Romney's taxes show breaks given wealthy

Mitt Romney and his wife, Ann, earned more than $20 million in 2010. They held millions of dollars in a Swiss bank account and millions more in partnerships in the Cayman Islands. His family's trusts sold thousands of shares in Goldman Sachs that were offered to favored clients when the storied investment house went public. The couple's effective federal tax rate for the year worked out to 13.9 percent, a rate typical of households earning about $80,000 a year.

Yet the hundreds of pages of tax documents released by Romney's campaign Tuesday morning did not readily reveal any elaborate financial legerdemain or exotic tax shelters. What Romney's returns illustrated, instead, was the array of perfectly ordinary ways in which the tax code confers advantages on the rich, allowing Romney to amass wealth under rules very different from those faced by most Americans taking home a paycheck.

Those differences leapt to the front of the national debate Tuesday when President Obama -- whose family's income was less than a tenth of Romney's in 2010 but whose effective federal rate was double -- called for higher taxes on the wealthy in his State of the Union speech.

Romney's tax returns were posted on his campaign's website Tuesday morning after escalating pressure from the other Republican candidates, Democrats and even supporters, some of whom attributed his loss in South Carolina's Republican primary last weekend to his shifting and tentative responses to questions about his wealth, tax burden and overseas investments.

The 547 pages of documents included 2010 federal income tax returns for the Romneys, the couple's estimated 2011 return and returns for their charitable foundation and two blind trusts established in their names, as well as a trust established for their children.

The couple paid about $3 million in federal taxes on an adjusted gross income of $21.6 million, the vast majority of it flowing from stock holdings, mutual funds and other investments, including profits and investment income from Bain Capital, the private equity firm Romney retired from in 1999.

The couple reported no wage earnings in 2010. But in a conference call with reporters Tuesday, Romney's campaign counsel, Benjamin Ginsberg, said that Romney and his wife collected more than $7 million worth of Bain profits in 2010.

Obama and others have argued that carried interest should be taxed at the rates which normally apply to income earned by people providing services, topping out at 35 percent. If Romney's carried interest income in the past two years had been taxed at that higher rate, he would have owed about $4.8 million in federal taxes, roughly $2.6 million more than he would typically be assessed under current rules.

And like most of the wealthy, the Romneys paid only a tiny sliver of their income in payroll taxes, which cuts heavily into the weekly paychecks of wage earners but is barely a blip on the returns of the rich. While payroll taxes eat up 6 percent of the income of Americans earning the national median income of $50,221, Romney and his wife paid just one-tenth of 1 percent of their income in payroll taxes.

Romney's 2010 returns also suggest he may have paid far less in taxes the previous year. The 2010 return shows the family made estimated tax payments for 2009 of $1,369,095. To avoid penalties, estimated tax payments must be at least 110 percent of the taxes owed the prior year. Assuming that is what he paid, his federal tax bill for 2009 would have been $1,244,632, far less than in 2010.

Romney's GOP rivals did not immediately comment on the disclosures. But House Speaker John Boehner, R-Ohio, defended him, saying that Romney's tax rate is close to the 15 percent rate most Americans pay on long-term capital gains from the sale of investments.

Ginsberg, the legal adviser, concluded: "Governor Romney has paid 100 percent of what he owes."