Romney Releases 2011 Tax Returns and By His Own Words They 'Disqualify' Him From the Presidency
Desperate to shift the national discussion away from his dismissal of half the country as indolent, unwashed and irredeemable, Mitt Romney released his 2011 tax returns today. According to his own words, the return “disqualifies” him from the presidency.
Why? Because the Romneys inflated their 2011 tax bill by not deducting all of the money they'd forked over to “charity” (much of which was tithes to the Church of Latter Day Saints, which doesn't provide a lot of charitable services). According to a blog-post written by the manager of his “blind trust” – close confidant and attorney Brad Malt (who's not as independent as the Romneys would have you believe) – the Romney's gave over $4 million to charity last year but only deducted $2.25 million.
“The Romneys’ generous charitable donations in 2011 would have significantly reduced their tax obligation for the year,” writes Malt. “The Romneys thus limited their deduction of charitable contributions to conform to the Governor's statement in August, based upon the January estimate of income, that he paid at least 13% in income taxes in each of the last 10 years.” In other words, they would have paid an effective rate of less than 13 percent had they deducted all of their “charitable” giving, so they didn't. They can afford to overpay for the political argument.
In July, while traveling to Israel, Romney was asked about his taxes in an interview with ABC News' David Muir. “I don’t pay more than are legally due,” he told Muir. “And frankly if I had paid more than are legally due, I don’t think I’d be qualified to become president. I’d think people would want me to follow the law and pay only what the tax code requires.”
Had they taken all of their deductions, the Romneys would have paid an effective rate of just 12.2 percent in 2011. And here is a key point: as Ryan Grimm notes, "after the election he can recoup that money. If the American people reject him at the polls in November -- and even if they don't -- Romney would be fully within his legal rights to file an amended return, requiring the Treasury to cut him a substantial check."
We're waiting to sift through the complete returns. In the meantime, it's worth noting that while Malt specifies “federal taxes” or “federal income taxes” in several places in his post, his statements about the overall rate the Romneys paid say, simply, “taxes.” For example, “In 2011, the Romneys paid $1,935,708 in taxes on $13,696,951 in mostly investment income,” and “the Romneys’ effective tax rate for 2011 was 14.1%.” Those rates may therefore include state and local taxes as well, meaning the Romney's effective federal tax rate is lower. (In 2010, the Romney's paid about $700,000 in state and local taxes).
If that's the case, then the Romneys 14.1 percent is a significantly smaller share of their take in taxes than the poorest American households pay – the mythic 47 percent. According to the Tax Policy Center, the poorest fifth of American households paid a total of 16 percent of their incomes in combined federal, state and local taxes, and the second poorest fifth paid 21 percent.
We'll update this post after we can digest the full returns.
UPDATE: The 14.1 percent figure does not include state and local taxes. If, for the sake of argument, we assume, very generously, that the Romneys paid about $350,000 in state and local taxes like they did in 2010 (it's generous because they reported $8 million less in income in 2011), that would be an overall rate of about 16.7 percent, or less than 1 percentage point more than the poorest fifth of American households pay, on average. If they amend their return to recoup the overpayment -- it's almost unimaginable that they wouldn't -- then their combined tax rate would be about 14.7 percent.
UPDATE 2: Brian Beutler at TPM finds that Mitt's real effective tax rate may be even lower:
Some of his income was subject to the Alternative Minimum Tax at a maximum rate of 28 percent. If the contributions he didn’t deduct were taxed at that rate, it means he could’ve reduced his effective tax rate... to 10.5 percent.