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. MagisterLudi

    Rich people (and corporations) shirking their responsibility to pay their FAIR SHARE of taxes is going to be the cause for this country's failure.

    Gee, if only I could cheat my way into paying a mere 14% in taxes!

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

    I would love to believe the top 1% are going to help create jobs in the USA. I simply do not see that happening.

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

      Great that he gave to charity but how many jobs did that $42.7MM create. If keeping the tax rate low on the wealthly so that they can invest to create more jobs. I am not seeing it. Just sayin'

      January 24, 2012 at 6:08 pm | Report abuse |
  3. Biggles

    I am a tax accountant and this is typical misstatement of facts. Romney pays a capital gains tax which means he is paying tax on gains from investments he already paid income tax on. If his income tax rate when earned was 35% and now he is paying 15% on the gains ..his effective tax rate over the long haul (not just 2010) is about 50%. Another words if you took the money you made in income invested it and then made a couple of bucks off of it you would pay 15 on the gain.

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

      You may know your numbers, but "Another words" should be "In other words." Not sure I would trust your services, regardless.

      January 24, 2012 at 5:52 pm | Report abuse |
    • Laura

      I guess he had a nice job to "earn" that money to invest.... I am at school all my life and have a pretty good education and job, my income %% of his one was not even showing on the calculator, I added some digits to see it – 0.24% of his. Such of nice country we are living in...

      January 24, 2012 at 6:07 pm | Report abuse |
    • Matt

      No, he's not paying taxes on money he's already earned, we don't wealthy. First off, some of the money he's receiving is part of that extraordinary practice paying partners after they leave the partnership. That money is new to him. Second, of the taxes her paid on gains on his existing wealth, that is also new income. If he sold assets for the same as he paid for them, he'd have no gain and no tax liability. It's only when his assets gain value and he realizes the gain that he pays more taxes. Also, those assets he didn't sell continue to appreciate tax deferred until he sells them.

      If you're an accountant you know this, and you should be ashamed of yourself for trying to mislead the less knowledgeable.

      January 24, 2012 at 6:14 pm | Report abuse |
    • Kingfisher

      I call BS. Let's say I earn $1,540 and I'm taxed 35%, $539. If I invest the remaining $1,001and it returns $2,002 I'm taxed 15% on $1,001 (NOT $2,002) or $150.15. My total income will have been $2,541 and I would have paid a total of $689.15 in taxes.. a net rate of 27.12%. The more I earn in capital gains the lower the net tax rate will be.

      January 24, 2012 at 6:15 pm | Report abuse |
    • Mg

      Yeah, you are a tax accountant and I am an invader from Mars. A person earns money and pays taxes on it, 35% is a n OK number for this excercise, True. He then takes those dollars and invests them, True. The gains that he makes on that investment are taxed at 15%, true. The dollars that he put in to get those gains are NOT taxed again, only the gains are taxed, once. Where on earth do you get a long term tax rate of 50%??? That is some creative math.

      January 24, 2012 at 6:17 pm | Report abuse |
    • CSpackler

      You're not qualified to do anyone's taxes. If I earn $100 and am in the top tax bracket, that nets me $65 after taxes. If I invest the $65 and earn 8% year and hold the investment for two years, when I cash in, I have a gain of about $16. The tax on the GAIN is 15% of the $16 (not the principal plus the gain) or $2.40. Thus, the effective tax rate on the earned income of the gain is $37.40 on $116 of total income (or 32%). Not only are you not an accountant, you don't understand simple math. As the percentage of tax due to capital gains approaches infinity, the overall effective rate will approach the capital gains rate (in this case 15%). Because Romney receives most of his income from capital gains as opposed to ordinary income, his rate is close to 15%. In no way is his income taxed twice, or is his effective rate "near 50%."

      January 24, 2012 at 6:22 pm | Report abuse |
  4. Tim

    I'm in a bit of a quandry: I'm a republican, yet I can't stand either Romney or Gingrich (I would never vote to re-elect Obama). I think this country is beyond help, politically. What we need is an American Spring. Over two hundred years was a good run, but we need a revolution.

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

    Holy Cow I am tired of the whiners here. Jealous much? How many people commenting have actually had to pay anything in taxes? Romney wasn't entirely born into his financial success, he made it and continues to live a fiscally responsible life WHILE donating a significant amount to the less fortunate AND following the law. What previous president could say the same thing? When's the last time we had a president that donated that much to charity? The man knows how to make money and keep making money. Aside from anything else I think we need to be asking ourselves – how do we get out of debt as a nation without starting another war? There's really only one guy who seems to be living the financial life we all dream about – making lots of money and helping a lot of people at the same time. He's not perfect, but he's the most financially perfect candidate out of all of them. How much did Joe Biden donate again?

    January 24, 2012 at 5:49 pm | Report abuse |
    • Darrel

      Not a Romney fan but I totally agree with you. Newt doesn't come close in character or class, but I still can't vote for Rom.- or the Newt either.

      January 24, 2012 at 6:04 pm | Report abuse |
  6. MAFV

    I told my students that the Romney's of America got started in the 1600's and acquired wealth on the backs of slaves. Then they told us to wait at the starting line and when the gun goes off, they can go, but us coloreds need to wait in line until 1965 hint...hint...(right to vote) to take off. I'm not surprised at the transferance of wealth in this country. It's outright "criminal".

    January 24, 2012 at 5:52 pm | Report abuse |
    • Darrel

      Check the income of your brothers who are entertainers and professional athletes(same thing) and then tell me how poor they all are.

      January 24, 2012 at 6:02 pm | Report abuse |
    • Whine Much?

