January 24th, 2012
10:46 AM ET

Romney tax release lights up debate on wealth inequality

Republican presidential candidate Mitt Romney made $42.7 million over the past two years and paid $6.2 million in taxes, newly released documents show.

Romney and his wife, Ann, filed a joint 1040 reporting $21.7 million in 2010 income and $3 million in federal taxes. They also said their 2011 income was $21 million and tax bill was $3.2 million. Over the two years, Romney's effective tax rate - the percentage of his income that he owed in federal income taxes - was just under 14%.

Nevertheless, and contrary to popular perception, Romney's effective federal income tax rate is still above that of many Americans - 80% of whom have an effective rate below 15%. That tax rate is higher when other federal taxes - such as the payroll tax - are included.

And there's nothing that gets people revved up like peering into someone else's taxes to learn more about their wealth, especially when they're running for office. So you know that people were abuzz this morning trying to dissect it all, that is, if they could wrap their heads around it.

It appears Romney and his campaign knew that too, and expected the onslaught. If you did a search on Twitter for "Romney Taxes" "Romney Tax Returns" or "Romney" you saw an interesting promoted tweet, meaning someone paid for that tweet to show up at the top of the heap.

And judging by the tweet, Romney's camp must have thought, if people are going to be searching around, we ought to offer a message.

For the most part, the conversation online seemed more focused on what Romney's overall taxes show about America, rather than the candidate himself.

Rick Newman, the chief business correspondent for US News & World Report, tweeted a statistic that seemed to characterize what others were thinking.

[tweet https://twitter.com/rickjnewman/status/161820377935396866%5D

A majority of the comments we saw online showed that many folks, while they may have been a bit revolted by the mass amount of money Romney makes, found that more of the problem was our tax code or a major gap divide between the wealthy and middle class.

[tweet https://twitter.com/edwardvirtually/status/161824789172977665%5D

[tweet https://twitter.com/marclamonthill/status/161820174784282624%5D

[tweet https://twitter.com/marclamonthill/status/161821094037295104%5D

[tweet https://twitter.com/NickKristof/status/161781523740229632%5D

Others bemoaned the general fact that Romney didn't have to pay more, considering what they pay, even if it is all part of the current rules.

[tweet https://twitter.com/Cephster/status/161824859045900289%5D

But others thought that there wasn't any massive damage done by Romney releasing his tax returns, because they showed he also gave money to those who needed it, and simply followed our current rules.

[tweet https://twitter.com/Toni_TWG/status/161824885176401922%5D

[tweet https://twitter.com/jrawlinsisu/status/161823455078125569%5D

Some joked the release was well-timed because it came when people were paying more attention to Oscar nominations.

[tweet https://twitter.com/AndrewCDaniel/status/161823761753063426%5D

[tweet https://twitter.com/joe_hill/status/161812094528913408%5D

[tweet https://twitter.com/carlimck/status/161819689947901952%5D

But for others, there was also a continuing sentiment of wondering why we get all excited about these tax releases anyway.

[tweet https://twitter.com/g2slade/status/161815915418234881%5D

For some, knowing where the politics and money collide along the campaign trail was the more important monetary detail they'd prefer to learn.

[tweet https://twitter.com/betthearm/status/161812408099287040%5D

What do you think? Does it still matter that we see candidate tax returns? And if so, what is your reaction to Romney's release. Let us know in the comments below.

Post by:
Filed under: Economy • Mitt Romney • Politics • Twitter
soundoff (733 Responses)
  1. What's your point

    OK, Romney pays an effective tax rate of 14%. So what? Is that surprising. According to the IRS numbers, it's actually higher than 90% of all taxpayers. According to the IRS, the Top 1% pay an average effective tax rate of 24%, the 1-5% group pays 16.4%, the 5-10% pays 11.4%, the 10-25% pay 8.2%, the 25-50% pay 5.6% and the Bottom 50% pay 1.8%.

