The Romney campaign released Mitt’s 2011 taxes Friday afternoon in an attempt to put the whole tax issue behind them, but they’ve only raised more questions. As many people quickly pointed out, he actually overpaid his taxes to make sure that his rate stayed above that 13% he said was the bare minimum he’d paid. He did this by only claiming some of the charity contributions he made.
He donated just over $4 million to charity, but only claimed a $2.25 million deduction when he could have claimed it all. That raised his taxable income and his tax rate to 14.1% when he could have paid about 9%. Much has been made over the fact that he once defended his low rate by saying that if he paid more than he had to, that might disqualify him from being president, but that’s just a political “gotcha” argument that doesn’t really matter. There are more important considerations here.
The first and most obvious is that he was clearly acting retroactively to make sure he stayed above 13%. As Rachel Maddow said, “In order to make that statement from last month retroactively true, Mr Romney’s accountants went back and artificially inflated his tax rate so it would comport with what he said.” And in fact, his spokespeople are essentially owning up to it all.
He has been clear that no American need pay more than he or she owes under the law. At the same time, he was in the unique position of having made a commitment to the public that his tax rate would be above 13%. In order to be consistent with that statement, the Romneys limited their deduction of charitable contributions.
But I think there’s more to it than that. The campaign also released a summary from his accounting firm of his previous 20 years of taxes that said three things: First, that he paid federal income taxes every year; second, that the lowest federal rate he paid was 13.66%; and third, that the “average annual effective federal tax rate” was 20.2%.
But this raises a few questions. First of all, did he go back and amend any of those returns to pay a higher rate than he had at the time for political purposes? Remember, he has a track record of doing that. He did it when he was running for Massachusetts governor, repeatedly swearing that he had filed as a Massachusetts resident for the previous seven years when, in fact, he had filed as a Utah resident for several years (paying state taxes to Utah, getting big tax breaks for his Utah house by claiming it as his primary residence, etc). So he went back and amended those returns after the fact to make the false statements he’d been making all along true — or something resembling true, through some magic bit of time travel. Secondly, I’d be willing to bet that nearly all of those “charity” contributions went to his church, not to an actual charity. Legally, that is all deductible too.
But maybe all of this distracts from the real issue, which is that even with the artificially inflated rate he paid in 2011, he still paid less than half the rate that I paid, and that most people pay. And that is only because he has arranged his finances to make sure his income is all in the form of capital gains because that means he pays a 15$ marginal rate rather than the 35% that someone of his wealth ought to be paying. This is exactly how many of our wealthiest citizens manage to pay a far lower rate than those of us who can’t play such games with our income.
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Ben P
September 25, 2012 at 2:13 pm (UTC -4) Link to this comment
Keep in mind also, that as far as the 2011 Return, Romney can also go back and amend this return to claim the whole $4 million as a deduction.
Considering this would net him, give or take, about $300,000, I give even money odds he does this once the political consequences no longer matter.
Zinc Avenger (Sarcasm Tags 3.0 Compliant)
September 25, 2012 at 2:15 pm (UTC -4) Link to this comment
I’m used to being lied to. I’m not used to the truth value of events in the past varying day by day.
Randomfactor
September 25, 2012 at 2:16 pm (UTC -4) Link to this comment
And did he take advantage of a tax amnesty program–which would’ve inflated his tax rate in keeping with the “average”–in order to avoid going to jail?
Spanish Inquisitor
September 25, 2012 at 2:18 pm (UTC -4) Link to this comment
And don’t forget, as Chris Hayes pointed out, he has three years to amend his return. Whether he wins or loses, you know he’s not going to let the government keep those additional taxes. How else is he going to create those jobs he promises if the government gets all his money?
smhll
September 25, 2012 at 2:55 pm (UTC -4) Link to this comment
First, that he paid federal income taxes every year; second, that the lowest federal rate he paid was 13.66%; and third, that the “average annual effective federal tax rate” was 20.2%.
First, yes to what Ben said.
Second, I heard (on Maddow?) that his statement was based on a simple average of the tax rate, not a dollar weighted average. Using any kind of sensible math, he would add up all the income for the time period and all the tax for the time period and divide the latter by the former to get his effective average tax rate. However, it has been suggested that he took the rates and added them and averaged them. That is, hypothetically, 13 + 12 + 14 + 14 + 12 averages to 13. However, there’s no reason to think his income is consistent from year to year. Likely it fluctuates a lot, depending on how the stock market performs and how much stock he sells. It is them possible to make 10x as much money in a year in which he had extra good loopholes and pay only a 12% tax rate that year. A very lucrative year that was taxed at a somewhat lower rate might throw off the real average. I have no evidence that this happened, I just think averaging the rates without weighting them is garbage math.
