After weeks of criticism over his reluctance to release his tax returns (and a bruising loss in the South Carolina primary), Mitt Romney caved in on Tuesday, making public his tax returns from 2010 and an estimated return for 2011. Despite his earlier hemming and hawing, Romney said he has nothing to hide.
"Will there be discussion? Sure," he said during a GOP debate in Florida on Monday night. "But is it entirely legal and fair? Absolutely. I'm proud of the fact that I pay a lot of taxes."
Romney earned $21.7 million in 2010 and $20.9 million in 2011, the vast majority from dividends and interest from investments. The Washington Post reports:
None came from wages, the primary source of income for most Americans. Instead, Romney and his wife, Ann, collected millions in capital gains from a profusion of investments, as well as stock dividends and interest payments.
The couple 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 that 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.
In Monday's debate, Romney repeated his view that objections are steeped in politics of envy. "I will not apologize for having been successful," he said. Questions about Romney's taxes, however, have been less about his success and more about a tax code that lets wealthier people pay lower taxes than the average American.
"Most of his income comes from capital gains and dividends, which face a preferential tax rate of no more than 15 percent," explained Roberton Williams, a senior fellow with the Tax Policy Center. "On top of that, he deducts about 4 1/2 million dollars' worth of income for itemized deductions. So not only is he paying a preferential 15 percent tax rate, but he's not paying it on his whole income."
According to the Tax Foundation, the average taxpayer pays about 11 percent, and when payroll and Medicare taxes are added, it pushes that taxpayer above Romney's rate. "The complaint that people have is that we give a tax break to wealthy people who are investing, compared to people who are out working for a living," said Williams. "The argument is: Shouldn’t these high-income people pay more taxes than they're paying?"
Romney's advantage from the American tax code won't bother fiscal conservatives who want the government out of their way, but it might hurtt him among others in the Republican base. "For rank-and-file blue-collar workers, who have been drawn to Newt Gingrich in part because of his populist rhetoric, this kind of revelation only confirms for them the idea that Mitt Romney is out of touch and doesn't get the issues that regular people face," said Michael Fauntroy, professor of public policy at George Mason University. "The Romney campaign understands that, which is why he's been so reluctant to release his tax returns."
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Cynthia Gordy is The Root's Washington reporter.