Do the Romneys pay federal income tax when no one is watching?
TPM’s BENJY SARLIN (and many others) seem to believe Romney's campaign assurances that they do:
Harry Reid Was Wrong. Sen. Harry Reid’s notoriously unsubstantiated claim that Romney paid no taxes for 10 years is not true. In his latest return, Romney paid an effective tax rate of 14.1 percent. As for his previous taxes, Romney’s trustee, R. Bradford Malt, provided no primary documents but offered some basic details backed up by a letter from accounting firm PriceWaterhouseCoopers. Malt said Romney’s lowest effective tax rate was 13.66 percent and his average rate was 20.20 percent across the 20-year period.In fact, this is what Romney Disclosure campaign site shows (click on “Letter from PricewaterhouseCoopers” on the right):
The lowest of any annual “effective federal personal income tax rate” for any year during the period is 13.66. As you requested, we computed each annual “effective federal personal income tax rate” as total taxes owed divided by adjusted gross income as shown on the federal income tax returns as prepared.Let us parse what is being said here. Specifically, why is that Price Waterhouse Coopers needed to follow precise language that defined “effective federal personal income tax rate”? What is missing in this definition is in bold:
The lowest of any annual “effective federal personal income tax rate” for any year during the period is 13.66. As you requested, we computed each annual “effective federal personal income tax rate” as total federal income taxes owed divided by adjusted gross income as shown on the federal income tax returns as prepared.Total taxes owed may mean any combination of United States federal income taxes, payroll taxes (not likely – Romney did not work for salary in years), foreign tax paid, and so on.
So wide is the loophole, that the following is entirely consistent with the released statement:
Let’s say the Romneys end up with $10M adjusted gross income mostly from foreign investments.
They pay $900K in Massachusetts state taxes; and $466K in foreign taxes, getting total tax to 13.66% as described in the letter.
They end up with Alternative Minimum Tax with effective rate of 15% (consistent with the rates on capital gains and dividends), but then they subtract 14.999% charitable contribution to LDS (paid not in cash but in stock in an obscure security whose “fair market value” Bain gets to manipulate at whim), resulting in one dollar federal tax liability.
So contrived is the precise name the Romneys instructed to use that "effective federal personal income tax rate" returns only 17 hits if you set the date range from Sep 1, 1994–Sep 5, 2012 (and some of them still capture the recent Romney definition).
The Romney campaign should stop playing 20 questions. The country needs to see the actual returns.