Gregory in Seattle
September 25, 2012 at 2:57 pm (UTC -4) Link to this comment
@Zinc Avenger #2 – We are at war with Eurasia. We have ALWAYS been at war with Eurasia.
robertbaden
September 25, 2012 at 3:00 pm (UTC -4) Link to this comment
Why are charitable contributions deductible? Should you contribute what you want whether or not it is tax deductible? Why should I subsidize your deductions?
John Hinkle
September 25, 2012 at 3:26 pm (UTC -4) Link to this comment
I don’t know why he bothers playing games with his taxes. He could’ve just said, well look at that! I did actually pay less than 13% for years x, y and z. My bad. Well, that’s what happens when you give FOUR MILLION DOLLARS to charity.
And then down the memory hole it would’ve gone. But instead he gets the Streisand effect. What is he, a chronic liar?
Eric R
September 25, 2012 at 3:34 pm (UTC -4) Link to this comment
“Please excuse Willard (Mitt) Rmoney from revealing tax returns for the last ten years, I promise he paid on average 20%”
Signed,
A person paid by Mitt RMoney to write this
Markita Lynda—damn climate change!
September 25, 2012 at 3:43 pm (UTC -4) Link to this comment
Averaging percentages is wrong!
And, of course, he revealed his adjusted gross income, after he’s probably had a sizeable amount of money owing to him paid into overseas bank accounts. He has yet to tell anyone his actual gross income.
I think the “adjusted gross” is what we call in Canada “Taxable Income,” which is the amount we pay taxes on after taking all our deductions.
Spanish Inquisitor
September 25, 2012 at 3:55 pm (UTC -4) Link to this comment
I think the rationale behind tax deductions for charity is that it encourages charity. One might be less likely to give money away, if they had to pay tax on the same money first.
One other thing that Chris Hayes mentioned, or was it Rachel Maddow, is that the tax rates on unearned income (capital gains etc) was much higher during the beginning of the period he averaged his tax, so that he had to pay much lower taxes later on to meet that average. Capital gains prior to the Bush tax cuts was around 35% IIRC, and is now 15%. If he was paying 35% during a substantial period of time over which he averaged his tax, he’d have to paying close to nothing over the later periods to get the average he’s claiming.
He actually might be the poster boy for the Bush Tax cuts.
Randomfactor
September 25, 2012 at 4:05 pm (UTC -4) Link to this comment
What is he, a chronic liar?
Yes. You can tell by the (R) after his name.
Reginald Selkirk
September 25, 2012 at 4:09 pm (UTC -4) Link to this comment
R-money paid taxes every single one of those years – by my calculation, that’s a 100% tax rate.
Taz
September 25, 2012 at 4:15 pm (UTC -4) Link to this comment
How much of his charity was to the Mormon church, and how much of that was used to fight against gay rights?
shripathikamath
September 25, 2012 at 5:45 pm (UTC -4) Link to this comment
And while the attention is away from Missouri, here come the PACs funding Akin: http://abcn.ws/QSLe80
tomh
September 25, 2012 at 5:47 pm (UTC -4) Link to this comment
@ #14
Exactly. “Charitable” is a misnomer. Contributions to non-profits (all churches qualify) are deductible though it would be a stretch to call the Mormon Church a charity. According to the Salt Lake Tribune;
“Mitt Romney gave about $2.6 million to the LDS Church in tithing last year, though he only claimed a little over $1 million on his federal income tax filings to ensure a higher tax rate…In addition to Romney’s direct contributions to the LDS Church, he also gave to the faith through his charity for a total of $3.07 million last year, according to his campaign.”
david
September 25, 2012 at 6:10 pm (UTC -4) Link to this comment
The Romney campaign released Mitt’s 2011 taxes Friday afternoon in an attempt to put the whole tax issue behind them
No, they released the 2011 returns in an attempt to deflect attention from the “47%” comments.
bksea
September 25, 2012 at 6:26 pm (UTC -4) Link to this comment
The great stupidity of all of this is that the manipulations he made to ensure a higher tax rate are meaningless. He could have chosen to pay at a 30% rate. It would not have made a difference.
The PROBLEM is that he COULD have paid a 9% rate. It completely blows a hole in his fundamental argument that the rich are overtaxed. Guaranteed, most millionaire – billionaire types are not paying more than they need to. You need a law to make them pay their share.
Dalillama, Schmott Guy
September 25, 2012 at 6:28 pm (UTC -4) Link to this comment
As I understand it, in theory, it’s because the charity will take your money and do something with it that the government would otherwise have to do, so you’re saving the govt money/contributing to the wellbeing of society, and thus should be excused that amount of obligation in other places. In practice, it’s another way for the richer to transfer the tax burden onto poorer people (who are likely to donate smaller quantities, and less likely to keep receipts or have accountants who can help them take advantage of that deduction). Also, any 501(c)3 or 4 counts as a ‘charity’ for this purpose, which means that donations to churches count, as well as such nonprofits as Opera companies and similar. Not that I have a problem with a nonprofit Opera company, but it’s not a charity, and giving them money isn’t taking any burden off of anyone.
