Mitt Romney is rich. That's not news, but until Tuesday, the former governor and GOP presidential candidate had refused to release his tax returns showing just how rich he is.
Now we know that, over the last two years, Romney and his wife claimed an income of over $20 million a year. Almost all of that was income from dividends and interest on investments — which means he paid an income tax rate of about 14 percent. That's much lower than the typical salaried worker pays in America, but it is what the federal tax system allows.
WBUR's Curt Nickisch joined All Things Considered host Sacha Pfeiffer Tuesday to discuss.
Curt Nickisch: Let's start with the top lines. Romney calls his occupation "executive." Ann Romney lists her profession as "homemaker." And the tax returns were prepared by PricewaterhouseCoopers in Boston. The Boston office of the big law firm Ropes & Gray LLP is listed as legal counsel. Romney also used Goldman Sachs to help manage his family trust investments.
I went through the returns with a couple of certified public accountants, and here's the reaction from one of them, Mark Gianno, who runs a firm in Hyannis:
That’s a — to my mind — a very nice choice. Because here’s a fellow who’s trying to position himself to be absolutely above the fray and as clean as a whistle. And how better to do that than to use some of the largest law firms, investment companies and accountants in the world?
"Squeaky clean" was a term that kept coming up with the folks I talked to — not surprising considering he's been running for president for years and knows the scrutiny that his financial reporting is under.
His release didn't include state tax returns. Can we tell anything about his local tax burden from his federal returns?
Romney reported paying almost $700,000 in 2010 in state income taxes. A little bit of that is tied to his speaker fees, and some of that was probably paid out-of-state. But since most of his income was from investments, you can conclude that most of that money went to the state. By the way, Romney expects his state tax burden to almost double for 2011 because investments did so well last year.
A lot of us who own homes take deductions on our real estate taxes and mortgage interest payments. Did Romney?
He did, and on his other couple of homes, for around $200,000 in all. Note he didn't deduct any mortgage interest, meaning he doesn't carry a mortgage or didn't bother taking the deduction.
Let's talk about Romney's charitable contributions. Amazingly, he paid about the same amount in taxes that he gave to charity in 2010: $3 million. How much of that went to local charities?
Not a ton, but there are a lot of names in there you'll recognize. One reason that Romney's charitable deductions were so high is that he tithes. He gave $1.5 million to the Church of Jesus Christ of Latter-day Saints. He gave about the same amount to his family foundation, and it's the one that made local donations.
I noticed that $10,000 went to his other alma mater, Harvard Business School, which of course has quite an influential cast of grads. What else?
A bunch of well-known Boston-area charities: Boys and Girls Clubs of Boston, City Year, Dana-Farber Cancer Institute and Pan-Mass Challenge, and also a number of schools in Belmont. Most of these were in the $10,000-20,000 range.
What about investments out-of-state?
One-hundred thousand dollars went to the Bush Library, which one could call a strategic donation, to his alma mater Brigham Young University. And a couple of medical research charities in other states.
What's been making national headlines is this 15 percent tax rate on dividends that basically reflects Romney's tax rate. This is the issue that really touches the income inequality nerve. So I was surprised to see that Romney paid a higher tax rate than Sen. John Kerry apparently did when he ran for president.
Well Romney and Kerry, besides both being or having been presidential candidates, have the similarity of having most of their income come from investments, not from wages like most Americans do. Kerry happened to have much of his income in tax-free investments, municipal bonds set up that way to encourage private investment in public projects. Romney has most of his money in taxable investments — which makes sense because he worked in the private sector, he understands commercial finance.
Interesting how Romney's tax returns say that about him. What else can we read from his persona in his returns?
It's telling to see what's not in his returns. I spoke with Kenneth Brier, a tax accountant from Needham, and he noted that even though Romney listed more than $300,000 in speaker's fees, he hardly itemized any deductions off of that self-employment income.
Sure, usually people who have their own business, even as a speaker and author, deduct everything that they possibly kept — some stationary, some postage. A lot of people would have a home office, entertainment. None of that.
I think what that tells you is that Romney was willing to not list any deductions and pay more in taxes because that was worth more to him than having every itemized deduction picked through and debated. Risk-averse, you might put it.
This program aired on January 24, 2012.