Wow! The New York Times is on a roll today. I've already seen a few diaries about how they've been digging into the Bain Capital document dump. In a totally separate article, James B. Stewart tries to untangle the complicated web of information already available in the 2010 Tax Returns that Mitt Romney has released.
I do my own personal and businesses taxes, so generally speaking, I understand what Stewart is talking about when he tries to explain that it is conceivable that Romney had enough carry forward credits from previous years of taxes, so that Romney didn't have to pay taxes in 2009. What Stewart has newly found in the 2010 tax return is the fact that "American taxpayers who claim the foreign tax credit are required to report their total foreign taxes paid and tax credits used for the previous 10 years."
It's like putting together a puzzles. The pieces available in the 2010 taxes provide clues to what might be in the previous years' tax returns that Romney refuses to release. The article does not claim that Romney paid ZERO taxes in 2009, but it hints at the fact that the Romney quote, "Over the past ten years, I never paid less than 13%," may not be true. Take a look:
Mr. Romney’s foreign tax credit was so high in 2010 in part because the tax code allows American taxpayers to use credits from previous years. Mr. Romney had an unused foreign tax credit from 2009 that he carried over to 2010, when he was able to use most of it (the rest was carried over to 2011). The year 2009 was the first time in 10 years that Mr. Romney didn’t use the full amount of his foreign tax credit to offset his taxes in the United States, which means that his foreign losses that year more than offset his gains, producing a net loss. American taxpayers can’t use a foreign tax credit if they don’t report foreign income on their tax return.
Since Mr. Romney didn’t use all the foreign tax credit available to him in 2009, tax experts said he must have reduced the tax owed on his foreign income to zero. In the highly unlikely event he also reduced his taxable income from United States sources to zero, or even showed a loss, he would have owed no federal income tax in 2009.
That’s not the only evidence that Mr. Romney’s income in 2009 was substantially lower than in 2010. He was able to use substantial losses from previous years to reduce his 2010 capital gains, indicating that he had no net capital gain in 2009. Capital gains accounted for most of Mr. Romney’s income in 2010 — $12.6 million of his $21.6 million total. In addition, he reported more than $800,000 in taxable refunds from 2009, which seems very high. If he had smaller refunds, lower speaking and director’s fees, and lower business income or even a business loss, his adjusted gross income for 2009 could have been quite low, at least by Mr. Romney’s standards. Assuming he had similar itemized deductions to the $4.5 million he had in 2010, his taxable income could have been extremely low.
Deep in Romney’s Tax Returns, Some Hidden Revelations
Over the last few weeks I've seen it noted that Romney always says "taxes." He never says "income taxes," and people have deduced that maybe he's trying to include other types of U.S. taxes like property taxes and sales taxes in the mix when he uses the word "taxes." But now here's another caveat: When Romney says taxes, does he mean "U.S. Federal Income Taxes" or is he including "Foreign Income Taxes" in his generalization?