    His rate is lower than other in the Top 1% because almost all of his income is from long-term capital gains, which have a maximum tax rate of 15%. So, the only real question from Romney' released tax info is, do people believe that the long-term capital gains rate should be higher than 15%? Most people will answer immediately from an emotional standpoint and state that it should be increased much higher. However, think about why the government has created the incentive to invest for a long-term. These long-term investments provide the capital to these public companies to allow them to grow and survive. If you were to remove those investments, most of those companies would be hard-pressed to survive. The Top 1% would still be fine if they took all of their wealth and left it under their mattresses doing nothing to avoid paying higher taxes by investing it. However, do you think our overall economy would be fine?

    Right now, the Top 1% is responsible for less than 17% of the total AGI in the country. By contrast, the Bottom 50% is responsible for 13.5% of the total AGI in the country. That's pretty close, in my book.

    However, the Top 1% pays an average effective tax rate of 24%, while the Bottom 50% pays 1.8%! That's NOT very close in my book.

    The Top 1% pays 37% of all federal income taxes collected in the country. The Bottom 50% pays 2.2% of all federal income taxes collected in the country. Again, that's NOT very close in my book.

    And that was comparing 1% with 50%, not 1% with 1%!

    I agree that the current tax system isn't "fair". However, the reason it's not truly "fair" is because the wealthy pay a higher burden and the lower 50% pay an unfairly low burden.

    January 24, 2012 at 5:16 pm | Report abuse |
    • Name*Mike

      Yep

      January 24, 2012 at 5:17 pm | Report abuse |
    • JB

      Now I can see why we have a $16Trillion budget deficit with all these low tax rates for the rich.

      January 24, 2012 at 5:25 pm | Report abuse |
    • What's your point

      JB, the wealthy are already paying a MUCH higher percentage of their incomes than the other groups of taxpayers. Let me make sure I understand you, though.

      You think the wealthy taxpayers should pay what, 40, 50, 60% of their incomes and the rest of the taxpayers should pay 1-2%?

      January 24, 2012 at 5:33 pm | Report abuse |
    • Andy Smith

      How about the 70% of American corporations that paid nothing in taxes for one or more years in the last 10 years? Should they be included in the "widening the base" argument? They get taxed on profit (total revenue – cost to do business), but my "corporation" gets taxed at total revenue – a few deductions (and these few deductions are less than 5% of my "cost to do business" of going to work and taking care of myself in order to be most productive at work). I think these corporations are doing better than the 50% of the population that pay little to no federal taxes.

      January 24, 2012 at 5:39 pm | Report abuse |
    • Lisa Jenkins

      Very well said. These facts never get broadast on CNN or MSNBC. This is just preview of the assualt ROmney will come under if (hopefully) he is the nominee. THe press will vilify him for being sucessful, I mean rich...which is obviously a sin....."Who is John Gault"

      January 24, 2012 at 5:40 pm | Report abuse |
    • What's your point

      OK, Andy, so you're comparing corporate taxes to personal taxes? Wow, it must be tough not being able to recognize when two things are completely DIFFERENT. It is clear that it is not possible to explain to you the difference between corporate finances and personal finances from a purely economical perspective in a reasonable amount of time, so we will just have to let you be. Plus, anyone can throw out any random unsubstantiated number. That doesn't make it true. 😉

      January 24, 2012 at 5:45 pm | Report abuse |
  2. Suzanne

    I think his tax returns show just what is wrong with our tax code. He should be paying more taxes so that our bridges, roads, schools and the impoverished are better taken care of.

    January 24, 2012 at 5:16 pm | Report abuse |
    • What's your point

      suzanne, please give me a hard number for what they think would be "fair" for the wealthy to pay? Should the Top 1% pay an effective tax rate of 50% on their income? Should the Top 1% pay 75% of all federal income taxes collected? Please give an idea of what you would consider to be "fair". Already, the wealthy are paying a higher percentage overall of their income than the other groups. How much more lopsided do you think it should be before you ould consider it "fair"?

      January 24, 2012 at 5:28 pm | Report abuse |
    • mj

      Ignorance

      January 24, 2012 at 5:32 pm | Report abuse |
  3. dugsage

    That's it. Going foward, only those who make $30k or below should be elected President. That's the fairest way, right? I mean...then we can say "he's (or she's) one of us"! No, of course they would have no idea how to run a multi-billion, or trillion, dolloar corporation. Nor, would they have the slightest clue on how to best serve 5 billion people, and to ensure their safety. But...it would be fair, right?