      Way to purpetuate the non productive culture of blame the white guy among impressionable youth...Mitt Romney's family had practically nothing until the last two generations, they decided to work and better themselves without blaming others and look what they made of themselves. Roll up your sleaves and teach your kids that America is a place that you can be what you choose to become, but you have to work for it instead of standing in the liberal bread lines waiting for your "deserved" handout.

      January 24, 2012 at 6:14 pm | Report abuse |
  7. Rob

    To me, it's just ludicrous that the people who it obviously affects the most (lower income), are forced to pay a much higher percentage for taxes, while large corporations and wealthy Americans pay little to no taxes. People have the nerve to act confused about this "occupy" business that's been going on. If I didn't have to work all day and had the time/energy, I'd be right out thhere with them.

    January 24, 2012 at 5:55 pm | Report abuse |
    • What's your point

      Rob, I'm sorry to have to break it to you, but the actual numbers prove your position wrong. According to the actual returns from 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%.

      In case you're having trouble digesting those facts, it clearly shows that the lower classes do NOT pay more than the higher classes. Perhaps the problem you're having is that you're trying to compare the rates for the different tax brackets to the actual effective tax rates, which is what we're discussing in this article.

      January 24, 2012 at 6:03 pm | Report abuse |
  8. Danny

    Romney paid ALL of the taxes that he owed on money that he EARNED. End of conversation.

    January 24, 2012 at 5:57 pm | Report abuse |
    • reggie

      Danny,
      to me, your post should be the central point of the debate about wealth. I'm a capilalist through and through but I am more and more skeptical about American capitalism. what I mean is that true capitalism is merit-based, it assumes effecient markets are allowed to operate in a true darwinian sense. no bother with who you know or work for, what political party you donated to, what special access you have to opportunities for any other reason. in a true capitalist society, you could count on the fact that the person who made the most money had produced/contributed the most, and was rightly compensated for it. the sad fact is that american capitalism has become less and less about merit and more and more about connections, manipulations, and affiliations. To put it in Ayn Rand's terms, full of "moochers and looters" with fewer and fewer "producers", men that actually create wealth. The financial firms, including banks, hedge funds and private equity funds don't add nearly as much value to the system as they take out, in my opinion. All this to say, in my opinion, there is no way Mitt Romney "earned" what he received, even if it was all legal.

      January 24, 2012 at 6:22 pm | Report abuse |
  9. Darrel

    The problem is the tax code, and a country that lets those with the most keep it while expecting those in the middle to support both ends. Change the tax code . Most out there are simply jealous and would love to be "rich". Newt is a sleaze and he'd have never released his if he had that much. Oh yeah, romey is in the bottom of the 1 percent.

    January 24, 2012 at 6:00 pm | Report abuse |
  10. TomInVa

    So here (from a tea partier) are some taxes that could be raised:

    1. profits from day trading
    2. golden parachutes
    3. so-called non profits whose real motivation is opulence for its directors

    January 24, 2012 at 6:01 pm | Report abuse |
  11. Dave Riley

    what gets me , is your never hear anything about Steve Jobs or Bill Gates on the Mills they make / or made every Year Bbut that true of any buss. .you work and you make money.... you hire people to work for your company they make and earn money. Stop putting down the hard working people trying to get their company started . after all look at our states men most go to Washington to change things , but in the end its their bank accounts that change, lets go back to our roots they worked for free!!! they were already rich before going into office, they did it to serve their country

    January 24, 2012 at 6:02 pm | Report abuse |
  12. reader10

    Romney paid taxes.TIM GEITHNER didn't pay taxes for several years.

    January 24, 2012 at 6:05 pm | Report abuse |
  13. columbus

    I find it most disturbing to have the Republican party insist Obama is the worst president in history, but when they get a chance to get out there with full access to the media where they can sell their version of reform, they get off subject and attack one another. The prolonged campaign for a party nominee is to their advantage, it keeps Republican agendas in the news, but this has demonstrated how dysfunctional the party has become, with divisions and infighting. We need a third party!!!

    January 24, 2012 at 6:06 pm | Report abuse |
  14. Big Ron

    If Romney gives 17% to charity then he forks out 30% total to taxes and charity.So he 's actually paying out as much as the 99% of the rest of us are forking out.The problem is that his 17% to charity does nothing for federal taxes which in turn means if the wealthy 1% in this country had to pay,say 22% fed tax it would enable the feds to lower all the rest of our federal taxes.By not doing this it will keep the rich-rich and the poor-poor forever.Welcome to America!

    January 24, 2012 at 6:06 pm | Report abuse |
    • What's your point

      It's funny that you picked those numbers Ron, because right now, 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%. Those numbers come from actual returns from the IRS. So, on average, the Top 1% pay an effective tax rate of 24%. Since you suggested they should pay 22%, I guess you're saying they should get a break?

      If you think that having the Top 1% pay an effective tax rate of 22% will lead to the effective tax rates being lowered for other groups, you are sadly mistaken. However, if you want to look at why that is, notice how the Bottom 50% (yes HALF of all taxpayers) have an average effective tax rate of less than 2%!

      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 relatively 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%!

      January 24, 2012 at 6:22 pm | Report abuse |
  15. Tiger

    I made 2% of what Romney made and paid 24.95% in taxes. He paid less than 14%. Flat tax lets get it done.

    January 24, 2012 at 6:07 pm | Report abuse |
    • joma

      Tiger Woods? Is that you? Not to worry; you'll be back in the hunt soon..

      January 24, 2012 at 6:43 pm | Report abuse |
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