It’s baffling to me why the Romney campaign didn’t release his tax returns (although he completed a financial discloure form) and hold a media conference call sooner, as it did today. Sure, the media began scoffing about Mitt Romney’s income. But should we expect any different from the anti-business, left-leaning media?
In fact, Romney has a positive story to tell. Jim Pethokoukis outlines some key points:
1. So as it turns out, less than a third of Romney’s annual income is from carried interest, the performance fee that fund managers charge that is taxed at the preferential 15 percent capital gains tax rate.
2. Romney paid 16 percent of income in charitable giving the past two years. Wow, that is a lot. The studies I’ve seen put the annual figure for the average American in the 2-4 percent range.
3. Romney’s effective tax rate is around 15 percent. Even including payroll taxes, Romney pays a higher effective tax rate than 60 percent of Americans. . . .
4. So given this release, the only reason to make a political issue out of Romney’s taxes is if you are trying to inspire antipathy toward wealthier Americans in general and Romney in particular just because they are wealthy. And even that route makes little sense. Romney’s taxes show just how progressive the U.S. tax system is, with “the rich” shouldering an incredible burden. Indeed, no advanced economy leans on upper-income households as much as America does.
In the conference call, Romney’s advisers rather effectively debunked some of the false reporting. The Cayman “accounts” aren’t accounts at all. They are funds that were fully taxed under U.S. law. I asked about the Swiss bank account. According to Romney’s trustee, it was formed in 2003 and closed in 2010 because “it wasn’t worth it”; in other words it didn’t serve any purpose and may not have been keeping with Romney’s ”political” wishes. In any event, there was no tax avoidance there either.
The Romney team explained that if measured against gross income, Romney paid at a 21.2 percent rate in 2011 and 17.6 percent in 2010. (If measured against adjusted income those numbers are 13.9 percent and 15.4 percent, respectively). Some of this is so-called carried interest (in essence, payout on his Bain investments). The advisers pointed out that Romney’s tax plan wouldn’t lower his own tax, but Newt Gingrich would have him paying nothing by wiping out capital gains taxes. Moreover, the income taxed at the capital gains tax rate has already been taxed at the 35 percent rate as corporate income.
Romney’s trustee for three blind trusts (for Ann, their children and their charitable trust) repeatedly made the point that Romney does not make investment decisions and is only briefed on the aggregate gains and losses from investments.
The campaign noted that there were 26 people on the phone from the Chicago area, a dig at the Obama opposition research operation. Unfortunately for David Axelrod and his minions, about the only thing to carp about is that Romney made a lot of money. That’s the “issue” for the left — wealth creation and the prosperity of those who invest in the U.S. economy.
Frankly, the tax return conference call was one of the most effective and thorough efforts by the Romney campaign. Why this was not done weeks or months ago remains a mystery. That said, the tax story, I suspect, will largely die out, aside from the incessant giggling from the media. (Look how much he makes!) While the Romney team batted down a great deal of false reporting, it is true that those stories could have been prevented by earlier disclosure.
Romney’s returns reflect a man who walks the walk. He earned a lot of money. He pays tons of taxes and gives an extraordinary amount in charity. Newt Gingrich? The sole year’s return he has released shows a pitiful 2.6 percent paid in charity on over $3 million in income. For a man who touts the wonders of faith-based charities, he does a shabby job of supporting them.