    Lemings.

    January 24, 2012 at 5:17 pm | Report abuse |
    • bookgeek79

      And who says a multi-millionaire automatically does? Why shouldn't a person making $30,000 a year be able to be President? There are a LOT of millionaires and billionaires who have made bad decisions for their companies (*cough* bank bailouts *cough*). Money does not equal ability to run a country/

      January 24, 2012 at 5:23 pm | Report abuse |
  4. Arran Webb

    Mitt earns 500 times the average American household income and Newt earns 50 times the average American household income. And they both say they can identify with the American people. Forget it folks – the country is ruled by Capitalist Kings! It is a monarchy of Capitalism.

    January 24, 2012 at 5:18 pm | Report abuse |
    • Pete/Ark

      I'm looking for a candidate who will give me the CHANCE to earn more money...currently they all seem determined to make it easier on investors and owners with little thought to the rest of us...tax breaks seem to support wage stagnation rather than promoting an expanding middle class. In other words...they DON"T understand.

      January 24, 2012 at 5:28 pm | Report abuse |
    • Lisa Jenkins

      Comrade Lenin:

      Remember, America is based on the free enterprise system, not the Marxian theory of collectivism. True freedom means freedom to fail....you are not promised anything in life, you must work for it..."Who is John Gault?"

      January 24, 2012 at 5:42 pm | Report abuse |
    • B

      @ Pete/Ark

      Exactly.

      January 24, 2012 at 5:49 pm | Report abuse |
  5. L251

    Seriously, is it so bad to have a leader who knows how to run a businesss, stick to a budget and make a profit??? Our government has blown their budget year after year and our deficit is ridiculous.

    January 24, 2012 at 5:20 pm | Report abuse |
    • Andy Smith

      It is bad, because government isn't a business. Business is there to make a profit, the government is there to protect the people and maintain order. Should our military charge each citizen $2 for every $1 spent on protecting us? No. Should the government charge senior citizens $2 for a $1 medical procedure? No. A business can, and does a lot of time. A government and a business have two different agenda (like Herman Cain always says, apples and oranges).

      January 24, 2012 at 5:31 pm | Report abuse |
  6. LMD

    Let's think this through – most of us retire at age 65 – our taxable income drops, which lowers our tax brackets, which lower the taxes paid – in some cases to almost nothing. We live for 25 years hardly paying any income tax. Romney's taxable income from age 66 to 90 will most likely be at current levels – so he is paying 14% or about $3.0 million per year.

    January 24, 2012 at 5:22 pm | Report abuse |
  7. Znod

    While there are exceptions, I challenge the often heard view that low tax rates for the 1%ers, etc., lead generally to job creation. I think that for the most part the super rich are too uninvolved to spend time starting new businesses, expanding their existing businesses (if any), funding startups, providing venture capital, etc. Instead, they have investment advisors that trade their securities for them leading to little benefit to the country as a whole given our inappropriately low capital gains tax rates. I'd like to see data, even provided by Romney, that supports the view that he is involved in activities that lead to significant job creation.

    January 24, 2012 at 5:29 pm | Report abuse |
    • Andy Smith

      Mitt Romney's business history shows that not all "job creators" are created equal.

      January 24, 2012 at 5:33 pm | Report abuse |
  8. Victoria Probes

    I am not surprised or upset about the facts coming from the Romney's tax report. We all know that the wealthy always have loopholes to help them write off so much of their income. That's the problem !!!
    Knowing that 80% of our nation pay LESS THAN 15% in taxes, makes me frustrated. The rest of us (20%) have to pick up the bulk of the taxes to help our roads, schools,infrastructures, etc. That is a big part of the reason why we are in the financial stress of our lifetime. Come on...let's finally make some changes that will help out our middle class citizens.
    We are the ones working our hearts out just to stay above water in our own personal lives.
    Let's admit it.....the stress is actually killing the most hard working and honest citizens in this nation.