Marcus Ranum
September 25, 2012 at 6:49 pm (UTC -4) Link to this comment
“charity” can also include funds moved into a charitable remainder trust, which is a popular way of passing on tax-free wealth to your offspring.
There are a lot of ways to play games with the taxes and the percentage is not the whole of the information. That Romney is choosing to only release a bit of information ought to be highly suspicious.
Aliasalpha
September 25, 2012 at 7:21 pm (UTC -4) Link to this comment
He only paid 15 bucks in taxes? Now that has to be illegal…
d cwilson
September 25, 2012 at 8:20 pm (UTC -4) Link to this comment
So far, we have a sample size of 2 and both are significantly lower than 20%. Unless he expects us to believe that there are years in which paid 25% or more, this last point still looks suspicious.
bananacat
September 25, 2012 at 9:14 pm (UTC -4) Link to this comment
This is what really gets me. On one hand he’s proud that he can (legally) cheat the system and not pay his fair share. And then he has the gall to complain poor and elderly people paying less in taxes than the middle class, even though he could afford to pay more and they can’t. He’s the real parasite.
bananacat
September 25, 2012 at 9:18 pm (UTC -4) Link to this comment
I don’t know how much of his $4 million went to the church, but he definitely does tithe the church, and he definitely counts that as charity. It’s essentially club dues, but since Christians have so much privilege in this country, paying to stay part of your religious club is considered charity for some reason.
Modusoperandi
September 25, 2012 at 9:51 pm (UTC -4) Link to this comment
Doc: “Mitty! We have to go back in time!”
Mitty McFly: “To save my parents?”
Doc: “Great scott, no! To do your taxes!”
tomh
September 25, 2012 at 10:25 pm (UTC -4) Link to this comment
I don’t know how much of his $4 million went to the church
According to his campaign, $3.07 million.
democommie
September 26, 2012 at 12:15 am (UTC -4) Link to this comment
Just remember, there is no “I” in “Team”. There is also, no “Me” in Mittmoroni; there is a “Mitt”, and “I” and a “Moron”, though.
dingojack
September 26, 2012 at 1:40 am (UTC -4) Link to this comment
An Opera company isn’t a charity? Nonsense!
Who else will bring ‘The Magic Flute‘ to the poor? ^
;) Dingo
——–
* Who did Mozart write it for? Where was it performed?
M, Supreme Anarch of the Queer Illuminati
September 26, 2012 at 2:52 am (UTC -4) Link to this comment
Great. So now trying to have me denied medical care, killed, and/or run out of the country counts as “charity.”
Konradius
September 26, 2012 at 3:10 am (UTC -4) Link to this comment
You know, I don’t care what Mitt does with his own money.
He had to pay 9% in taxes. That is the actual truth. That he chose to give an additional 4% doesn’t matter. Again, I don’t care what Mitt does with *his own money*.
lofgren
September 26, 2012 at 3:24 am (UTC -4) Link to this comment
Really? You don’t care at all what the potential leader of the free world spends his money on? This doesn’t strike you as somewhat valuable information?
Johnny Vector
September 26, 2012 at 8:22 am (UTC -4) Link to this comment
Let me bring up the amnesty question again. Paul Abrams has a fairly convincing argument that he took advantage of it, which means that without the amnesty he would be in jail. (Well, should be in jail.)
Yes, it’s the HuffPo, which is not a reliable source. Anyone have anything refuting the points he makes, though?
matty1
September 26, 2012 at 10:07 am (UTC -4) Link to this comment
@30, I might have some sympathy with that view if it wasn’t for the fact his 47% remark implies that he himself believes that not being liable for more tax is a moral failing.
If not paying the standard rate because you do not have the money makes a person lazy and stupid, what does not paying the standard rate when you have enough to not even notice the loss make you?
theophontes (坏蛋)
September 26, 2012 at 10:42 am (UTC -4) Link to this comment
It all starts with necrodunking. Then degenerates into necrotax returns.
@ matty1
rMoney puts himself that far ahead of his country. It should be a badge of honour to pay (relatively) high taxes.
Taz
September 26, 2012 at 10:58 am (UTC -4) Link to this comment
It should be pointed out that he could have paid 9%, and probably would have if he wasn’t a politician, and yet still favors tax cuts for those in his income bracket.
dean
September 26, 2012 at 11:17 am (UTC -4) Link to this comment
I think “congenital liar” is a better description.
Kalex's Tome » | Kalex's Tome
September 26, 2012 at 6:02 am (UTC -4) Link to this comment
[...] Romney Plays Games With Taxes The Romney campaign released Mitt’s 2011 taxes Friday afternoon in an attempt to put the whole tax issue behind them, but they’ve only raised more questions. As many people quickly pointed out, he actually overpaid his taxes to make sure that his rate stayed above that 13% he said was the bare minimum he’d paid. He did this by only claiming some of the charity contributions he made. [...]