Mitt pays less tax
Tampa, Florida (USA) – Republican presidential front-runner Mitt Romney, among the richest Americans with a fortune of about $250 million, paid a smaller proportion of his income in tax than most others, his returns show. The former Massachusetts governor paid a smaller proportion than other Americans because his income is from investments of his fortune, which attract a lower rate than earned income.
Romney released tax returns showing that he and his wife Ann paid $3 million tax on an income of $21.7 million in 2010, a rate of 13.9 per cent. He expects to pay $3.2 million in taxes on his 2011 income, a rate of 15.4%.
He paid less tax than President Barack Obama who along with wife Michelle had a joint income of $1.8 million in 2010, much of it from sales of the president’s two popular books. They paid 26% in tax.
Romney’s arch rival Newt Gingrich revealed at the weekend that he paid nearly $1 million in income tax, a rate of about 31%.
According to Romney’s returns, he and his wife, Ann, donated $4.1 million to the Mormon church and about $3 million to other charitable causes. The money given to the Mormon church that some people do not view as Christian may not sit well with some voters.
The multi-millionaire businessman said during a televised debate in Tampa on Monday night: “I’m proud of the fact that I pay a lot of taxes.”
Romney is refusing to release tax returns for earlier years, leading some critics to speculate that he paid even less tax back then.
Romney had initially insisted that he would not release the returns until April, but agreed to do so after coming under intense pressure during televised debates last week, before losing the South Carolina primary to Newt Gingrich.
Romney led the private equity firm Bain Capital in the 1980s. He enjoyed a lower tax rate than most Americans because his income came largely from returns on investments and capital gains. Under controversial reforms by George W. Bush, such income is taxed at a flat rate of 15 per cent.
The returns also showed the Romneys had a string of foreign holdings including assets in the tax haven of Cayman Islands, and that they held a bank account in Switzerland, which is renowned for its tax advantages and secretive accounting.
Romney’s tax returns has reignited the debate in the US over how investment income – in particular carried interest, the profits that private equity managers make – is taxed.
President Obama has said such income should be taxed at a higher rate, and that wealthy Americans and corporations should pay more tax to help trim the country’s deficit.
However, Republicans are opposed to any tax hikes, saying they would harm the economy.