    January 24, 2012 at 5:30 pm | Report abuse |
    • What's your point

      Victoria, the "rest of us" are not paying anywhere NEAR and effective tax rate of 20%. Look at the numbers from the IRS. The wealthy have the highest effective tax rates. There is a BIG difference between what tax bracket somebody is in and what their effective tax rate is! I'm sorry that you're frustrated. What frustates me is the level of stupidity among the average person. Also, the 15% long-term capital gains tax rate is not a "loophole". It's there for anybody to take advantage of by investing for longer than a year. If you have no money left to invest, then that's your fault.

      January 24, 2012 at 5:40 pm | Report abuse |
    • Andy Smith

      What's Your Point....speak for yourself. I don't make anywhere close to what Mitt makes, but I sure pay a lot more than 20% effective tax rate. So, "sitting on your butt and collecting dividends" should be rewarded more than going to work for more than 4,000 hours each year? Aren't the GOP all about getting people to work, and not "be lazy"? Okay, it's not a loophole, then neither is Earned Income Credit or mortgage interest deduction or the R&D tax credit, or even the subsidies to the oil, corn, etc companies.

      January 24, 2012 at 5:45 pm | Report abuse |
    • What's your point

      Andy, I'm speaking based on the actual numbers from returns provided by the IRS. If you are paying an average effective rate that is a "lot more than 20%", then either you are in the Top 1-5%, you're lying, or you can't figure out how to determine effective tax rate. How about you back your claim up with your tax info? I guess you don't take any standard deductions or any itemized deductions or any personal exemptions.

      PS – This may be a wild shot in the dark, but I don't think many people took any corn or oil subsidy write-offs or R&D credits on their personal income taxes last year.

      January 24, 2012 at 5:57 pm | Report abuse |
  9. Mike

    Romney gave 15% of his earnings to charity, Obama gave 1%, Biden gave $369. I wonder if CNN will ever report that.

    January 24, 2012 at 5:33 pm | Report abuse |
    • Andy Smith

      Obama paid about 28% of his income in taxes, and Mitt paid 14%? Your point being? Is charity more important than taxes? Does charity help pay the military, or maintain public roads or schools or make sure that the food and water we consume are safe? Didn't think so.

      January 24, 2012 at 5:48 pm | Report abuse |
    • Mmer

      No, according to the report, Obama and Romney donated 14% to charity.

      January 24, 2012 at 5:58 pm | Report abuse |
  10. Sherron

    The real reason Romney doesn't want to release multiple years of his taxes has to do with the fact it will show he has been investing outside of the country despite the republican claim that if we reduce taxes for the wealthy it will bring all their money back here. Romney had 2010 to move his accounts and investments around to try and hide a history of out of country investments. His attorney said he was closing the Swiss account. So, in 2010 we know he had a Swiss account and a Caymen Island account. Both are used for investment transactions out of the country.

    January 24, 2012 at 5:35 pm | Report abuse |
    • rc

      So what! First the funds are invested in a blind trust which means he has no control over the investments. Most concerning about Swiss and Cayman Island accounts are that people of means use them to hide assets and not pay taxes on them. Since he clearly discloses them obviously he is not trying to hide them or avoid paying his taxes. These accounts are also used to help shelter liability in case of a lawsuit which in Amercia unfortunately can be a necessary evil in our sue happy society.

      January 24, 2012 at 5:48 pm | Report abuse |
  11. rc

    Because of his overall tax rate I am guessing some of his invesments were in municipal bonds which municipalities do use for infrastructure such as schools, roads hospitals etc. I also assume that if those invesments were taxable, Mr. Romney as well as many investors would not invest in them which would then transfer resources to the federal government from the local government. To me that is the crux of the difference between the Republicans and the Democrats. Who do we want to control our resources, Washington bureaucrats or local policymakers who have the pulsebeat of the community and live amongst those who's resources they control.

