As he continues to stonewall requests to release more of his tax returns, Mitt Romney is quickly turning the 2012 presidential campaign into a game of "Hide and Seek." Americans are left to speculate what dark secrets or advantages unattainable for most people lurk in those papers. Did Romney pay any taxes at all in 2009? Did he take advantage of an IRS amnesty program to come clean about his Swiss accounts? Is he using "blockers" to avoid paying taxes on his Cayman Islands income? Was Mitt able to somehow write off the $45 million he spent on his failed 2008 White House run? Inquiring minds may want to know, but Romney is "simply not enthusiastic" about providing any answers.
Not enthusiastic, that is, except when it comes to his charitable contributions. Once you factor in the millions of dollars he has donated to his church and family foundation, Mitt insists that "all total," his tax rate is "really closer to 45 or 50 percent."
As you'll recall, earlier this year Gov. Romney at first refused to release any returns at all. As he put it in December, "I don't put out which tooth paste I use either. It's not that I have something to hide." But when he begrudgingly let two years of tooth paste out of the tube, Americans learned that the $250 million man pays less than 15 percent of his income to Uncle Sam each year, a rate below many middle-class families. That paltry figure is made possible by the notorious "carried interest" exemption for private equity managers Romney wants to preserve taxes him not at the ordinary income rate of 35 percent but instead at the capital gains rate of just 15 percent. (Thanks to his unusual golden parachute, most of Mitt's millions each year come from his controversial former employer, Bain Capital.) On top of his Cayman Island investments and past Swiss bank accounts, Romney has created a $100 million trust fund for his sons—tax free. Thanks to some (apparently legal) chicanery on the part of his former employer, Mitt has also accumulated an IRA worth a reported $100 million. (The Romney camp even complained about that, worrying that recent tax code changes had "created a tax problem" for the former Massachusetts governor and asking, "Who wants to have $100 million in an IRA?")
Given the horrible appearances for a man who claims to be part of "the 80 to 90 percent of us" who are middle class, Team Romney set out to polish Mitt's tax turd. As Romney spun it to Jorge Ramos of Univision on Jan. 25:
Well, actually, I released two years of taxes and I think the average is almost 15 percent. And then also, on top of that, I gave another more 15 percent to charity. When you add it together with all of the taxes and the charity, particularly in the last year, I think it reaches almost 40 percent that I gave back to the community. One of the reasons why we have a lower tax rate on capital gains is because capital gains are also being taxed at the corporate level. So as businesses earn profits, that's taxed at 35 percent, then as they distribute those profits as dividends, that's taxed at 15 percent more. So, all total, the tax rate is really closer to 45 or 50 percent.Romney restated the point during a GOP debate in Florida. He did the math for Wolf Blitzer and Newt Gingrich (around the 2:40 mark above):
"My taxes plus my charitable contributions this year, 2011, will be about 40 percent."(Continue below the fold.)
To drive the point home, the Romney campaign website proclaims that "a number of key points should be kept in mind." Among them:
Second, the Romneys take to heart "to whom much is given, of him shall much be required." Accordingly, they have been extraordinarily generous in their charitable giving, donating over $7 million from 2010-2011, averaging over 16% of their income.Of course, like John and Cindy McCain back in 2008, Mitt Romney's charity begins at home. While the top-line is very impressive (a typical person gives 2 to 3 percent of their income to charity compared to 6.5 percent for those earning $10 million), the bottom line is less so. For the former bishop and Boston "stake president," most of his charitable giving is in the 10 percent tithe required by his church. As the AP explained:
Romney reports he will give a total of $4.13 million to The Church of Jesus Christ of Latter-day Saints over two years as part of his overall charitable donations. The former Massachusetts governor reported income of about $43 million for the two years. Separately, over the past decade, Romney and his wife, Ann, have given more than $4.7 million to the denomination through the Tyler Charitable Foundation, a multimillion-dollar trust the couple leads.Of course, millions of Americans give to their churches, synagogues, temples and mosques each year; it is the single largest form of charitable giving in the United States. And to be sure, with his donations of time, cash and stock, Mitt Romney has consistently upheld his commitment to his church. But that is no substitute for paying your fair share to the United States, especially when your campaign slogan is "Believe in America."