Obamas’ tax returns show earnings of $790K in 2011

On the same day that President and Michelle Obama reported that they earned $790,000 in 2011 and paid just over 20 percent in federal taxes, Mitt Romney and his wife asked the Internal Revenue Service for an extension in filing their returns.

The Obama campaign used the opportunity to emphasize the incumbent president’s populist call for a more equitable tax code and to draw a contrast with Romney’s wealth and his past reluctance to release tax information.

Romney joins more than 10 million filers out of an estimated 145 million who are expected to ask for a delay, which is automatically granted for up to six months. A Romney representative said the presumptive Republican presidential nominee will release his 2011 returns when they are filed.

The president distributed his tax information four days before the federal filing deadline, capping a week in which he lobbied the Senate heavily to support a bill modeled on the “Buffett Rule,” which would require anyone earning $1 million or more to pay an effective minimum tax rate of 30 percent.

That rule is named for Warren Buffett, the billionaire investor who has complained he pays a lower tax rate than his secretary.

As it turns out, Obama does too.

“The president’s secretary pays a slightly higher rate this year than the president on her substantially lower income, which is exactly why we need to reform our tax code and ask the wealthiest to pay their fair share,” White House spokeswoman Amy Brundage told Bloomberg News. She declined to release details on the rate paid by the secretary, Anita Breckenridge.

Tax experts say extension requests are common among all categories of taxpayers but are more common when filers have complicated holdings.

“A lot of people extend for a lot of reasons,” said Michelle Hanlon, a professor of accounting at the Massachusetts Institute of Technology. She added that “the more complicated the return — the more likely it is” that a filer will ask for more time. Offshore accounts, like those held by the Romneys, “add to complexity,” she said.

Extensions are requested as a matter of routine at private equity firms, which, like other investment partnerships, must provide a separate IRS form, “K-1,” for each of the funds or accounts.

Romney’s 2010 tax return, released earlier this year, showed he and his wife paid an effective rate of 14 percent on earnings of about $21 million, largely from investments. In January, Romney estimated he would pay a rate of 15 percent in 2011.

Obama campaign manager Jim Messina issued a statement Friday noting that Romney “has yet to provide tax returns from the period in which he made hundreds of millions as a corporate buyout specialist or as governor of Massachusetts, the experience he says qualified him to be president.”

A Romney spokeswoman dismissed the criticism. “It’s no surprise with the worst job-creation record in modern history that President Obama would try to distract Americans from the real issues with a series of sideshows,” spokeswoman Andrea Saul said.

White House aides stressed that Obama would still pay a higher rate under his proposals for a revamped tax code, even though his 2011 income does not meet the Buffett Rule’s threshold.

In 2011, the Obamas’ tax rate was relatively low in part because they were able to take deductions for contributions of $172,130, or 22 percent of their earnings, to 39 charities. The White House said the president donated his after-tax proceeds from his children’s book — $117,130 — to a Fisher House Foundation scholarship fund for children of fallen and disabled soldiers.

The Obamas’ earnings slid 54 percent from the $1,728,096 reported in 2010, when they amassed higher royalties from sales of the president’s three books. And they were far below the $5.5 million the couple had reported for 2009, which included book-sale profits and the $1.4 million that the president received on winning the Nobel Peace Prize.

Obama collects a $400,000 salary but in 2010 received most of his income from sales of his nonfiction books: “Dreams From My Father,” “The Audacity of Hope” and “Of Thee I Sing: A Letter to My Daughters,” a children’s book.

In the past 12 years, his tax returns show, Obama’s earning ramped up — after he was elected to the U.S. Senate in 2005 and sales of his first book, “Dreams,” took off. After having earned $207,000 to $273,000 in each of the five previous years, the Obamas collected $1.66 million in 2005, paying a federal tax rate of 32.9 percent. In 2007, after “Audacity” was published, Obama raked in $4.1 million and paid a rate of 33.7 percent. In 2008 and 2009, the family also paid more than 32 percent in taxes.

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