    January 24, 2012 at 5:39 pm | Report abuse |
  12. B

    Charitable giving isn't the issue; the dollar amount in charitable giving doesn't mean Mitt or anyone else is a better person and should be excused from paying what they should be paying in taxes (as Fox News tried to put it this morning to pull conservative readers away from the real issue at hand). Also charitable giving doesn't help our debt crisis. Furthermore, charitible giving that's a tax write off isn't truly charitable IMO. If your going to donate, then donate and don't worry about claiming it on your taxes.

    I give to charities too and make annually what Mitt makes in one day and I'm subject to a 35% tax rate while he, a millionairre, only pays 15% because his income is interest and dividends and 15% tax is what's assigned to that income. I pay my taxes and minimally complain, but a millionaire that pays less percentage wise than I do simply because it's a specific, rich man's income, is BS and if your a working American, that should be a slap in the face. And blaming the debt on the poor who can barely afford food & shelter, much less a 15% tax or any tax, is completely absurd as well. Maybe Mitt payed what he legally should have, but percentage wise, what he paid is BS and is an example of what is wrong with this country's tax code.

    January 24, 2012 at 5:41 pm | Report abuse |
    • What's your point

      B, to be in the 35% tax bracket, you would have to be making more than $380K, which I seriously doubt. If you are making that much, then it truly shouldn't be hard for you to save up some money and then invest some of it. Guess what, any profits that you make on that investment would only be taxed at 15%. What's so hard to understand. He worked in the past and made a lot of money (fo which he was taxed in the 35% bracket). Now, most of his money comes from investments, as opposed to ordinary income (ie wages). However, even with that being the case, his effective tax rate is higher than nearly every other taxpayer out there.

      January 24, 2012 at 6:12 pm | Report abuse |
  13. Johen

    Irony: People are angry at Mitt Romney because of how much money he earns, but people don't give one thought to athletes or movie starts who make just as much or even more than Romney does.

    Case in point: The same day as Romney released his tax records, baseball player Prince Fielder signed a whopping $214 million contract. Why is no one talking about the wealth gap/ unfairness in regards to Mr. Fielder's huge pay check? (Which, by the way, is more than five times Romney's 40 million over the last two years!)

    At the end of the day, Mitt Romney – just like Mr. Fielder and other athletes/ movie starts – get paid the big bucks becuase they perform a service that is in high demand and others are willing to pay a large some of money for those services. If they didn't have talent or a marketable skill, no one would give them any money.

    We shouldn't claim Mr. Romney is bad, and athletes/ movie stars who make just as much money or more are good. It is the same concept.

    January 24, 2012 at 5:41 pm | Report abuse |
  14. jkreutzer

    The bottom line is that we, as a country, are not paying enough taxes to pay our bills. The poor and middle class got hammered in the Recession and are in no position to pay more. Cutting vital services doesn't make sense unless you think we don't really need meat inspectors, nuclear inspectors, mail service, and social security. Where is the missing money? The wealthy are paying far less money than they used to in taxes. They are not using this money to help the economy or we would not have been in a deep Recession for so long. It's time to grow up and all do our share. Hiding money in the Cayman Islands and being proud of paying less than what most Americans pay is not the sign of a Patriot. And contrary to the article, it is less because the author was not counting payroll taxes or contributions to social security and medicare.

    January 24, 2012 at 5:43 pm | Report abuse |
    • Karen

      jkreutzer, problem is, unlike most businesses or households, the government looks at what it needs to spend and wants to spend BEFORE it looks at what it will earn. The government has enough money for its needs, but not its wants – but spends that money anyway. The rich (of which, I am NOT one) actually pay quite a bit in taxes and the "middle" and "lower" class pay even less. And, all the money that goes to charities actually helps the government out one way or another. What we actually need is more people paying INCOME tax – of which not many do. My daughter makes $4500/year. In INCOME TAX she gets it all back ($60 whole dollars). She still pays over $300 in FICA and Medicade. So, how do you look at her tax rate – 0% or 6.7%? The numbers only tell you what you want to hear, not what is actually happening.

      January 24, 2012 at 6:39 pm | Report abuse |
  15. steve

    Q: is the 15% tax rate for returns for investment applicable to Foreign investment or only domestic?

    January 24, 2012 at 5:44 pm | Report abuse |
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