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Romney Taxes May Be Legally Sound But They're Politically Dicey
Originally published on Tue January 24, 2012 5:30 pm
The income fairness debate has just gotten a lot more interesting. And it's taking place in anything but Mitt Romney's "quiet rooms."
Romney's release of his federal tax details for 2010 and 2011 came the morning that President Obama was preparing to deliver his State of the Union address, a speech in which he was expected to make the increasing gap between the superwealthy and everyone else a major topic of the evening.
Obama even planned to have a prop. To underscore a point constantly made by Warren Buffett that he and other members of the top .01 percent pay federal taxes at a much lower rate than the billionaire investor's secretary, the White House has invited that secretary to sit in the First Lady Michelle Obama's box Tuesday evening.
Meanwhile Romney, who recently indicated his discomfort with public and boisterous debates about the ways government policies have contributed to the super rich controlling an ever larger portion of the nation's income, was forced on the defensive.
Romney's personal lawyers and tax experts explained to reporters on a conference call Tuesday morning that, yes, Romney and his wife Ann made a tremendous sum from investments in 2010 and 2011, $21.7 million and $20.9 million, respectively.
But even though they paid taxes at a relatively low rates, 13.9 percent in 2010 and an estimated 15.4 percent for the 2011 tax year which hasn't yet been filed with the IRS, they paid all that was legally required, $6.2 million for the two years, Romney's team said.
And they made $3 million in charitable donations in 2010 and $4 million in 2011, giving more than 16 percent of their income to charity, much of that in the form of tithes, a commitment to give 10 percent of income, to the church, in the Romneys' case, the Mormon church.
While Romney's surrogates on the tax-return conference call with reporters may be right that he did all he was legally require to do, that doesn't mean he doesn't have a political problem.
First, it will be a tall order for Romney, whose net worth has been estimated at between $190 million and $250 million, to defend paying federal taxes at an effective rate that's so much lower than those paid by million of Americans of far more modest means. That likely explains in part Romney's reluctance in the first place to release his returns.
Even rich politicians like Obama and Newt Gingrich, Romney's GOP challenger, paid their 2010 federal taxes at significantly higher rates, 26 percent and 31.5 percent, respectively.
With Obama making economic fairness for the middle class an overarching campaign theme, Romney gives the president an ample target to attack.
Two, Romney's tax information reinforces perceptions that for all his attempts to appeal to average voters, he's a full member of the nation's financial aristocracy with concerns far removed from the typical voter's.
For instance, until 2010 his trustee kept a Swiss bank account for Romney which at one point held $3 million before the trustee closed it. Asked if it was closed because it was bad optics politically as some had reported, Brad Malt, the trustee said:
"... I decided that this account wasn't serving any particular purpose. It might or might not be consistent with Governor Romney's political views, you know again, the taxes were all fully paid etc. But, it just wasn't worth it, and I closed the account."
Swiss bank accounts are just something that even a lot of wealthy Americans don't have, let alone middle-income Americans.
Romney may continue to try to neutralize those who question how it came to be that the rich are snaring an ever greater share of the nation's overall income. On the Today Show recently with Matt Lauer, he accused them of engaging in the "politics of envy."
But that may not go over so well with voters, a majority of whom are, convinced that the wealthy aren't paying their fair share of taxes which just so happens to be the case Obama will make Tuesday evening all the way to Election Day.