazil’s Itau and the disgraced Swiss bank Credit Suisse, which agreed to a $556 million settlement in 2009 with U.S. authorities who alleged it had help Iran skirt U.S. financial sanctions.
The foreign investments put the trustee of Romney’s blind trust, R. Bradford Malt, in awkward positions. In June, Malt disposed of shares of Chinese video giant Youku.com at a loss about a month after acquiring them. Although the firm was breaking out as China’s version of YouTube, it also has become a den for pirating movies and DVDs. Romney, on the campaign trail, had criticized Chinese piracy.
As with the Romneys’ 2010 return, the 2011 return made fleeting mention of a series of offshore investments through tax havens such as the Cayman Islands, Ireland and Luxemburg.
In addition to the tax information, Romney’s campaign released details about Romney’s health and that of his running mate, Rep. Paul Ryan of Wisconsin.
Dr. Randall Gaz described Romney, 65, as “a vigorous man who takes excellent care of his personal physical health.”
Romney, said Gaz, "has reserves of strength, energy and stamina that provide him with the ability to meet unexpected demands. There are no physical impairments that should interfere with his rigorous and demanding political career as next president of the United States."
In a two-page letter, Gaz said Romney takes Lipitor to lower his cholesterol because of a family history of cardiac issues. Gaz also wrote that Romney will undergo close monitoring for prostate cancer because of a family history of the disease.
The doctor noted Romney "eats a high fiber diet with abundant fruits and vegetables and minimizes intake of high cholesterol foods and concentrated sweets."
Romney’s "slow, resting regular heart rate in the 40s is most likely related to his past intensive exercise with regular running."
Gaz said his "current medical issues include hyperlipidemia, or high blood cholesterol, with a stable mild triglyceride elevation at 179 and normal cholesterol of 169," among other matters.
Ryan’s physician, Dr. Brian Monahan, called his health excellent. He said Ryan has a history of asthma that is occasionally treated with an inhaler.